Monday, July 24, 2006

Getting Around Tax Fairness

Over the last decade or so, the chances of a low-income American being audited by the IRS has gone up by about a third. In the same period, the chances of the wealthiest Americans being audited has decreased by about 90 percent. As it stands today, your odds of an audit are now higher if you earn under $25,000/year than if you earn over $100,000/year.

And it's about to get even easier for the rich to cheat on their taxes: the IRS will be cutting the staff responsible for enforcing the estate tax nearly in half.

IRS commissioner Kevin Brown says it's because fewer people are required to pay the estate (and other) taxes, thanks to the Bush tax cuts. The NY Times, however, reports that, "Over the last five years, officials at both the I.R.S. and the Treasury have told Congress that cheating among the highest-income Americans is a major and growing problem."

It turns out that poor people don't have quite the same incentive to cheat on their taxes as rich people do, and focusing the majority of audits on them is just a waste of time.

Quite clever really. When you can no longer get away with giving your buddies big tax breaks through the legislative process, you just gut enforcement so they can write their own rules.

Sources: PERRspectives Blog & TomPaine.com

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