A report in this week’s Parade magazine details the issue of off-shore accounts and tax evasion by the wealthy. The report notes that:
Offshore tax evasion has grown dramatically in recent years as businesses and banks have become more globalized, says Internal Revenue Service (IRS) Commissioner Douglas Shulman. Cheating is surprisingly easy. Wrongdoers falsely inform tax-haven banks that they are not U.S. citizens so that their financial information gets withheld from the IRS. Another common tax dodge involves deducting losses from bogus investments in phantom offshore companies.
While the issue of cheating on taxes is certainly a legitimate one, one interesting statement in the article is a little misleading. The lead paragraph characterizes the issue as one that is “costing law-abiding U.S. taxpayers some $40 billion to $70 billion a year.” What is implied by this is that the additional $40 to $70 billion belongs to us.
While such tax evasion does mean less revenue for the government, to say that it is money that should belong to the public is a stretch. That money, like all money collected through income taxes, is money that was earned by individuals. But our “progressive” tax system takes money earned by certain individuals and gives it to others who haven’t earned it. The wealthier pay a progressively greater amount and percentage of their income in taxes compared to the less affluent.
Perhaps if our tax system was completely balanced in that it collected the same from all, the argument that such evasions cost us might be more believable. But even then, it still misses the point that it isn’t “our” money to begin with. It only becomes “our” money through government coercion and force.
One other interesting little tidbit from the report: Legislation supported by Obama would “provide funding for 800 new IRS agents.” Great! Just what we need is more people paid for by our tax dollars to make sure we are paying our taxes!