Archive for April 19th, 2007

by Jay Stevens

As a regular outspoken critic of Max Baucus, I suppose it’s fair to give him his due when he does something cool. Like get in a heated exchange with Treasury Secretary Henry Paulson over closing the gap between owed taxes and paid taxes:

Baucus, D-Mont., who has focused for years on the so-called “tax gap” between what Americans owe and what they actually pay, held another hearing on the issue Wednesday. Since 2001, the government has failed to collect more than $2 trillion in legally owed taxes, he said.

“Yet the administration does not appear to take this job seriously,” Baucus said.

Paulson, a good administration soldier, bristled. Basically he’s happy with the 85 percent compliance rate for taxpayers. Baucus was not happy. Hilarity ensued.

Are you thinking what I’m thinking? Eighty-five percent? Almost one in five tax dollars remains uncollected? Sign me up! Right? I mean, that’s a lot of tax dollars going uncollected, they won’t miss little piddly contribution to Bush’s grandiose and delusional foreign policy schemes!

Not so fast. If you’re like me, a regular working joe with a five-digit income, you won’t be getting away with cheating. That’s right! The IRS has stepped up its scrutiny of middle-class taxpayers.

Admittedly the frequency of audits are much higher if you earn a million or more. But what about the super wealthy? The Bush administration has cut the IRS staff investigating the wealthiest Americans in half. Additionally, while IRS staff investigating the super-rich have gone down, the complexity of the tax laws has shot up, and it’s the super-rich with their paid accountants and tax specialists who have the tools and the resources to exploit those laws.

A study of Walmart’s earnings against its taxes shows how much it cheated state governments out of its rightful income. According to the report, Walmart and other multi-state corporations cook their books and shift income made in states with income taxes to states without.

How much is it bilking US taxpayers?

Over those seven years, Wal-Mart reported $77.4 billion in pretax U.S. profits to its shareholders. But it reported a total state income tax bill of only $2.4 billion, just 3.16% of those profits.

That’s less than half of what it should be. Or about two and half billion withheld from state coffers.

Or take this account of tax cheat and Swift Boat financier, Max Wyly, who cheated the government of $300 million.

Wyly did his cheating through an offshore scheme that hid $1 billion in profits via Isle of Man “shell companies” that existed only on paper, were registered under front men to hide the Wylys’ names, and were used to carry out transactions and launder money. And that’s only the hidden income that was found. The Dallas mogul, with a $1 billion admitted net worth, may be guilty of the biggest personal tax fraud in U.S. history.

According to the report, this type of tax cheating is common among the super-wealthy and large corporations.

According to the IRS, business executives have used such shelters to evade taxes on $8 billion in income. Assume that means “at least.” And that’s just one swindle in the panoply of tax cheating which the IRS says contributes to the loss of $40 billion to $70 billion a year from individual use and $30 billion from corporate use of tax havens.

[snip]

Those numbers are probably low: According to a Tax Justice Network report quoted by the Senate investigation and based on statistics from Merrill Lynch/Cap Gemini’s “World Wealth Report” and the Boston Consulting Group’s “Global Wealth Report,” 16.2 percent of the private wealth of North Americans, $1.6 trillion, is held offshore. The overwhelming reason for that is tax evasion.

The Bush administration has largely ignored this form of tax cheating, which is strictly limited to the richest among us. Why? Maybe because Wyly and Walmart are huge contributors to the President and to the Republican party.

Senate Democrats have taken this issue up and are looking to close off the offshore loopholes that allow the most egregious tax cheating. Barack Obama (D-IL), Carl Levin (D-MI) and Norm Coleman (D-MN) have sponsored the The Stop Tax Haven Abuse Act (S-681) (pdf), which would effectively end this practice.

So Secretary Paulson is dead wrong when he claims the government would be unable to close the tax gap. The Senate is sitting on a bill that would greatly aid the collecting of taxes from the country’s biggest cheats.

If Senator Baucus is genuinely concerned about narrowing the tax gap, he should enthusiastically endorse, promote, and push Senate bill 681 through Congress.

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by Jay Stevens

The long-awaited grilling of Attorney General Alberto Gonzalez has begun.

For those of us who like to see incompetence and malice appropriately rewarded, Gonzalez’ appearance before the Senate Judiciary Committee is especially sweet.

Senator Patrick Leahy’s opening remarks began with thoughts on the Virginia Tech shootings, and hopes that the Justice Department can swiftly work things out – and here Gonzalez was beaming and nodding his head eagerly, probably the only person in the country happy, even for a moment, that the shootings occurred. But then things quickly turned sour as Leahy made it evident he thinks there’s enough evidence to support the theory that the US attorney firings were politically motivated, and he lambasted the administration and its Attorney General, who sat alone at a long, red table, at the center of a circle of a throng of journalists and reporters and politicos and onlookers.

Or watch Senator Arlen Specter absolutely paste Gonzalez. If Specter is angry, then Gonzalez is probably toast. It’s safe to say that Specter is angry.

Aw, heck, check out the highlights for yourself…

Basically it’s obvious the Senators have a lot of information, and little of it looks good for Alberto Gonzalez.




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