DrSmellThis
04-16-2005, 04:34 PM
America's rich rise against tax
By Stephen Evans
BBC North America business correspondent
Only taxes
and death are certain - except for taxes, that is.
It won't seem that way to the millions of Americans who
file their tax returns by the deadline on Friday, but there is a mountain of evidence that tax avoidance (the legal
variety) and even tax evasion (the illegal variety) are growth industries.
Accountants in the field have even
come up with the term "tax avoision" to describe the grey areas in between. It was Leona Helmsley who said famously
that "only the little people pay taxes".
You might forgive her cynicism. The assertion was over-stated but not
completely wide of the mark.
Tax burden shifting
According to David Cay Johnston, who won a
Pulitzer Prize for his study of American taxes, there's an industry that squirrels away billions of dollars that
might otherwise head for the public purse.
"[The IRS is] like a police department that was giving out lots
of parking tickets while organized crime was running rampant".
Charles Rossotti
Former Internal Revenue
Service commissioner
Trust funds enable wealth to be passed tax-free between generations or enable income to be
disguised.
Tax-breaks for pursuits like flying in private jets help minimise the burden at the top. Entities
are created so that profits are apparently earned where taxes are low. Losses are borne where taxes are high.
On top of that, Mr Johnston, who covers taxation for the New York Times, says the tax burden has shifted downwards
through decisions by government.
Ten years ago the richest Americans paid thirty cents of each dollar of their
income in federal income tax (about the same as middle earners did).
Five years ago, that had fallen to 22
cents on the dollar.
In recent years, the trend has continued.
Tax havens
The non-partisan Tax
Policy Center calculated that half of Mr Bush's tax cuts this year will in effect go to the wealthiest 10% of
tax-payers.
Companies too are off-loading their burden.
According to the journal Tax Notes, big
corporations based in the United States increased the proportion of profit earned in low or no tax countries.
More of their profits were earned in "tax havens" than in the areas where they actually did business and where
taxes were higher.
Equitable taxation
The change has come with a big intellectual shift in recent
years.
What once seemed like a fringe argument that all taxes were a form of theft from hard-working
individuals now has political credibility, at least in America.
There are groups who oppose all income tax who
would have been shouting in the wilderness 20 years ago.
Today, they lobby in the corridors of power.
From
the Greeks through a string of eighteenth and nineteenth century philosophers, there was a sense that there should
be "equity" in the taxation of different groups.
Today, this philosophical basis for proportionately heavy
taxation on the rich compared with the poor is debatable.
The counter idea, that taxes represent an unfair
confiscation by the state, has grown along with the view that taxing the top penalises success.
Disguised
income
On a baser level, politicians have realised that attacking the tax collector is very good business
indeed.
That has made it easier to pare the resources of the Internal Revenue Service (IRS) and to brand
investigations as a form of heavy-handed pursuit of the powerless.
The former Commissioner of the IRS, Charles
Rossotti, says that the agency's enforcers end up scrutinizing ordinary tax-payers who depend on easily-tracked
wages rather than the rich who can disguise income more easily.
Mr Rossotti says in his book, Many Unhappy
Returns, that the IRS is "like a police department that was giving out lots of parking tickets while organized crime
was running rampant". He adds that it "picks on the little guy" while ''largely overlooking an ocean of money
hidden in business entities for which the owners, rather than the businesses themselves, were supposed to pay
taxes.''
Story from BBC
NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/busin
ess/4440125.stm (http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/4440125.stm)
Published: 2005/04/13 23:00:07 GMT
© BBC MMV
By Stephen Evans
BBC North America business correspondent
Only taxes
and death are certain - except for taxes, that is.
It won't seem that way to the millions of Americans who
file their tax returns by the deadline on Friday, but there is a mountain of evidence that tax avoidance (the legal
variety) and even tax evasion (the illegal variety) are growth industries.
Accountants in the field have even
come up with the term "tax avoision" to describe the grey areas in between. It was Leona Helmsley who said famously
that "only the little people pay taxes".
You might forgive her cynicism. The assertion was over-stated but not
completely wide of the mark.
Tax burden shifting
According to David Cay Johnston, who won a
Pulitzer Prize for his study of American taxes, there's an industry that squirrels away billions of dollars that
might otherwise head for the public purse.
"[The IRS is] like a police department that was giving out lots
of parking tickets while organized crime was running rampant".
Charles Rossotti
Former Internal Revenue
Service commissioner
Trust funds enable wealth to be passed tax-free between generations or enable income to be
disguised.
Tax-breaks for pursuits like flying in private jets help minimise the burden at the top. Entities
are created so that profits are apparently earned where taxes are low. Losses are borne where taxes are high.
On top of that, Mr Johnston, who covers taxation for the New York Times, says the tax burden has shifted downwards
through decisions by government.
Ten years ago the richest Americans paid thirty cents of each dollar of their
income in federal income tax (about the same as middle earners did).
Five years ago, that had fallen to 22
cents on the dollar.
In recent years, the trend has continued.
Tax havens
The non-partisan Tax
Policy Center calculated that half of Mr Bush's tax cuts this year will in effect go to the wealthiest 10% of
tax-payers.
Companies too are off-loading their burden.
According to the journal Tax Notes, big
corporations based in the United States increased the proportion of profit earned in low or no tax countries.
More of their profits were earned in "tax havens" than in the areas where they actually did business and where
taxes were higher.
Equitable taxation
The change has come with a big intellectual shift in recent
years.
What once seemed like a fringe argument that all taxes were a form of theft from hard-working
individuals now has political credibility, at least in America.
There are groups who oppose all income tax who
would have been shouting in the wilderness 20 years ago.
Today, they lobby in the corridors of power.
From
the Greeks through a string of eighteenth and nineteenth century philosophers, there was a sense that there should
be "equity" in the taxation of different groups.
Today, this philosophical basis for proportionately heavy
taxation on the rich compared with the poor is debatable.
The counter idea, that taxes represent an unfair
confiscation by the state, has grown along with the view that taxing the top penalises success.
Disguised
income
On a baser level, politicians have realised that attacking the tax collector is very good business
indeed.
That has made it easier to pare the resources of the Internal Revenue Service (IRS) and to brand
investigations as a form of heavy-handed pursuit of the powerless.
The former Commissioner of the IRS, Charles
Rossotti, says that the agency's enforcers end up scrutinizing ordinary tax-payers who depend on easily-tracked
wages rather than the rich who can disguise income more easily.
Mr Rossotti says in his book, Many Unhappy
Returns, that the IRS is "like a police department that was giving out lots of parking tickets while organized crime
was running rampant". He adds that it "picks on the little guy" while ''largely overlooking an ocean of money
hidden in business entities for which the owners, rather than the businesses themselves, were supposed to pay
taxes.''
Story from BBC
NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/busin
ess/4440125.stm (http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/4440125.stm)
Published: 2005/04/13 23:00:07 GMT
© BBC MMV