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News & Politics News & Politics

Taxes Avoided by the Rich Could Pay Off the Deficit

Posted by on Aug. 28, 2012 at 1:29 AM
  • 53 Replies

PAUL BUCHHEIT FOR BUZZFLASH AT TRUTHOUT

Conservatives force the deficit issue, ignoring job creation, and insisting that tax increases on the rich wouldn't generate enough revenue to balance the budget. They're way off. But it takes a little arithmetic to put it all together. In the following analysis, data has been taken from a variety of sources, some of which may overlap or slightly disagree, but all of which lead to the conclusion that withheld revenue, not excessive spending, is the problem.

1. Individual and small business tax avoidance costs us $450 billion.

The IRS estimates that 17 percent of taxes owed were not paid, leaving an underpayment of $450 billion. In way of confirmation, an independent review of IRS data reveals that the richest 10 percent of Americans paid less than 19% on $3.8 trillion of income in 2006, nearly $450 billion short of a more legitimate 30% tax rate. It has also been estimated that two-thirds of the annual $1.3 trillion in "tax expenditures" (tax subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes) goes to the top quintile of taxpayers. Based on IRS apportionments, this calculates out to more than $450 billion for the richest 10 percent of Americans.

2. Corporate tax avoidance is between $250 billion and $500 billion.

There are numerous examples of tax avoidance by the big companies, but the most outrageous fact may be that corporations decided to drastically cut their tax rates after the start of the recession. After paying an average of 22.5% from 1987 to 2008, they've paid an annual rate of 10% since. This represents a sudden $250 billion annual loss in taxes. Worse yet, it's a $500 billion shortfall from the 35% statutory corporate tax rate.


3. Tax haven losses range from $337 billion to $500 billion.

The Tax Justice Network estimated in 2011 that $337 billion is lost to the U.S. every year in tax haven abuse. It's probably more. A recent report placed total hidden offshore assets at somewhere between $21 trillion and $32 trillion. Using the lesser $21 trillion figure, and considering that about 40% of the world's Ultra High Net Worth Individuals are Americans, and factoring in an annual 6% stock market gain based on historical records, the tax loss comes to $500 billion.


4. That's enough to pay off a trillion dollar deficit. Reasonable tax changes could pay it off a second time:

(a) A non-regressive payroll tax could produce $150 billion in revenue.

Get ready for some math. The richest 10% made about $3.84 trillion in 2006. A $110,000 salary, which is roughly the cutoff point for payroll tax deductions, is also the approximate minimum income for the richest 10%. A 6.2% tax paid on $1.43 trillion ($110,000 times 13 million payees) is about $90 billion. The lost taxes on the remaining $2.41 trillion come to about $150 billion.

(b) A minimal estate tax brings in another $100 billion.

The 2009 estate tax, designed to impact only the tiny percentage of Americans with multi-million dollar estates that have never been taxed, returns about $100 billion per year.

(c) A financial transaction tax (FTT): up to $500 billion.

The Bank for International Settlements reported in 2008 that annual trading in derivatives had surpassed $1.14 quadrillion(a thousand trillion dollars!). The Chicago Mercantile Exchange handles about 3 billion annual contracts worth well over 1 quadrillion dollars. One-tenth of one percent of a quadrillion dollars could pay off the deficit on its own.

More conservative estimates by the Center for Economic and Policy Research and the Chicago Political Economy Groupsuggest FTT revenues of a half-trillion dollars annually.

Add it all up, and we've paid off the deficit, almost twice. More importantly, the avoided taxes and a few other sensible taxes could provide sufficient revenue for job stimulus without cutting the hard-earned benefits of middle-class Americans.


http://truth-out.org/buzzflash/commentary/item/11702-taxes-avoided-by-the-rich-could-pay-off-the-deficit

by on Aug. 28, 2012 at 1:29 AM
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Replies (1-10):
GardenerArtist
by Bronze Member on Aug. 28, 2012 at 2:24 AM
2 moms liked this

All the rest of us ending paying for them, the 1%

mustbeGRACE
by Silver Member on Aug. 28, 2012 at 4:09 AM
2 moms liked this

We have a small business and our taxes are all paid up.

Do you mean tax bills that aren't paid, or taxes that weren't yet assessed?

You mean they need to be assessed more taxes, or the IRS needs to get off it's dead azz and  go after deadbeats??????

I am not in a position to need other peoples money to pay for my stuff.

I can pay for my own stuff.

mustbeGRACE
by Silver Member on Aug. 28, 2012 at 4:12 AM
1 mom liked this


Quoting GardenerArtist:

All the rest of us ending paying for them, the 1%

How are you helping out the   1%  ??

We don't even know if you pay any tax at all.

Let alone help somebody.

sweet-a-kins
by Ruby Member on Aug. 28, 2012 at 5:51 AM
2 moms liked this

We don't know if you do either as you stated you don't work

Quoting mustbeGRACE:


Quoting GardenerArtist:

All the rest of us ending paying for them, the 1%

How are you helping out the   1%  ??

We don't even know if you pay any tax at all.

Let alone help somebody.


rocketracer
by Gold Member on Aug. 28, 2012 at 6:36 AM
2 moms liked this

And if gov't employees paid their taxes that would help...

Apparently, receiving higher compensation, better benefits, and a day off for every holiday including Lithuanian Independence Day is not good enough for some folks. In fact, as of 2010, there are 98,291 federal employees who owe us $1.034 billion. (That’s billion with a B.) This really shouldn’t surprise anyone since the number of federal employees who are also tax delinquents has been fairly consistent: about 100,000 over the last seven years. The problem is that during that period the amount owed has soared from $600 million to over $1 billion.

http://townhall.com/columnists/brucebialosky/2012/02/06/our_government_employees_skip_paying_taxes/page/full/


TIM GEITHNER ISN’T ALONE!

Thanks to The Washington Post, the venerable newspaper has now revealed that some 41 Obama aides have not paid $830,000 in back taxes either!  Now, now, don’t judge since that’s only $21,000 in back taxes owed per Obama aide.  However, if you calculate the total amount of taxes owed by delinquent government employees, the number comes out to over $2 billion dollars!

http://www.financialsamurai.com/2010/09/12/obama-aides-dont-pay-back-taxes-geithner-cheats/


Yes, one report link says 1 billion while the other link says 2 billion, but what's a billion when the the debt is set to hit 16 trillion any day now.

Carpy
by Platinum Member on Aug. 28, 2012 at 7:13 AM
3 moms liked this

You can tax the rich 100% and hardly make a dent in the deficit.  This article is so full of BS, I need to go get my boots on.

Kate_Momof3
by Platinum Member on Aug. 28, 2012 at 7:25 AM

In what way, Carpy?

Quoting Carpy:

You can tax the rich 100% and hardly make a dent in the deficit.  This article is so full of BS, I need to go get my boots on.


Carpy
by Platinum Member on Aug. 28, 2012 at 7:40 AM
1 mom liked this

In what way?  How about the fudged math?

Quoting Kate_Momof3:

In what way, Carpy?

Quoting Carpy:

You can tax the rich 100% and hardly make a dent in the deficit.  This article is so full of BS, I need to go get my boots on.



Kate_Momof3
by Platinum Member on Aug. 28, 2012 at 7:42 AM

How is the math fudged?

Quoting Carpy:

In what way?  How about the fudged math?

Quoting Kate_Momof3:

In what way, Carpy?

Quoting Carpy:

You can tax the rich 100% and hardly make a dent in the deficit.  This article is so full of BS, I need to go get my boots on.




Carpy
by Platinum Member on Aug. 28, 2012 at 7:48 AM
3 moms liked this

First off, what is the definition of taxes avoided?

Could it be when I claim credit card costs?  I pay about $600 a month in fees just so you can have the convenience of using that debit or credit card.  Should I not be allowed to exempt this?  Should I then raise prices on my product, like American express wants retailers to do?  I could make this list a mile long, but will settle for just this one example.

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