That bumper sticker always made me chuckle.
Now they say the IRS has targeted Tea Party groups trying to set up as non-profit organizations, technically known as 501(c)3 organizations after the IRS chapter/verse that defines them. They want to get the IRS out of politics.
I say fair enough. Why don't we take it a step farther and get politics out of 501(c)3's? Did you know there are one million non-profit organizations on file with the gubment? And that doesn't count the other half million with revenues of $25,000 or less that aren't required to jump through all the hoops. And none, of course, pay taxes.
This all sounds like one giant tax dodge to me. Sure, I can see the Cancer Society, Heart Association, food banks, etc. as legitimate non-profit organizations doing work for the public good. But the Tea Party? Or MoveOn.org? If some rich guy wants to contribute to a political group, fine with me, but don't ask me to subsidize his bribe generosity. This is essentially what's happening when a group gets 501(c)3 status.
I say we need to severely tighten up the IRS definition of "non-profit". In too many cases it's little more than a legal tax avoidance scam. I could live like "The Donald" if I had just a fraction of what the IRS leaves on the table.
Put me in charge for a few months and I promise our tax coffers will soon be overflowing. (Well....less low.) And there will be a lot of formerly highly paid non-profit CEO's crying in their domestic beers.
S
In a post a while back I suggested it was likely that, due to the middle class being so squeezed, more and more people will start working for cash and not report their income, or at least not all of it, to the IRS. More than a few of you commented my scenario was unlikely. Consider this:
Here are some statistics from a German university study in 2006 showing the size of the "shadow economy" (% of the economy not reporting income/paying taxes) in a number of advanced western countries:
Greece 28%
Italy 25%
Spain 22%
Portugal 21%
Sweden 18%
Germany 16%
UK, Netherlands 12%
US 8%
(There are other more current studies, too, but this one was the easiest to pull numbers from.)
Closer to home let me share a few actual examples I have personal knowledge of:
Last year (2012) I was approached by a guy who owned a specialty grocery store about building him a house. He wanted to pay me $200,000 in cash and then have the balance documented on a sales contract. This would make it look like the house cost $200,000 less than it actually did.
I suspected he was skimming cash from his business and needed to burn it off, and/or he wanted to claim his house cost less than it actually did for property tax purposes. I wanted nothing to do with him and declined.
Today his house is being built by another builder. Is that builder working under the same terms I was offered? If he is, is he going to report the $200,000 in cash he received? I don't have answers to these questions, but the opportunity to cheat is certainly there.
I have a cousin who owns a masonry supply business. He tells me he has numerous customers who do small brick and stone repairs for individuals on a cash basis only....$200-$300 at a time, several a day....and that's how they pay for their materials, too....in cash. Do these small one-man operations pay taxes on any/all of this cash income? I don't know, but I have my doubts.
I know a guy who has a residential window washing business, and he works on a cash basis only. He quit his full-time career with benefits and made this part-time job his full-time business. He's single and has no employees. Whether he pays taxes on his cash income I don't know, but his lifestyle suggests he doesn't. Regardless, the opportunity is there to cheat.
I have more examples, but I believe these are enough to prove my point. I think more people than you might imagine would jump at the chance to screw the government out of some taxes if they could. Look around and you can probably see similar examples where you are, too.
And these are just the small-time tax cheats. The big boys don't pay their taxes....legally and with congress' blessing....by sending their money to low-tax/no-tax havens offshore. I recently read in the Economist that these havens hold tens-of-TRILLIONS of dollars from all sources worldwide.
Why should you care? Because what they don't pay, you do. Sorta makes signing that tax check a bit more infuriating, doesn't it?
S
According to a recent USA Today report 21,000 retired federal workers receive a lifetime government pension (from YOU, the taxpayer) of $100,000 or more per year.
Those would include 326 DEA agents, 237 IRS investigators, 186 FBI agents, 444 Social Security agents, and...wait for it...714 retired postal workers. POSTAL WORKERS for cryin' out loud! One retired Smithsonian zoologist receives a $162,000 annual lifetime pension, and six other retired federal workers receive over $200,000 per year for life!
Gimme a second to regain my composure.... *deep breath*
By comparison, consider this: The average federal pension is $32,824. The average state and local government pension is $24,373. The average social security recipient receives $14,760. (The absolute maximum a social security recipient can receive is $30,156.)
Want a bit more sand kicked in your face? The average federal employee retired at age 59.4 years old, and had served for 27.8 years (2006 statistics). Full Social Security eligibility for the rest of us isn't until age 65-67.
True, years ago government salaries were below private sector pay, which is why the retirement benefits were more generous, but those days are long gone. Today federal government employees make 25-33% MORE than their friends in the private sector for comparable work.
Here's my point: With a trillion dollar federal deficit every year as far into the future as we can see, and with virtually everything on the table for possible cuts, why aren't federal pay and benefit reforms on the table, too? (If there is a major restructuring underway now that I'm not aware of, please enlighten me.)
IMO federal employee pay and benefits should be brought to parity with those in the private sector. Pay, benefits, pension, retirement age....everything! Why should civil servants have it SO much better than the taxpayers who are paying them?
I suggest you contact your congressman and register your outrage! Oh, wait....he's an overpaid federal employee, too. (And besides, right now he's on vacation.) *sigh*
S
EDIT: Let me add this for the benefit of a retired federal employee friend of mine....once you're retired, your pension should not be tampered with....with one caveat. If some day Congress deems it necessary to cut existing Social Security recipient's benefits, then the same % cuts should apply to retired federal worker's benefits, too.
A few years ago I had a Realtor bring to me a Vietnamese couple who owned a liquor store in south Dallas, an area where I'm sure almost all transactions are in cash. They had a large down payment, and drove a new Mercedes (the BIG one) and a new Toyota SUV. I later learned the Realtor arranged for them a "no documentation" loan, more commonly called a "liar's loan". That was an apt description as they only claimed to make, jointly, $13,000 a year. Hmmmmm.
Just last week I had an oriental gentleman approach me about building him a new, very expensive home, asking if we could have a contract showing a sales price several hundred thousand dollars less than it actually was, with the balance made up in cash. I refused. I'm sure he was trying to document that his house was worth less than it actually was (to save on property taxes), or was trying to burn off some unreported cash income, or both. Either way he was scamming the system, a system that is now in a deep hole, a system that us honest taxpayers are now being asked to sacrifice for. I also had a man of middle eastern descent (?) recently propose something similar, too. It seems many of our new immigrants are bringing with them from "the Old Country" their casual attitude about paying taxes. Just look at the troubles today in Europe, particularly in Greece and Italy, where tax avoidance is rampant. Believe me, it's not just "over there."
Last Friday the IRS reported that taxpayers here still owed an estimated $385 BILLION from 2006, that's net AFTER the $65 BILLION they collected through audits. (That could amount to as much as $3-4 TRILLION in lost revenue over 10 years!) In fact, they admitted they had a voluntary tax compliance rate of only 83%, and I would imagine its only gotten worse these last several years due to the troubled economy.
So let's review: Our government is a TRILLION dollars a year short of break even, they're cutting back on everything from social services to military spending to paper clips, yet 17% of all taxes owed go uncollected. Considering how much (probable) tax fraud I've seen right here in my own back yard, imagine how much goes on all across the land? We're punishing the good, honest folks who pay their taxes on time by cutting back their services or threatening to cut back their Social Security, Medicare, etc, while the cheats are living the good life. And don't even get me started on the massive tax breaks the rich have bought for themselves. Grrrr!
OUR SYSTEM ISN'T WORKING! No band-aid is going to fix it. We need some extreme, deep changes. And just replacing a figurehead at the top isn't going to make a hill-of-beans difference. The person at the top doesn't control the system; the system controls devours them. Remember these words.
S
....but now I realize all I want is a paycheck.
Is it just me or has life become dramatically more difficult in recent years? Thirty *cough, cough* years ago when I became a homebuilder it was actually fun. I began in sales and did reasonably well, watched and learned "how-to" build homes, and finally joined with my brother in our fledgling family business.
Back then a contract was one side of letter-sized piece of paper. Then it went to two sides of a legal-sized piece of paper. Today it's 28 pages long. We have to follow rules by OSHA, EPA, HUD, Fed banking regulators, Storm Water Run-off regulators, city mandates, state registration, etc, etc....Oh, and of course, the IRS. And insurance audits, too. Actually building the home is the EASY part today!
And homebuyers....*biting tongue*. They see something online and tell me, "That's what I want!" Except it won't meet current building codes. Or it features a product made by a local artisan in Vermont and isn't available here, and I don't dare order it sight unseen and with no local support....but that isn't what my customer wants to hear. They just think I can walk into Home Depot and buy 'em by the case. And they want me to negotiate a super-cheap deal on their behalf, but then quibble over my margin.
Please don't misunderstand. I am SO grateful the Good Lord has given me work during these tough times. I'll work diligently as always, but like that old B. B. King song says, "The thrill is gone." I don't want the thrill to be gone. I'm just not sure the thrill-kill genie can go back in the bottle at this late date.
S
