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Attempting to frame it as class warfare is a perfect way to lose support from a significant portion of the US population.

"I'm Robin hood stealing from rich people" doesn't work for the people on the right who are more likely to complain more about the irs in the first place.

Joe the plumber who runs his own plumbing business and doesn't pay taxes is going to get audited as well and he's (rightfully) going to lose despite his position in the middle class.

This isn't "the bourgeois" stealing, it's anyone who deducts significant amounts of money, which is a broader/simpler message everyone can get behind. Every small business/individual contractor has the means to illegitimately write off tens of thousands of dollars.

> Every small business/individual contractor has the means to illegitimately write off tens of thousands of dollars.

But I'll add that every small business/contractor has the right to write off a lot of things, or portions of things that they use for business.

It worked up to this newest incarnation of right wing politics. The IRS should go after the big cheese because a) they're more often stealing from us and b) the return vs cost of audit is maximized.

What sort of "promoting" of IRS tax audits and fraud cases do you think should be done?

It literally is class warfare; what else should it be portrayed as?

The quote frames it as class warfare, then points out that 40% of Italy is evading taxes. So...40% of Italy is upper class? Sounds like something we should move to so we can have 40 times more people than the current 1%.

From who, those who do steal? What is tax fraud if it's not stealing?

Why are crimes for some people not crimes while crimes for others punished so harshly? How is that not unfair already?

> Attempting to frame it as class warfare is a perfect way to lose support from a significant portion of the US population.

Why? That's exactly what it is.

If you've ever listened to Trump or Palin or similar figures speak I'd have to say you would probably come to question this notion.

What people really don't understand is how much can be expensed by people who make a lot of money and structure their income as a business entity first.

Meals, travel, vehicles, basically everything a regular person has to spend out of their own income to survive, these people get away with expensing as business expenses.

The core problem is that businesses have to pay taxes on net while you and I have to pay taxes on gross. We need to equalize this. Either both should pay taxes on all money that goes through them (and have to change market prices accordingly) or people should only pay taxes on money they don't use in pursuit of living.

You want a business who has revenue of $100M and expenses of $150M to pay taxes?

Maybe. What portion of the expenses went to executive salaries in exchange for this stellar outcome?

Does it matter? Those salaries are taxed. Indeed, all expenses are taxed because every dollar of expense represents a taxable gain at some point in the supply chain.

If I have expenses that cost me $150K this year but I only make $100K I often have to pay taxes. Some expenses are deductible in certain cases, but even then it isn't equivalent.

All I'm saying is that both should be treated equally, which ever option that ends up being.

But they aren’t equivalent, that’s why they aren’t treated the same.

You are right in that they aren't equal. The things I need to survive I'm taxed on the money I make to spend on them and then I'm taxed when I spend on it. The things a business needs to make more money, it isn't taxed on at all. If anything, the system is the opposite of what it should be. This is a way that the tax code insanely favors the wealthy, and it is so drilled into our subconscious that many see it idiotic to even question the way things currently work.

This would be chaos in most industries, where margins are razor thin. And it would be a trade nightmare, as low margin industries would just move all production offshore.

For the thin margins, imagine a company that makes 2%. But they pay 30% tax. Suddenly they’re at a loss on every sale due to tax. So thry raise price. Except every component in their chain alos does this.

You’d probably also see a lot more vertical integration. No sale, no tax. Whereas separated companies have to pay tax every time thry deal withan outside company.

But the world is not vertically integrated. So this tax plan wouldmforce america to drop best practices and go for extremely inefficient methods.

Your plan for fairness would almost certainly destroy the economy.

Ok, so tax private individuals on net instead of gross then.

Most people spend most of what they earn.

The middle ground we have now is personal exemptions and the standard deduction, which gives single individuals $16,000 in Federal tax-free income. Which is fair-ish. Certainly it's more fair now than when only upper-middle class people with mortgages and high property taxes were able to itemize.

You would either need to massively cut government services, or massively increase tax rates. Since only savings would be taxed, this would increase spending. In fact, you could even get the government to pay you money if you ran up extra expenses using debt and incurred a loss.

There is a reason no country in the world does OP’s proposal, or yours. They would turn things topsy-turvy.

> Since only savings would be taxed

This seems wrong. I would think you would only be able to deduct basics like food and housing, maybe vehicles, with limits. Admittedly, that does get complicated really fast. In fact, as a pastor technically working as a contractor, my dad was able to deduct housing expenses for his whole family. It's not entirely unheard of.

Also, I don't believe getting the government to pay you by deliberately incurring a loss works for business, so I don't see why it would for individuals.

You can carryforward the loss to future years to avoid taxes. You're right, it's not an instant payment, just a deferral.

It would indeed be an enormously complicated system. And for what benefit?

(Americans actually have one of the most deduction heavy tax systems in the world btw, including mortgage interest. In Canada we have almost no deductions of expenses from income tax. So our taxes are very simple. Complex taxes favour the rich, and require auditors)

It might work. B&O taxes are taken out of gross income, but no where near 30%:

https://en.wikipedia.org/wiki/Business_and_occupation_tax#Ma...

So a federal B&O scheme might work if the rate was low enough. Auditing a business would be massively simplified, no need to carefully check expenses and write-offs to calculate net income. Compliance would be much easier. The question is would gross income taxation create a bigger pie, and would that pie be big enough that a low rate would substantially tax revenues.

Leaving aside other complaints, on a nuts-and-bolts level, what is your tax law-definition of the 'pursuit of living'? Does this mean I'm only taxed on what I save? (time to pursue another solid gold toilet to... live on!) Or do the prince and the pauper alike get to deduct the same 'pursuit of living' credit and pay tax any remainder?

In particular the one that aggravates me is childcare. A lawyer running their own practice can deduct their childcare as a cost of doing business. I, as a salary worker who also needs childcare as a cost of working, cannot. (Aside from the very limited DCFSA)

Childcare isn't a deductible business expense in most jurisdictions, including the us.

https://www.inc.com/manon-defelice/ceo-mom-expense-childcare...

I probably got bad tax info then, not surprising. I guess that's at least equitably unfair, then.

They aren't similar entities though.

Individuals shouldn't be able to misrepresent personal expenses as business costs, but the amortization of a $500,000 crane also isn't all that similar to needing to eat.

The business doesn't have to have the crane, but a person dies without eating. If we only have to tax one, tax the crane.

Meals, travel, vehicles, basically everything a regular person has to spend out of their own income to survive, these people get away with expensing as business expenses.

That's actually not true, and is in fact the point of the IRS auditor. Namely, that people are expensing these items as business deductions when they are in fact normal living/lifestyle expenses.

The author is highlighting absurd examples.

A partner at a law firm can easily get away with expensing 1 of their 2 luxury cars, 50% of their meals, 50% of their travel, their home computers and software, etc. Car companies even make SUVs and Crossovers that are slightly over 6000lbs so they can be deducted as 'working' trucks for white collar workers.

When I was working as a consultant, I was able to expense most of this. The flip side is that you have to pay FICA, which is an extra 15% or so, which practically speaking, cancelled the deductions out.

But it's not; For an employee, the employer is paying 1/2 of it and the employee is paying half of it; At best, if we discount fungibility of salaries/costs for market salaries; it's an additional 7.5%

When you're a 1099 contractor (i.e., self-employed), you pay all of FICA yourself because you are both the employee and the employee.

Yes, but that's only if you discount that whether the employer or employee pays for it as a fungible difference.

If it wasn't setup as the employer paying for 1/2 of it, do you not think that most workers would want to be paid 7.5% more to pay it?

And the point of the article is that almost no-one is getting prosecuted for it. So it is true, that people are getting away with expensing them.

The point of the article was that they no longer have the resources to prosecute those people as a result of budget cuts.

However, those people are not getting away with expensing them, because the IRS has no statute of limitations on going after these sorts of issues (income tax returns which are fraudulent are not subject to a statute of limitations, which means that the related crimes aren't either). Basically, it's a timing issue of when they get punished for the tax evasion, though at some point the backlog gets big enough that they might have to triage out the smaller cases.

Do you see any big budget hikes to the IRS in the offing? They're making a bet that the IRS will never catch up to them and it's not a crazy one.

>Don't kid yourself; these people are stealing from you.

This seems like language specifically crafted to encourage an us vs. them view of taxation. Also, I notice the examples given are upper middle class/lower upper class, and not the top of top that evade the most taxes. Often legally, since there are so many massive tax loopholes that the richest get to legally avoid paying a share in proportion to the government goods and services they consume.

True, but our budget already accounts for the super-wealthy using the loopholes. It doesn't account for the merely-very-wealthy committing outright tax fraud.

The thing is, that difference between outright tax fraud and loopholes is having enough money to lobby and for lobbying to be worthwhile.

On some level it feels like punishing the poor for trying to emulate the wealthy, and the merely very wealthy (an interesting way of putting it) like lawyers and doctors often fall into the poor when you break it down to those who are truly rich or not.

No, the difference between outright tax fraud and loopholes is that one is knowingly against the rules and the other one is taking advantage of the rules.

On some level it feels like punishing the poor for trying to emulate the wealthy,

Let's get things straight: they're being punished for breaking the law, or more specifically, for fraud. The fact that they want to emulate the wealthy is irrelevant.

>breaking the law

When the IRS is enforcing a corrupt law, it makes people who fear the corrupt law being enforced against them view the IRS as the bad guys. That it is the law only hurts the IRS's position in this. Until the IRS makes the truly wealthy pay their fair share, not their legal share, they will find themselves in a position lacking moral authority.

Put another way, yes those loopholes are legal, but so is reducing the IRS's budget until they aren't able to operate at all.

> Until the IRS makes the truly wealthy pay their fair share, not their legal share, they will find themselves in a position lacking moral authority.

This isn't the IRS's job. This isn't within their authority. Under these conditions, the IRS can't ever be in a position of moral authority.

Is it possible that you may be blaming the IRS when blame might be better apportioned elsewhere?

>IRS can't ever be in a position of moral authority

You are right, which is part of the reason why there is a non insignificant part of the population that wants to disable the IRS and sees them as a threat.

Same as a police officer who is sent as set of drug laws to enforce that are crafted specifically to target minorities. The only winning move is to not play, and those who don't quit begin to be seen as opponents regardless of how much the individual doesn't like the laws they are enforcing. Regardless of if you think this is a correct or incorrect way to view things, one has to accept that this does happen and it explains why entire communities turn away from the police and engage in self enforcement of their own rules and begin to craft policies such as 'snitches get stitches'.

When the IRS is enforcing a corrupt law,

The IRS is not enforcing a corrupt law, and the story Fox News doesn't want you to know about the IRS' conservative "charity" crackdown is that all of those charities were openly violating tax laws to the private inurement of their executives and challenging the IRS to do something about it, knowing that they had members of the House GOP in their pocket to prevent IRS action.

>conservative "charity" crackdown

I wasn't speaking about that case. I was talking about how the tax law is currently written to favor some groups at the expense of other groups. And to be honest, this doesn't even have to be true. Only the appearance of it has to be seen by enough of the population for the reaction I describe to happen. Even if you think the tax law is completely fair, you would have to admit that significant portions of the population are not in agreement, and their views of the IRS will be driven by their views of the tax law.

Practically speaking, it's probably difficult for them to go after the top-of-the-top. At the low-end, I doubt many people under the 90th percentile have the ability to evade taxes, since most of their income likely comes from wages. Even if they do modify their W4 to reduce the amount taken automatically, the IRS probably has a very efficient system for finding them and forcing them to pay.

This leaves that middle ground of people who don't earn traditional wages, but also don't earn enough to employ fancy tax evasion schemes. Instead, they literally break the law and hope to evade justice long enough for it not to matter.

The people at the very top don't evade taxes. They structure to minimize and evade them. Tax evasion is for those who aren't clever enough - or spendy enough - to do it with the legal tools already available.

The key lies in the awkward distinction between tax evasion and using the tax system to minimize your tax liability. They look pretty damn similar to most people. But they're different in a very important way to the IRS - evasion is illegal and minimization is not.

> They look pretty damn similar to most people.

And indeed, many of the examples given will likely be settled under audit instead of criminal cases; Wrote off jet skis? Oh, that isn't allowed, but I used them for business meetings, to show clients 1st hand example policies; limited criminal intentionality there.

So if I'm middle class steal just a little, and am careful, I can probably get away with it?

He had me until the Joe the plumber remark…