Re: Why I Pay Too Much in Taxes

[tcmay@got.net (Timothy C. May)]

At 8:05 PM 5/6/96, Duncan Frissell wrote:

>>       However, are you controlling for level of income? The IRS is a lot
>>more worried about TCMay committing tax fraud than they are about me
>>committing
>>tax fraud; my income taxes are a lot closer to 0 than his.
>>       -Allen
>>
>
>Actually, as a percentage of income, tax evasion is probably more prevalent
>among the poor than the rich.  Because they are less exposed.  Studies of
>spending show that the poorest 20% of Americans spend twice their reported
>income.

Indeed, I am extremely limited in how I can avoid complete traceability of
my major income sources. Not rich enough to shelter income in a really big
time way (and even these shelters are harder and harder to
find...near-billionaire Justin Dart renounced his U.S. citizenship and
became a citizen of Belize to avoid huge U.S. taxes). And too rich to
"forget to report" income from mowing lawns, tips, freelance car body
repair, etc.

Caught right in the middle where the computers file reports automatically
with the IRS."You can run, but you can't hide."

By the way, as long as I've added another comment to this not-very-relevant
thread (but one which has generated a lot of comments, so it's hard to hard
folks aren't interested), I should mention that I left out the effects of
INFLATION in my "60%" figure.

To wit, imagine buying an asset (stock, real estate, etc.) for, say,
$10,000 in 1982, selling it for $20,000 in 1995, and having to pay $3600 in
taxes on this "gain," much of which was erased by the effects of inflation.

(I don't have a convenient chart of the cumulative inflation over this
period, but I'd guess it's between 60% and 90%. Meaning, a 1995 dollar is
worth about half to two-thirds of a 1982 dollar.)

Also, the effect of inflation has been to inflate salaries and thus inflate
people into higher tax brackets, even when their "real wages" have not gone
up.

If we ever get really bad inflation again (>10% per year, as we had in the
late 70s, early 90s), or, God forbid, hyper-inflation, the tax system will
likely not survive in anything near its current form.


--Tim May

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