America’s tax gap is almost as big as its military spend

View this email in your browser

WELLNESS CHECK
This edition leans...

Hey Below the Fold fam,

We often hear about the wealth gap in the U.S., but putting the numbers into perspective, getting to know the tactics used by the wealthy, and learning about how much this is hurting the rest of the U.S. has helped paint the true depth of the problem for us. It feels overwhelming but we're bolstered by efforts to go after taxes owed.

TODAY'S STORY

America’s 1% widens tax gap to $600 billion
Thu Sep 9

Just days before Alexandria Ocasio-Cortez’s controversial “tax the rich” dress, the U.S. Department of Treasury revealed how America’s top 1% are able to dodge $163 billion in annual taxes. As a reference, that lost revenue is more than the entire CARES Act, a $150 billion fund for COVID relief in 2020 and 2021.

How are they getting away with it? An IRS analysis we shared in March points to a multitude of contributing factors.

First, sophisticated schemes by the wealthy. This includes using offshore tax havens and pass-through businesses, a tactic where income passes directly to the business owner’s individual tax returns rather than corporate.
Second, the IRS’s outdated detection technology. On top of only being able to catch a mere 7% of offshore accounts, nearly a third of the unreported revenue is through sophisticated schemes that random IRS audits fail to detect.
Third, a shift in who is even audited. Because of heavy budget cuts and the high cost of auditing the complex tax returns of the wealthy, audit coverage is now heaviest in low-income, majority Black counties.
And finally, less focus on corporations. On top of corporations being granted giant tax cuts under the last presidency, only three of the largest 755 corporations were even audited in 2020. In fact, corporate income taxes were not even twice the missed revenue of $163 billion.

All that said, Biden’s administration wants to fight tax evasion through an $80 billion boost to IRS funding over a decade. Estimates show this would yield $200 billion in new revenue, and while lower than what the administration anticipated, still demonstrated the significant potential of arming the IRS with the funds needed to better detect and catch tax evasions.

Ultimately, America's tax evasion problem is due to its infamously complex tax code. Federal tax rules span almost 75,000 pages. Fully understanding the tax penalties or credits associated just with the Affordable Care Act requires over 100 pages of reading. The wealthy have the benefit of hiring expert tax practitioners familiar with the extensive content involved across every federal regulation and tracking the many annual changes.

🎬 Take Action

There’s a lot of opposition to taxing the rich. If you’re interested in learning more about what this even means and why it’s being asked, consider this resource from Americans for Tax Fairness.

Post

Share

RESOURCE CENTER

CNBC:
(Where we found this story)
5 weeks old | 5 minutes long

Salon:

March IRS analysis
6 months old | 8 minutes long

Wall Street Journal:
Biden’s $80B IRS Boost
1 month old | 3 minutes long

Wall Street Journal:

High income earners taxes
6 months old | 6 minutes long

Newsweek:
AOC’s MET dress
1 month old | 5 minutes long

Time:

Complex U.S. tax code
5 years old | 7 minutes long

POLL OF THE DAY

Do you remember reading our original coverage on the wealthy evading taxes in March?
Yes | No | Wasn’t Yet Subscribed

ICYMI (AGAIN)

Thursday: Our food costs far more than the price we pay
Wednesday: Mental and physical health at risk because of air quality
Tuesday: Human trafficking posing as agriculture jobs

ASCII-ING ABOUT THE NEWS

___________________________________
|#######====================#######|
|#(1)*UNITED STATES OF AMERICA*(1)#|
|#**          /===\   ********  **#|
|*# {G}      | (") |             #*|
|#*  ******  | /v\ |    O N E    *#|
|#(1)         \===/            (1)#|
|##=========ONE DOLLAR===========##|
------------------------------------

Dealing with America's tax code is pretty taxing.

Art Credit: ASCII Art Archive

Below the Fold

2261 Market St # 4135

San Francisco, CA 94114-1612

Add us to your address book

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.

America’s tax gap is almost as big as its military spend

🎬 Take Action

RESOURCE CENTER

ICYMI (AGAIN)

Older messages

wedding bells?

quality of life traces to quality of air

human trafficking posing as agriculture jobs

3 issues in the infrastructure bill

cybercrime has claimed its first life

You Might Also Like

Before you lose your phone ...

Friday Briefing: Supreme Court hears Trump immunity case

Microsoft results beat quarterly expectations as profits rise 20% to nearly $22B

The Dark Side of Immune

Techie-turned-lawmaker uses Microsoft chops as state senator | ‘Acquired’ podcast hosts raising fund

RIP, NBA Dynasties

☕ Fast, casual

☕ Spend but don’t break

Criminalizing homelessness before the Supreme Court.

Gibberish Party