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If I may add, the Repubs love to say that Americans in the service sector under-report their income…. I’ve worked in that sectors.. I bussed millions of tables and demanding customers…. I, like most others, was paid, like $1-2/hr plus my tips…. Let me tell you… it was a struggle! And, NO, I didn’t report my tips to the IRS… (maybe it wouldn’t have made much of a difference tax-wise.. but couldn’t affort to pay anything in added taxes)…

OK, I’m not advocating tax-cheating, but can we honestly blaim anyone who saves a few hundred dollars in taxes owed, when we see that HUGE corporations pay NOTHING?

Wachovia made 14 billion in profits in 2002…. paid ZERO in income taxes!
Accenture, got $10 billion in Homeland Dpt contracts (among others)… has a fax in the Bahamas that calls it “headquarters”!!!!!! No one works there…. Can it be for tax-evading reasons???

If you can’t think critically, you can be spoon-fed whatever propaganda the corporate media and right-wing controlled government wants to give you.

And you WILL love Big Brother.

Republicans lie and innocent people die.
Republicans steal and give to their rich friends.
Republicans cheat and think they are being moral.

We’ve got to sweep away all the republicans in ‘06 and ‘08.

Charlie L
Portland, Oregon
CLL2001@Gmail.com

However, it’s a little bit over the top to assume that any use of the phrase “service sector” primarily implies waiters, shoe shiners and bowling alley repairmen.

The economy is composed of manufacturing, agricultural and service sectors. That’s it. OK maybe governement gets it’s own category, maybe not. In any case, lawyers, doctors, wall street sharks (the ones who aren’t lawyers), Hollywood moguls as well as cabbies, minor league baseball players and Walmart greeters are all lumped in their as service sector workers.

Accounting procedures in manufacturing are very well established and it’s often way to difficult to hide physical assets. Services are full of accounting ambiguities and intangible assets. Thus the difficulty and the opportunites to cheat.

Feel free to educate the public about all these subtlties but it doesn’t warrant beating up the NYT when you incorrectly infer what they are not implying.

No question, in my mind at least, that the federal tax system does need reform.

Likewise, I admire Tony’s seemingly common sense suggestions that the federal tax system should be as “simple as possible” with the “cost/effort of compliance . . . as small as possible.”

But how do we translate that into policy and practice? In other words, is this the usual code speech for a flat tax? Or a consumption tax?

One could argue for either or both: but arguments and evidence are needed.

Let’s look at two obvious and related areas of reform for which we have considerable data:

1. Tax evasion, particularly the use of offshore tax havens.

2. Lack of effective enforcement by the IRS.

The General Accounting Office, in their review of IRS procedures, declared: “The area where progress is least apparent-compliance-is perhaps IRS’s most significant risk and greatest challenge looking forward.” Get the full report in PDF here.

In part, because the tax evasion schemes–and particularly the use of offshore havens–have become more sophisticated. In part also because the IRS–for various reasons–has cut back drastically on audits and criminal investigation.

Here are some numbers. In 2002, then IRS Commissioner Charles O. Rossotti testified that “60 percent of identified tax debts are not pursued,
75 percent of taxpayers who did not file a tax return are not pursued,
79 percent of identified taxpayers who use abusive devices such as offshore accounts are not pursued” [ref].

Got it? So If I’m using an offshore account, even after I’ve been identified by the IRS as a possible tax cheat, my chances are 8 out of 10 that I won’t be pursued.

Rossotti’s successor, IRS Commissioner Mark W. Emerson, correlated this lack of enforcement with “a real deterioration in taxpayer attitudes.”

No surprise, right?

What’s the running total thus far? Well, Jonathan Weisman of Washington Post notes that “IRS documents cited by the GAO indicated that these tax-evasion techniques and others are depriving the Treasury of up to $40 billion in unrealized taxes per year, more than the annual budget for the Department of Homeland Security.”

$40 billion.

And it’s not improving.

I’d recommend to anyone interested in these topics David Cay Johnson’s work, including
his book Perfectly Legal: The Covert Campaign to Rig Our Tax System
to Benefit the Super Rich – and Cheat Everybody Else.

If that title seems far too dramatic, which it does also to me, you should review Johnson’s research: it shockingly holds up.

So people like myself are deeply skeptical about certain proposed tax reforms.

The theory seems oh so wonderful. But in practice, a small minority benefits at the expense of everyone else.

While we debate the perfect tax system, try this in the meantime for some real reform.

1. Enforce existing laws.
2. Close the offshore loopholes.
3. Stop rewarding criminal behavior.
4. Stop subsidizing profitable corporations.

That would work.

Of course, the cuts in enforcement budgets and the focus on making poor people pay up is really the problem.

Let’s not forget that these are the “job creators” according to the Shrub and his flacks.

Let’s also not forget that these are the people who – according to W himself- hire accountants to evade their taxes and stick middle-class folks with the bill.

So……why are they getting more tax cuts when they aren’t even paying the taxes they now owe?

The rich being “punished” by taxes is utter bullshit……pure, unadulterated Bush bullshit.