news on the “tax gap” and on
Appearing before the Senate Homeland Security and Governmental Affairs
Federal Financial Management, Government Information and International
Security Subcommittee on ,
Commissioner Mark W. Everson delivered
testimony concerning the growing “tax gap,” a term used to describe the
growing disparity between the taxes owed the
the taxes actually paid. Everson’s remarks focused on the issues surrounding
noncompliance that the
believes contribute to the growing number of taxpayers failing to pay their
taxes on time and in full. He also reviewed steps that the
currently taking to curb the noncompliance.
Everson attributed the tax gap to a wide variety of problems, ranging from
taxpayer misunderstanding, as well as intentional taxpayer underreporting
and overdeducting, to
budgetary constraints, to unscrupulous tax practitioners. Despite the
disparate causes, however, Everson said that the
is working on the tax gap and is making headway. He reported that,
increased its enforcement revenues from $33.8 billion to $43.1 billion. He
predicted that the revenues collected from enforcement efforts will be even
greater in .
In response to questions from members of the subcommittee, Everson emphasized
that the focus has been on, and will continue to be on, higher-income
taxpayers, corporate taxpayers and flow-through entities, the number of
which, he explained, “have exploded.”
A little-noted provision in the tax relief package to aid victims of
Hurricane Katrina is shaping up as a windfall for charity and a drain on
It allows donors who make cash gifts to almost any charity
to deduct an
amount equal to virtually 100 percent of their adjusted gross incomes, double
the normal limit of 50 percent of income. The tantalizing prospect has set
off a financial scramble among some wealthy donors and charities vying for
Moreover, some donors may be able to use the provision to take deductions
this year for gifts made in past years. When taxpayers have more charitable
deductions that they can use in a given year, they may carry them forward to
future tax years. This possibility may further dampen tax revenues.
“Congress intended this, but I’m not sure they understood how big the tab is
going to be,” said Mr. Sharpe, who has become
a national town crier on the issue. “There are just so many ways a donor can
use this bill to maximize their charitable giving.”
Normally, you usually can’t eliminate your income tax simply by making large
charitable donations. It looks like ,
though, the rules may be different. Alas, the New York
Times article is full of quotes but very vague about facts and details,
and they follow a proud policy of not providing links to sources of more
President George W. Bush signed the
Katrina Emergency Tax Relief Act of
. For “qualifying contributions” made
in cash to public charities , this
bill temporarily suspends the 50 percent limitation applied to charitable
deductions in any tax year. (Charitable deductions for cash gifts to public
charities are limited, under current tax law, to 50 percent of the
taxpayer’s “contribution base” — roughly the donor’s adjusted gross income in
the year of contribution).
The Katrina bill also provides a temporary exception to the provision under
current tax law that reduces deductions for qualified charitable
contributions by 3 percent of the amount by which the donor’s adjusted gross
income exceeds stated dollar amounts.
The temporary provisions of the Katrina bill (as applied to gifts made by
individuals) are not limited to contributions made to public charities whose
mission is directly related to providing hurricane disaster relief.
That’s much clearer. Charitable giving isn’t a tax resistance solution for
most people, because you have to give away so much money relative to your
income that if you don’t have additional assets to live on, you’ll be living
very thinly indeed. (See The Picket Line .)
But — if you do have a lot of assets, but you thought your income was
so high that there was no hope of getting under the tax line,
there’s hope! Pick a good charity, give
generously, and you’ll have the satisfaction of giving your hard-earned money
to the good folks instead of to the Dubya Squad this year.
…I finished off [my] job, received my pay, and now can live for a month or
two without working. The only way to go I tells ya. Just at the point where
working starts to drive me ookie I don’t have to do it for a while.
Plus, the way this job is organized I don’t have to pay taxes. That means
something to me in this political climate. If things were to change I would
want to pay my fair share but the way they are now we actually need
to withhold our pay for it. Here we are, with the Downing Street memo, hard
core proof that the reason for the Iraq invasion was fabricated. And we have
our Congress doing nothing to stop it, even voting to increase funding for
I am furious. So when I came across this guy’s site which suggests to
everyone that the thing to do is find a job that pays little enough that you
won’t need to pay taxes, and pare your lifestyle down to a point where that
is not a problem, I immediately decided to post it here with a great big
way to go stamp.
It’s what I did when you come right down to it. Though I had not been
thinking of it in terms of taxation, just my own personal life, there is that
aspect to it as well. And when I got rid of my car I found I could afford it.
About ¾ of your average pay check goes to maintaining a motor vehicle if you
have one. And if you pay income taxes you are supporting the Bush
Administration. They have destroyed the meaning of our vote, so we have to
weigh in using something else — money.