The 290 Billion Dollar Heist

On an annual basis it is estimated that about 290 billion dollars does not make it to the US treasury because it was simply never paid. That right there would be 10 % of this year’s federal budget as proposed by President Bush. Also consider that earmark legislation totaled 18 billion. In other words the amount of annual unpaid taxes is over sixteen times more that all the earmark legislation of last year.

So who’s the culprit?! Who is robbing the American government and people of so much money? Exxon Mobile? Microsoft? McDonalds? Wal-Mart? HALIBURTON?! No actually according to Edmund L. Andrews, in a story in the NY Times Monday Feb 5th, 2001 (pages A1 and 16) the IRS has recently finished auditing tax returns from 2001. They came to the horrific conclusion that 290 billion dollars were lost because of underreporting and underpayment of taxes. It was also found that “…more than 80% of that loss stemmed from individuals, not corporations.”

Of course it is estimated that big business is involved in underpaying as well. Andrews reported further that the IRS believes it lost 11 billion because of understated capital gains by corporations after selling stock. But let’s do a little comparison for just a second.

Okay 80% of 290 billion comes out to be 232 billion. Ok, so compare that to the 11 billion that was lost due to misstated capital gains. In other words the United State government lost 21 times more money to individual fraud then it did to capital gains fraud.

The biggest culprits were…small businesses! In the same story the Times notes that, “the biggest problems were people who were in business for themselves." The cumulative effect of the dishonesty of some small business owners has put a heavy burden on all of America.

So of course there is bipartisan recognition of the problem but not a solution. Small business owners are currently some of the Republican Party’s strongest allies making them very timid to push any reform. The democrats on the other seem only slightly more ready to take on the challenge. The Democrats have the outrage and passion that the Republicans lack; however, they lack currently lack any substantive ideas to fix the problem.

Sadly, although attention has been raised it appears that nothing substantial will come out of it. So the annual heist of 290 billion will continue. After findings like that it makes it a little difficult to argue that every little bit doesn’t add up.