THE DINING ROOM TABLE — If I deduct line 34-J from the total of lines 3-R and the leftovers of Page 2-D, I think the federal government owes me an even $250,000. Oh, hi. I was just watching my wife do our 2015 federal income taxes, and seeing if I can pull one on the IRS like CBS and Xerox, and make the rest of you poor wage slaves pay my part. Don’t believe me? I’ll explain. First, let’s destroy the myth we hear over and over again from those talk-radio demagogues who say repeatedly. “Half of Americans don’t pay taxes.” Not true. Everyone pays taxes, but an estimated 45.3 percent of American households — roughly 77.5 million — will pay no federal individual income taxes. Big difference. (That number has fallen regularly from 50 percent reached during the peak of the financial bust in 2008.) Of that 45.3 percent, half of them don’t pay federal income taxes because they don’t have any taxable income. That makes sense. We’ve got millions of elderly Americans in nursing homes who haven’t earned a dime since Truman was President. How many homeless, unemployed, disabled? The other half of that 45.3 have loopholes, which means millions of Americans with incomes, even sizeable incomes, pay no federal income taxes, and it’s all perfectly legal.
The rest of us pay the remaining taxes to run the federal government, but let’s destroy another myth. The U.S. government does not depend solely or even mostly on income taxes to pay its bills. (Remember that the State of Texas has absolutely no income tax. We run Texas on other funds, mostly sales and property taxes, Lotto, UT football tickets and what the DPS wrings out of you for going 85 in a school zone.) Actually, less than half (47 percent) of what Uncle Sam rakes in comes from our income taxes. Another 33 percent are payroll taxes used to fund Social Security, Medicare Hospital Insurance, and unemployment insurance. By law, employers and employees split the cost of payroll taxes, but research has shown that employers pass their portion of the cost on to workers in the form of lower wages. Take THAT, union goons. About 9 percent comes from estate taxes plus the feds’ cut on booze, tobacco, gasoline and anything else they can think of, and 11 percent comes from corporations.
This brings us to the mom and pop businesses which need federal tax breaks to stay afloat, like GE, Boeing and Bank of America. If you paid one single dollar in federal income tax last year, you paid more than Verizon. FedEx and Citigroup. Actually, according to Citizens for Tax Justice (no doubt a commie bomb-throwing group), at least 15 Fortune 500 companies don’t pay any federal income taxes. In addition to those already mentioned, the list includes Interpublic Group, JetBlue Airways, Mattel, Owens Corning, PG&E, Pepco Holdings, Priceline.com, Prudential Financial, Qualcomm, Ryder System, Time Warner, Weyerhaeuser and Xerox. Of course, we must remember Mitt Romney’s famous quote, “Corporations are people, too, my friend.” And some wags’ reply: “I’ll believe corporations are people when Texas executes one.” These companies do pay taxes, just not federal income taxes, like you and I pay — and pay and pay.
One way these corporations avoid U.S, income taxes is to operate out of a post office box in the Cayman Islands, or just keep the money earned overseas over the seas. James Surowiecki, writing in the New Yorker, notes that “tax inversion” allows U.S. companies to merge with foreign firms, keep operating right here, but pay lower U.S. taxes. It’s a growing phenomenon. There was just one such deal in the 1980s, but there have been more than 50 in the last decade, most since 2009. The biggest was Pfizer’s $160 billion merger with an Irish company.
Again, it’s all perfectly legal, if immoral. These corporations hire top-talented tax lawyers, CPAs, lobbyists and bartenders to explain to members of Congress why beekeepers or lighthouse managers or bullfighters need special tax breaks, and they get them. I’ll bet not one single word in the budget was actually written by a member of Congress. The budget currently being debated is more than 2,000 pages, spends $1.149 trillion which works out to nearly $572 million per page. Last year the revenue and spending were about $3.5 trillion and $4.0 trillion, respectively, leaving a deficit of $474 billion. As huge as that is, it is more than an 11 percent decrease from the previous budget’s deficit of $535 billion. Our children will thank us.
Now let us discuss tax collectors, the most despicable creatures in society. Jesus thought so, in looking for apostles, or maybe disciples, I get them mixed up, he chose Matthew, a tax collector for the evil King Herod. Who better to change from despicable to good? Unfortunately, Saint Matthew, as he is now known, was martyred, but apparently not for being a tax collector. Today, we are facing a change in their ranks. After several false starts, the IRS is hiring for-profit debt collectors to chase down deadbeat tax dodgers. The problem is for years the IRS has been warning us not to trust anyone claiming to be a federal tax collecting agent who wants your money. Last year, more than 5,000 victims fell for the scam, giving fake agents $27 million, so now who are we to trust? As for the IRS, Congressional Republicans, pandering to the deadbeats, have cut the agency’s tax enforcement budget by one-fifth since 2010, when adjusted for inflation. I, for one, wish we had more IRS tax collectors so the rest of us wouldn’t have to make up the losses of those tax dodgers. One study showed that for every one dollar spent on hiring an IRS tax collector, 32 dollars were brought in.
Back here at the dining room table, maybe I can deduct the time I watch CBS.
Ashby is dodging at email@example.com