The Rich Underpay Taxes at $ 3 Trillion a Year

If the Republicans were seriously concerned about the need to cover the current deficit and reduce ongoing debt they could do something about those who don’t pay their fair share. Most of this doesn’t involve “new” taxes but the collection of existing taxes. Paul Buchheit, college prof, and participant in and has identified 7 areas where tax avoidance could be turned around to the benefit of the American people:

1. Tax Expenditures: $1.25 trillion

These subsidies from special deductions, exemptions,
exclusions, credits, capital gains, and loopholes are
estimated to be worth 7.4% of the GDP, or about $1.1
trillion. They largely benefit the richest taxpayers.
Business subsidies bring the total to $1.25 trillion.

That alone is almost enough to pay for Social Security ($884
billion) and Medicare ($524 billion).

But there’s so much more.

2. Tax Underpayments: $450 billion

According to the IRS, 17 percent of taxes owed were not paid
in 2006, leaving an underpayment of $450 billion. The largest
share of that came from underreporting of income.

3. Tax Havens: up to $250 billion

(a) It’s estimated that between $21 and $32 trillion is
hidden offshore, untaxed. (b) 40% of the world’s richest
individuals are Americans. That’s $8 to $12 trillion of the
total. (c) The historical annual stock market return is 6%.
That’s a return of $480 to $720 billion. (d) The 20% to 35%
tax loss amounts to a minimum of $96 billion, a maximum of
$252 billion.

4. Corporate Taxes: $250 billion

For over 20 years, from 1987 to 2008, corporations paid an
average of 22.5% in federal taxes. Since the recession, this
has dropped to 10% — even though their profits have doubled
in less than ten years. The missing 12.5% on $2 trillion in
profits amounts to $250 billion a year.

5. Financial Transaction Tax (FTT): $500 billion

The absence of an FTT constitutes tax avoidance. Not a penny
of sales tax is paid on U.S. financial transactions, which
have been estimated at about three quadrillion dollars
annually, or three thousand times the deficit. No sales tax
is paid despite the high-risk nature of “flash trading” that
can lose entire pension funds in a few seconds.

Just a half penny from every dollar of total U.S. financial
transactions would pay off the national debt — not just the
deficit, but the whole $15 trillion debt. More conservative
estimates by the Center for Economic and Policy Research and
the Chicago Political Economy Group suggest FTT revenues of a
half-trillion dollars annually.

6. Payroll Tax: $300 billion

This extremely regressive tax costs the richest Americans
only a small fraction of what everyone else pays. If the
12.4% tax (half employer, half employee) were assessed on the
full $3.84 trillion claimed by the richest 10% in 2006
(instead of on $1.43 trillion: $110,000 times 13 million
payees), an additional $300 billion in revenue would have
been realized.

7. Estate Tax: $100 billion

A repeal of the estate tax, which is designed to impact only
the tiny percentage of Americans with multi-million dollar
estates that have never been taxed, would cost the nation
about $100 billion per year.



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