Billionaires have armies of lawyers and accountants to devise tax circumvention schemes that adhere to the letter (though not the spirit) of the law, allowing them to pay a pittance in taxes compared to the riches they’re reaping.
George W Bush declared that “most people in America understand that the rich people hire good accountants and figure out how not to necessarily pay all the taxes”
He cut the IRS units that audit the wealthy expecting everyone not to realize the connection between the IRS departmental cuts and the tax evasion.
Analysis from the Congressional Budget Office, showed that roughly $380bn of owed taxes goes unpaid every year.
A report from Harvard University researchers showing that about three-quarters of that tax gap is from underpayment by the wealthiest 1%.
The Center for Equitable Growth finding that more than one-fifth of the top 1%’s income is going unreported to tax authorities.
The takeaway: the richest 1.6 million households are pilfering somewhere between $175bn and a quarter-trillion dollars of owed-but-unpaid taxes every single year – and they are apparently getting away with it.
We are told that while their tax avoidance schemes to reduce tax liability may be immoral, the tactics are all perfectly legal. Billionaires may occasionally be depicted as greedy fat cats– but no longer portryed as robber barons.
Why does anyone make such a generous and charitable assumption? The legal presumption of innocence is questionable. The answer is class bias from both government and the media. White-collar crime is almost never prosecuted, crime is seen by the government as something that only poor people do. Through this lens, grand larceny is presumed to be just shrewd accounting rather than lawbreaking. News outlets quick to convict the poor via sensational headlines are hesitant to do the same to billionaires who can weaponize media law.
They bankroll the political and media system itself. They are the owners of television stations and newspapers. They are the benefactors of thinktanks and universities who employ the pundit class. They pay intellectuals for defense speeches. They take cases to court with unlimited resources, bankrupting news outlets that cross them. They are the donors who finance the politicians to get themselves legislative favors .
After using a one-time gift of free tuition to generate positive headlines for himself, the Vista Equity Partners billionaire Robert Smith last year settled a massive criminal case over tax evasion. Robert Smith was granted a non-prosecution agreement, giving his firm necessary cover to continue managing workers’ pension money.
UBS, Credit Suisse, HSBC and KPMG have paid fines to settle justice department cases uncovering their roles in rampant tax evasion – and in the process, some of them have confessed to criminal wrongdoing. Bank executives money-laundering for drug cartels, facilitating dictators looting their state treasuries never entails jail-time.
These schemes were not isolated incidents: as prosecutors noted in the emblematic Credit Suisse case, the bank “knowingly and willfully aided and assisted thousands of US clients in opening and maintaining undeclared accounts and concealing their offshore assets and income from the IRS”.
The banks and accounting firms in the aforementioned tax evasion cases were given deferred prosecution agreements. Both Credit Suisse and UBS were granted government waivers from laws that could have barred them from managing retirees’ money.
For decades, officialdom has been tough on crime drum for the working class, while actively helping the wealthy cheat the system. Trump preached about “law and order” while gutting the IRS enforcement budget and trying to shield corporations from consequences when they violate foreign laws.
The IRS now audits low-income beneficiaries of the earned income tax credit at twice the rate as it audits corporations, the IRS audit rate for those making more than $1m has plummeted, and the agency has been referring a record low number of cases for criminal prosecution.
Adapted from here