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via New York Times: How to Collect $1.4 Trillion in Unpaid Taxes

March 22, 2021No CommentsFrank Schaeffer

By The Editorial Board

Read at New York Times

When the federal government started withholding income taxes from workers’ paychecks during World War II, the innovation was presented as a matter of fairness, a way to ensure that everyone paid. Irving Berlin wrote a song for the Treasury Department: “You see those bombers in the sky? Rockefeller helped to build them. So did I.”

The withholding system remains the cornerstone of income taxation, effectively preventing Americans from lying about wage income. Employers submit an annual W-2 report on the wages paid to each worker, making it hard to fudge the numbers.

But the burden of taxation is increasingly warped because the government has no comparable system for verifying income from businesses. The result is that most wage earners pay their fair share while many business owners engage in blatant fraud at public expense.

In a remarkable 2019 analysis, the Internal Revenue Service estimated that Americans report on their taxes less than half of all income that is not subject to some form of third-party verification like a W-2. Billions of dollars in business profits, rent and royalties are hidden from the government each year. By contrast, more than 95 percent of wage income is reported.

Unreported income is the single largest reason that unpaid federal income taxes may amount to more than $600 billion this year, and more than $7.5 trillion over the next decade. It is a truly staggering sum — more than half of the projected federal deficit over the same period.

The government has a basic obligation to enforce the law and to crack down on this epidemic of tax fraud. The failure to do so means that the burden of paying for public services falls more heavily on wage earners than on business owners, exacerbating economic inequality. The reality of widespread cheating also undermines the legitimacy of a tax system that still relies to a considerable extent on Americans’ good-faith participation.

Proposals to close this “tax gap” often focus on reversing the long-term decline in funding for the I.R.S., allowing the agency to hire more workers and to audit more wealthy taxpayers. But Charles Rossotti, who led the I.R.S. from 1997 to 2002, makes a compelling argument that such an approach is inadequate. Mr. Rossotti says that Congress needs to change the rules, by creating a third-party verification system for business income, too.

The core of Mr. Rossotti’s clever proposal is to obtain that information from banks. Under his plan, the government would require banks to produce an annual account statement totaling inflows and outflows, like the 1099 tax forms that investment firms must provide to their clients.

Individuals would then have the opportunity to reconcile what Mr. Rossotti dubs their “1099New” forms with their reported income on their individual tax returns. One might, for example, assert that a particular deposit was a tax-exempt gift.

Continue Reading at New York Times


Frank Schaeffer spent years as an evangelical activist pushing the right wing version of “family values.” These weren’t really family values at all but rather an anti-feminist agenda. In fact the far right opposes family togetherness by opposing child care, day care, working mothers, a high minimum wage, access to contraceptives and the right to choose. Frank walked away from a position of leadership in the evangelical world more than 30 years ago to become a successful author and progressive activist.  Now in Frank’s new book he lays out the real and practical affirmation of actual family values and the programs and ideas that will strengthen families and give everyone a better chance to experience love.
Available Now for Pre-Order at Amazon, Apple Books, and , Barnes & Noble.
 
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How do we make our way back into love, beauty and creation? Discover my book Letter to Lucy: A Manifesto of Creative Redemption—In the Age of Trump, Fascism and Lies, a multi-touch book about art, love and parenting, from the fall of the Byzantine Empire to the prophetic music of Green Day and everything in between. Read the first chapter for free on your kindle fire or iOS device. Available now on Apple Books and Amazon Kindle Fire.
 

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Caught between the beauty of his grandchildren and grief over a friend’s death, Frank Schaeffer finds himself simultaneously believing and not believing in God—an atheist who prays. Schaeffer wrestles with faith and disbelief, sharing his innermost thoughts with a lyricism that only great writers of literary nonfiction achieve. Schaeffer writes as an imperfect son, husband and grandfather whose love for his family, art and life trumps the ugly theologies of an angry God and the atheist vision of a cold, meaningless universe. Schaeffer writes that only when we abandon our hunt for certainty do we become free to create beauty, give love and find peace. Available now at Amazon.
 

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In 1998, Frank Schaeffer was a bohemian novelist living in “Volvo driving, higher-education worshipping” Massachusetts with two children graduated from top universities. Then his youngest child, straight out of high school, joined the United States Marine Corps. Written in alternating voices by eighteen-year-old John and his father, Frank, Keeping Faith takes readers in riveting fashion through a family’s experience of the Marine Corps: from being broken down and built back up on Parris Island (and being the parent of a child undergoing that experience), to the growth of both father and son and their separate reevaluations of what it means to serve. Available now at Amazon.

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Frank Schaeffer
Frank Schaeffer
Frank Schaeffer is a New York Times bestselling author, speaker, and painter. Click here to buy Frank's Multi-Touch book, "Letter to Lucy: A Manifesto of Creative Redemption—In the Age of Trump, Fascism and Lies" on iBooks.
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