Avoiding Taxes The Way Big Corporation Do

I'm interested in tax fairness. It doesn't seem fair to me that giant multi-national corporations, with their teams of lawyers, accountants, and lobbyists, are able to rig the game so they pay no income taxes despite significant profits.

By not paying their fair share, the burden on the rest of us increases while at the same time, our nation's financial outlook worsens as a result of what I believe to be both a spending and revenue problem.

Yesterday, I had an op-ed in The Hill, discussing this issue. The article was called Avoiding Taxes The Way Big Corporations Do where you can read more about my views and this issue.

The Willamette Week had a great article back in April entitled 9 Things The Rich Don't Want You to Know About Taxes where they highlighted the impact of corporate and individual loopholes that seem to be available to only an elite few.

Here's an older article claiming most corporations pay no US Income tax and here's a more recent article highlighting 16 profitable U.S. corporations who paid no income taxes.

Tax Cheats

Cheating on taxes is illegal. Tax avoidance is okay, tax evasion isn't.

Tax evasion is incredibly stupid as there are so many ways to get caught. As a CPA with former tax auditing experience, trust me when I tell you there are many, many, many ways to be caught.

And one thing to remember about an IRS audit is this: Unlike a court of law where you are innocent until proven guilty, when the IRS comes knocking, with them you are guilty until you can prove yourself innocent.

Another thing to keep in mind is that there is no statute of limitations on tax evasion. Failure to report wages or hiding income could come back to bite someone years and years later.

When caught, tax cheats face substantial penalties, interest on the unpaid tax, embarrassment, criminal charges, and potential jail time.

I was recently speaking with two people when one admitted to being paid under the table to tutor children, and the other admitted to hiring household help (landscapers, babysitters, and house cleaners) without checking their authority to legally work in the United States or properly dealing with employer reporting and taxation issues.

Every tax cheat I have ever known has their self-serving reasons for cheating. Both these women tried to justify their actions though their excuses amounted to little more than "I don't want to pay more taxes."

"The subject of every State ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State." ~ Adam Smith (1776)

I don't know anyone who wants to pay more tax although this is the way we fund our government and the many services it provides us. Though as Adam Smith pointed out, we all ought to pay our share according to our incomes and people who cheat to avoid this public responsibility, hurt the rest of us who do our civic duty.