Cheating on taxes is on the increase

By Peter Goldmark


Sometimes you really have to wonder if most of our society is still honest — or if it’s heavily corrupt.

I asked a friend of mine who works as an accountant why he was taking fewer clients. “Because too many of them just want to cheat on their taxes,” he answered.

Now, I wasn’t born yesterday. I understand the impulse to return as little as possible to the government and keep as much as possible for your favorite charity, which starts at home. But here was an old friend who has occasion to see how a lot of people behave telling me he’s seen a growth in cheating. I looked up the IRS estimate of the gap between taxes paid and taxes owed _ and it’s north of $300 billion. That’s a healthy slice of the deficit we’re all worried about.

‘Tax avoidance’

Big corporations play games with their taxes as well. It’s called “tax avoidance,” because it’s legal. Corporations hire lobbyists to get obscure provisions written into the tax code that reduce their tax burden. In one sense it’s aboveboard: The language is there to see, and technically the members of Congress vote on it, though none of them understand it and few follow it closely enough to know it’s there.

But in a deeper sense it’s dishonest. Even though it’s done in broad daylight, the corporation and their lobbyists are still raiding the public fisc for private advantage.

There were several reports that in 2009, Exxon Mobil paid no U.S. income taxes at all, but got a $156 million refund. The critics argued that upon closer examination, the picture got even worse. Exxon Mobil did pay about $15 billion in income taxes — but jiggered its books, in conformance with U.S. law, so that all those taxes went to other governments and none of it to ours.

There is something wrong with that picture. Maybe a system where corporations and their lobbyists can get complicated amendments that no one understands inserted into the law at one minute before midnight is itself not honest. How do you measure rot when by definition it’s underground?

I remember the articles coming out of Greece last year as that country ran aground on the shoals of financial mismanagement. It turned out that most of the very wealthy weren’t paying the taxes they owed. Some enterprising reporter went up in a helicopter and got pictures of all the private swimming pools whose owners had failed to declare them in their tax returns. When is the rot deep enough to threaten the continued existence of the body politic altogether? I know one place I’d go to get a sense of how far the rot has spread.

I’d get a sampling of the country’s tax accountants in a room, swear them to secrecy and promise them immunity, and then I’d ask them to put together an estimate, from their combined practices, of how much phony-baloney was in the tax returns their clients filed each year. I bet we’d all like to know the answer to that question.

Peter Goldmark, a former publisher of the International Herald Tribune, headed the climate program at the Environmental Defense Fund. He wrote this for Newsday. Distributed by McClatchy-Tribune Information Services.

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