It’s Not Social Security & Medicare that’s breaking our Financial Banks; it’s Government’s Failure to Collect & Prosecute $2.7 Trillion Worth of Tax Cheaters:

It’s Not Social Security & Medicare that’s breaking our Financial Banks; it’s Government’s Failure to Collect & Prosecute $2.7 Trillion Worth of Tax Cheaters:

By Marc Chamot

The U.S. government cannot collect unpaid taxes to keep our nation functional. 

Folks, it’s not the benefits that is the problem, it’s not all because of Social Security or Medicare that is bringing this nation down, and taxing people out of existence isn’t the solution. 

What we need, is to collect and prosecute all tax cheats, both domestic and foreign. Remember those Taquerias, bodegas, Korean convenience stores, East Indian motels and Chinese restaurants?  

And do you all remember those other immigrant owned businesses, mainly those whom I wrote about in the past, most are not paying their fair share of taxes? And now, not even real blooded Americans are not paying their fair shares of taxes either.

Well, here is the problem; our government cannot collect taxes owed from many perpetrating tax cheats from all colors. And there's no reason to raise taxes, just because government cannot collect or prosecute tax cheats.

This is exactly what we see in third world countries, banana republics like Peru, where its citizenry don't pay their fair shares of taxes, and government is forced to go after the wealthy, corporations and other money entities for their funding. 

Since our  move towards converting most salaried jobs in the private sectors, state, local and federal governments, towards independent contracting, people have avoided reporting and paying their fair share of taxes entirely by hiding their earnings from the Fed.

Also, by allowing floods of immigrants who open up businesses without any closer supervision from local, state and federal authorities, we’re basically not raking in the money, to make government function more effectively as it should be.

The biggest scofflaws are individuals and small independent businesses, who think they can get away without paying their fair share of taxes. With lack of enforcements, it doesn’t help any. As I had written in the past, people are getting away with murder, and they are not paying their taxes, while our government sits idly by doing nothing.

"People and businesses underpaid their taxes by an estimated 17 percent in the most recent year studied, meaning they failed to send the government $450 billion it was owed, according to an Internal Revenue Service report released Friday.

The study covered 2006, the most recent for which the IRS said it had data available. The amount of underpaid taxes far exceeded the size of the entire federal budget deficit at the time.

After IRS audits and other enforcement efforts, non-compliance shrank to 14 percent, leaving the final amount of unpaid taxes at $385 billion.

That is still larger than the budget deficit for fiscal 2006, which was $248 billion. Fiscal years begin in October of the previous year.

Altogether, the IRS estimates it was owed nearly $2.7 trillion in taxes in 2006.

Since then, federal deficits have mushroomed out of control, hitting a record $1.4 trillion in 2009 and barely receding to $1.3 trillion last year. President Barack Obama and Republicans in Congress have agreed to some spending cuts but have remained deadlocked over how to curb the massive budget shortfalls that are projected indefinitely.

The IRS has made efforts to improve compliance, such as increasing oversight of professional tax return preparers and increasing the information that must be reported to the agency by stock brokers, mutual fund companies and for some business transactions.

Even so, tax analysts said there was no reason to believe that today's compliance rate has changed significantly from the 2006 figures. That is chiefly because significant portions of the underpaid taxes are believed to come from businesses and individuals who report information about their income that is difficult for the IRS to verify.

"It's hard to get to that," said Clint Stretch, a tax policy expert for Deloitte Tax LLP. "Nobody wants a bunch of IRS police hammering on small business people."

The 2006 compliance rates were roughly similar to 2001, the last year the IRS had examined.

In that year, 16 percent of taxes were unpaid initially, while enforcement efforts lowered the non-compliance rate to 13 percent.

That meant that $345 billion in taxes were uncollected initially and $290 billion remained unpaid even after IRS audits and other enforcement efforts.

The dollar amounts of unpaid taxes were larger in 2006 largely because the size of the economy and the amount of taxes owed had grown."