At my Rotary Club meeting last week (April 15, 2015) a member exclaimed that we’re singing God Bless America today because today is the day we “pay for America.” “Not even close,” I shouted out to the laughter of the members. In fiscal year 2014, the U.S. Government had outlays of $3.504 trillion and receipts (taxes) of $3.021 trillion or a deficit of $483 billion dollars. The deficit for fiscal year 2015 is estimated to be $584 billion, according to the Congressional Budget Office. Added to our previous debt, the U.S. deficit is roughly $18.3 trillion and growing.
The agency responsible for the collection of taxes, the Internal Revenue Service, reported that this tax season, 7 out of 10 people calling the IRS with questions never got through. Hold time for those who did averaged well over 1.2 hours. The IRS budget has been slashed at a time when compliance with tax regulations and laws is at an all-time low and at a time when the IRS duties have been increased to make sure people are complying with the Affordable Care Act and having health insurance.
According to an April 9, 2015 article by ABC News* there is over $280 billion in uncollected taxes, mostly from people not filing returns and the IRS can’t track them down. The estimated non-compliance rate is 18%. Add to that the fact that nearly half the population pays no federal income taxes and I think we have a problem and it’s only going to get worse.
The tax laws have become too complex and expensive to comply with for most people. Enforcement has become too lax or simply too much for the IRS to handle. It’s time for something to change. Flat tax? Consumption tax? Use tax? Maybe it’s some type of combination. I don’t have the answer, but I’m willing to listen, because what we have now isn’t working.
Mike Berry is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
Copyright ©2015 Mike Berry. All Rights reserved. Commercial copying, duplication or reproduction is prohibited.
