3/29/2005

Free Riders of All Classes

An article by ABC News at abcnews.go.com/Business/wireStory?id=624158 shares the estimated lost revenue to the IRS by those who underreport their taxable income. The numbers are astounding- a whopping estimate of $300 billion a year. That is more money than government spending on Medicaid for a year! The IRS was able to recover only about $50 billion of that lost revenue last year. Without regard to ethics, is it better for the economy for that money to be in the hands of the private sector than to be paid to the government? After all, the government transfers a lot of that money back to individuals and corporations anyways. That seems to be a popular belief if so many people are doing it.

5 comments:

Lana said...

Maybe that's not their belief. Maybe people just want more money for themselves. Perhaps they feel like the government owes it to them because they work so hard for their money??

Nick said...

I think that they should cut a lot of these government programs and then they wouldn't need the $300 billion that they taxed the people. Then more could go back into the economy.

Fred said...

I think both sides are at fault a bit but the "underreporters" more than anyone. Even if they feel like the government owes it to them for working hard it is part of the law to report all taxable income. If we want to deal with this issue we shouldn't just break the law, we should look at what and who we are voting for and pay a little closer attention to what is going on.

ron said...

If ethics are not considered the unreported money is probably of more use in the private sector. These people will either spend the money or grow the money through investment both options benefit the economy.

Dr. Tufte said...

-1 on Scott's post for a poorly formatted link.

I don't want to be a party-pooper here, but I don't think it's very important macroeconomically if anyone cheats on their taxes. Obviously, I don't want to encourage illegal behavior. But the fact is, the government can recoup that money easily and painlessly by borrowing from the public. Pay the right rate of interest, and every one of those tax cheats will put the money in the hands of the government.