Sirwin
Sirwin

Just One Question for the IRS (The Tax Gap and Crypto)


Most definitions of the Tax Gap state it is the difference between what a person should pay compared to what they actually pay.  Using the word ‘should’ in the definition leaves it a little ambiguous, but, that is an argument for another day.

If you are in the US, the current administration is in the middle of adding 87,000 IRS employees to start going after the difference in what they said should be coming in and what is actually being collected. The IRS says this is somewhere around 458 billion a year, or more, as that is a conservative number. (Not my one question, more of a thought…How does anyone at the IRS keep their job when that are so inefficient they lose a trillion dollars every two years? I can't imagine it is all based on the fact they are understaffed.)

Crypto, whether it actually is or not, is being proclaimed to be the new way people are avoiding taxes. Although, a treasury report admits "cryptocurrency is a small share of current business transactions," it was used as a talking point to add the headcount to the IRS.

I didn’t bother to look it up for this post, because what is the point, but the last count I remember was the US tax code was over 6,000 pages long.  Historically, lawyers and accountants have relied on their jobs being so detailed that the normal person has to hire them to be able to effectively use the courts and tax systems, respectively.  We have stumbled across tax software, such as Turbo Tax, that has kept tax filing affordable. Although, we also blindly trust the information it spits out at the end is correct.

So, what is my point? If there is a half-trillion deficit according to the IRS that should be paid, it certainly isn’t the 95 percent of the population who can’t afford a team of accountants to look for loopholes. In fact, outside of adding a few miles to an expense report, the average person probably does their best just to pay what they think they owe, mainly to void the hassle of an audit.

(Let me just say, this is not about how much someone should pay, or what is a “fair share, I want to be one of those rich people someday)

My one question is, instead of hiring 87,000 thousand people and thinking digging into crypto transactions is a starting point, shouldn’t we just remove the thousands of pages of loopholes used by a very small percentage of the population to clean up this tax gap? Most of what I pay is pretty simple, a percentage of what I bring in, minus the standard deduction. Pretty sure, everything else was written in the code to give breaks to people who donated or voted a correct way at some point. Considering if you make less that about 45,000 dollars you are not paying any incomes taxes, those breaks aren’t going to taxi drivers.

 

 

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SeventyFourSeventyFive
SeventyFourSeventyFive

I am an American aquarium drinker. I assassin down the avenue. I'm hiding out in the big city blinking. What was I thinking when I let go of you?


Just One Question
Just One Question

A series of questions to recent people, news outlets and governmental organizations about crypto...no one has answered yet.

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