Experts state our economy continues to rebound, but the reality likely is the pace of improvement is close to undetectable. In states like where I reside, unemployment is back on the rise, another sign the economy may not be doing as well as one is led to believe.
The US Government continues to incur staggering debt, raising the debt limits and national debt beyond astronomical amounts, and state and local governments continue to be underfunded, maintaining minimal services at times while trying to remain financially solvent.
One economy seems to be doing extremely well, especially for the individuals operating within that economy. Every day I witness or experience a vendor or business who is clearly operating under the radar of our tax enforcement agencies, using cash (currency) as their form of finance to avoid reporting income for tax purposes. Yet, those same individuals and businesses seem to enjoy all the same benefits all the government agencies and programs provide.
Today I supported a local restaurant by meeting a colleague for breakfast. As I paid my bill at the counter, the waitress rang my order through the register (a means for tracking their sales). I thought for a moment I had finally found a local restaurant who was actually tracking their sales to ensure a complete and accurate reporting of their sales income. I asked the waitress for a printed receipt (to be used to support the business purpose of my meal per IRS Publication 463). I don’t know why I was surprised when the waitress told me she would have to hand write a receipt for me, as they didn’t keep register paper in the register (ergo no means to ever know what sales actually were versus their deposits and reported sales). She hand wrote a receipt on a restaurant dupe pad (the same pad used to take orders) – really official looking.
Tree companies have been clearing trees and bushes in my neighborhood for the past 12 months since last year’s storms. Each and every company has offered discounts to my neighbors if they paid in “cash.” The companies now all run new trucks. An individual we know works full time as a municipal employee. He is also a mechanic. On the weekends he repairs cars at his house. He only accepts cash payments, and none of his income ever makes it onto his tax return. He earns in excess of $1,000 per weekend after paying cash for the parts.
The level of tax fraud and non-reporting of income is likely highest today than I have ever seen. I often imagine what would happen if every taxpayer actually reported all their reportable income, and paid their share of taxes on ALL their income (and not just the minimal amount they actually reported). Would the country even have a deficit? One can only ponder. One thing I have learned is that there are insufficient resources currently employed to equally enforce the tax laws, and collect the funds required of the government(s) that is selfishly, inappropriately and unlawfully being used to self-promote individual’s personal wealth and situations.
The candidate(s) I am watching for in the upcoming elections is the candidate that will increase the tax enforcement agencies on all levels, to collect the taxes actually due from each and every taxpayer, individual and business alike, regardless of what each taxpayer reported on their return. The biggest issue seems to be that there isn’t a candidate out there who is even considering collecting all the taxes that are actually due the government under the existing tax rates and laws.
As tax increases and government funding strategies are debated, the funding for tax enforcement agencies will likely decrease. One can easily predict the disparity between actual reportable income versus the income actually reported will only get bigger, further compounding the funding issue of running the local, state and federal agencies and programs. Yet individuals operating within the thriving “cash” market will continue to get wealthier and wealthier, on the backs of all the compliant taxpayers.