Thread: Who Cheats the Most on Their Taxes?

Last Edited: Thursday, 23 Oct 2008, 2:53 AM EDT
Created: Thursday, 23 Oct 2008, 2:46 AM EDT


LOS ANGELES -- With all the talk about Barack Obama's and John McCain's tax plans these days, a study based on unpublished Internal Revenue Service data looked at who cheats the most on their taxes.
The findings probably won't surprise many -- the rich hide more of their income.

The previously unreported study estimates that taxpayers whose true income was between $500,000 and $1 million a year understated their adjusted gross incomes by 21% overall in 2001, compared to an 8% underreporting rate for those earning $50,000 to $100,000 and even lower rates for those earning less.

Although the study has not been officially endorsed or even released by the IRS, it is sure to spark more debate over whether those earning $250,000 or more should pay higher tax rates, as Obama has proposed.

The study, which was written by Joel Slemrod, an economics professor and director of the Office of Tax Policy Research at the University of Michigan's business school and IRS economist Andrew Johns, considers cheating on your taxes to include both underreported income and inflated deductions. It estimated the 2001 gross "tax gap" at $345 billion.

Reasons for the income-related cheating disparity: Higher income folks receive more of their income from sources that are easier to hide, including self-employment earnings; income from rents, partnerships and S corporations; and capital gains.

The 2001 study was the IRS' first such research effort since 1988.

So will this study influence the final days of the race for the White House?

Originally Posted by min0 lee

Does that also include illegal aliens? 40% is a scary number.

That also includes people who are making under poverty level wages each year, the same people working for those who aren't putting their fair share into the coffers .....