Tax Law Blog | IRS Tax Attorneys

The primary purpose of the tax system is to raise revenue for the U.S. Government. According to the U.S. Budget, tax receipts represent 58.8% of federal revenue; the federal deficit is projected to be $364 billion and $521 billion for the years 2005 and 2004, respectively. Therefore, the $345 billion tax gap has a considerable effect on the federal budget (see “Analytical Perspectives: Budget of the United States Government, Fiscal Year 2005,” from www.whitehouse.gov).

While measuring the magnitude of the tax gap is important, from an economic standpoint identifying the source of the tax gap is a necessary precursor to developing a structured plan to reduce the gap. To guide enforcement efforts, policymakers must identify who is cheating as well as how they are cheating. Identification of tax-gap sources also matters from a psychological standpoint, because tax evasion has been linked to the perceived fairness of taxpayer burden. That is, taxpayers are more likely to cheat if they perceive others in similar situations (occupation, education, income) are cheating:

The United States has long been proud of the “taxpayer morale” of its citizens—the willingness to pay voluntarily the income taxes necessary to finance government activities. Taxpayer morale ultimately depends, however, on the belief that taxes are fair. If the basis for this belief comes under suspicion, voluntary compliance with the tax laws is jeopardized. … Taxpayers resent paying substantially more than their neighbors who have equal or higher incomes. (“Tax Reform for Fairness, Simplicity, and Economic Growth,” U.S. Department of the Treasury, 1984; www.treas.gov/offices/tax-policy/library/tax-reform).
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Ruth Mason (UConn) has posted Efficient Management of the Wealth of Nations, 120 Tax Notes ___ (2008), on SSRN.  Here is the abstract:

This comment considers arguments for and against stricter regulation of sovereign wealth funds (SWFs), either by tightening securities laws or increasing the tax burden on SWFs. Concerns about SWFs fall into two broad categories: fears that

(1) investments will be politically, rather than financially, motivated, and that

(2) to the extent that SWFs are politically motivated in their investment choices, they are inefficient investors that distort capital markets.

While acknowledging these legitimate concerns, this comment explains how foreign equity investment by such funds may paradoxically promote global capital market efficiency because sovereign investors may behave more like private investors when they invest in abroad than when they invest at home.
Source

If your tax bric-a-brac tastes are more low-brow than yesterday’s Form 1040 Puzzle, you can bid on your very own roll of Form 1040 toilet paper:

Does it pain you to fill out a tax form each year? Does knowing that the IRS takes a large chunk of your salary give you the runs? This product isn’t deductible, but it’ll sure make you feel better. A collage of the 1040 IRS Form is printed throughout the whole roll!

The toilet paper is also available here and here.

Taxation in the United States is a complex system which may involve payment to at least four different levels of government and many methods of taxation. United States taxation includes local government, possibly including one or more of municipal, township, district and county governments. It also includes regional entities such as school and utility, and transit districts as well as including state and federal government.

The National Bureau of Economic Research has concluded that the combined federal, state, and local government average marginal tax rate for most workers to be about 40% of income.[1][2] The Tax Foundation concluded that government at all levels will collect 30.8% of the nation’s income for 2008.[3]

If you have IRS tax issues contact the Sheppard Law Offices. You can schedule a 1/2 hour consultation by phone or in person. Their services are available in all 50 states. You don’t have to fight the IRS alone, contact us today!