The Cheating of America: How Tax Avoidance and Evasion by the Super Rich Are Costing the Country Billions--and What You Can Do About It
by Charles Lewis

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Book Reviews of The Cheating of America: How Tax Avoidance and Evasion by the Super Rich Are Costing the Country Billions--and What You Can Do About It

Book Review: Classic example of leftist propaganda
Summary: 1 Stars

Second, is the authors' assertion that "upper-income taxpayers do not pay their fair share" true? That depends on how one defines "fair share." In their book, Lewis and Allison cite several carefully selected examples of wealthy Americans and corporations finding ways to avoid paying their fair share in federal income taxes, some legally and some illegally. Clearly, these extreme cases do depict specific situations that should anger and frustrate most taxpayers.

However, when one examines the bigger picture instead of looking at only an extremely small sampling of the very worst, the view is much different. For instance, while the authors tell the reader "The IRS recently reported that 2,680 filers with incomes of $200,000 or more claimed they owed no taxes, up from 612 in the mid-eighties, and 85 in 1977," they fail to mention that as our economy grows and incomes rise, there are many more people in these income brackets than in the past. As a result, despite the increase in the raw number of upper-income taxpayers reporting no taxable income, statistically the problem was less prevalent in 1998 than in 1985 or 1977.

In 1977 about 53,400 individuals claimed income of more than $200,000.[3] This compares to 296,500 in 1985[4] and nearly 2,074,000 in 1998.[5] This means that of individuals earning $200,000 or more per year, 0.16% claimed no taxable income in 1977, 0.21% in 1985, and 0.12% in 1998. While some people might feel it is unfair that someone with a high income can, in some circumstances, claim no taxable income, it is hardly an issue of epidemic proportions as the authors would lead us to believe, and is certainly less of an issue today than it was a few years ago.

Ironically, if the authors' implied definition of "tax cheating" was applied to the entire taxpaying population, the middle class would be "cheating" even more than the upper class.

Although our federal income tax system severely penalizes those who earn more money, even middle-class families can be hit with considerable tax bills. In the current tax year, for example, a family with two children under the age of 17 and an adjusted gross income of $40,000 could pay a federal income tax of roughly $2,200, even after taking the standard deduction, personal exemptions, and child tax credits. Yet the IRS reports that of filers earning between $40,000 and $75,000 per year, 0.26% (or 66,046 out of 25,860,161 filers) claimed no taxable income - on a percentage basis, more than twice as many as in the highest-income brackets.

The truth is, there are literally thousands of reasons individual taxpayers with income may pay little or no federal income tax. Certain investment income, such as that earned from municipal bonds, may not be taxable. Personal tragedies, such as disaster losses or high medical bills, can produce large offsetting deductions in any given year. And a dazzling array of tax credits, for everything from driving an electric car to adopting a child, can substantially reduce an initial liability.

Even more telling in the story about who is paying his or her "fair share" are the statistics of how much most wealthy Americans actually pay in tax. A rough comparison can be made with Internal Revenue Service (IRS) tax return data. Although individual situations vary widely, even within each income grouping, these statistics still provide a useful illustration of the inequities found in our Tax Code. According to the Spring 2000 Statistics of Income Bulletin, in 1998 tax filers reporting an adjusted gross income of under $200,000 (98.3% of all tax filers) paid an average federal income tax rate of 11.3%, or $3,852 each. In contrast, tax filers in the category earning more than $200,000 (about 1.7% of all tax filers) paid an average federal income tax of 26.8%, or $155,949 each. It should be noted that this figure averages in the wealthy individuals who found legal ways to report little or no income, as discussed in Lewis and Allison's book.

To look at it another way, the bottom 98.3% of tax filers pay a combined total of 60% of all income tax dollars, while the top 1.7% of tax filers carry the burden of paying 40% of all federal income tax dollars.[6] Obviously, someone earning more than $200,000 per year can afford to pay more than someone earning much less, but is the extreme discrepancy in the current Tax Code fair? With such a huge inequity, it is not surprising that wealthier Americans spend huge amounts of time and money seeking ways to lower their tax burden.

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