Wednesday, June 30, 2010

$3,238 - Avg Small business cheating on income taxes

What's $3,238? It's the amount of money the average small business person pockets every year by not paying their fair share of federal income taxes. How do I know this? Well, I did some research, and used some basic math skills. Why do I care about this number? I care because I'm just damn tired of listening to my Republican elected representatives tell me how we need to give small businesses more income tax breaks. Sound familiar? It's another Republican mantra. We need to throw more of our tax money at small business. We can't increase any taxes, it'll hurt small business. Small business this, small business that. Bullshit.

How about let's change this Republican mantra to "let's make small businesses pay their damn fair share of income taxes, like the rest of us"?

The math is pretty easy. The IRS does detailed work every couple of years to determine how much cheating takes place in America on the income tax front. The results of the last study are detailed here. The amount of annual unpaid income taxes came to $345 Billion - $1,045 per every American citizen. Stunning, eh? We're a country of income tax cheats.

If you read the study results carefully you'll see that about $68 Billion of that shortfall comes from filers of Schedule C (small business, sole proprietorship). According to this website, there are about 21 million Schedule C filers annually. So, on average, each small business person underpays $3,238 in federal income taxes ($68 Billion / 21 Million). Small business people cheat up a storm.

Do keep in mind, this doesn't include the tax cheating that goes on with the 4.4 million filers of Subchapter S Corporations (the majority of which are small business people), or the millions and millions more filers of partnership and LLC Corp. returns too. It's a landmine of small business tax cheaters out there.

So, next time you hear Republican Senator Richard Burr get on his soapbox and talk about how we need to help small business, give the man crap. Tell him to take a hike. We should help those who honestly pay the income tax they owe. And right now, a giant bulk of the tax gap in this country comes from the income tax cheating of small business owners. Instead of helping these people, we should be hiring more IRS agents and going after them aggressively.

Republican Senator Richard Burr wants to give your tax dollars to the tax cheats. How much sense does that make? North Carolina deserves better than Republican Senator Richard Burr.

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