From The Washington Post:
Reluctant to raise taxes, some states push the tax man on tougher collection enforcement
By Associated Press, Updated: Sunday, May 27, 11:58 AM(Toby Talbot/ Associated Press ) – In this May 17, 2012 photo, Richard Lowe loads a truck with mulch in Morrisville, Vt. Nursery owners and landscapers around Vermont have been getting big bills from the state recently for unpaid sales taxes on products like bark mulch and soil additives that many thought had an agricultural exemption from the 6% levy. Some are complaining that they were caught unaware of a change in the tax code made six years ago. “You don’t just change the taxes and laws and not tell somebody,” said Lowe, owner of Green Mountain Landscaping in Morrisville, who is fighting $18,000 in bills for back taxes.”
MONTPELIER, Vt. — Dentist Frank Illuzzi was stunned when Vermont tax collectors began demanding a 6 percent sales tax on the value of toothbrushes and floss he hands out to patients. Senior care facility operator Jay Grimes was similarly surprised to get a $350,000 bill slapping a 9 percent restaurant tax on the meals served to residents in the dining room. Landscaper Richard “Buckwheat” Lowe got $18,000 in bills taxing him for the first time ever on the mulch he sells.
Vermont is among a handful of cash-strapped states getting more aggressive about collecting every tax owed — hiring more collectors, hounding scofflaws and exploiting corners of their tax laws that haven’t been enforced in years. It’s an effort to avoid what politicians from both parties are dead set against: raising taxes.
“You don’t want to raise taxes until you’re very sure the taxes that people are supposed to pay are being paid,” said Rep. Janet Ancel, chairwoman of Vermont’s House Ways and Means Committee.
Under adamant no-new-tax Democratic Gov. Peter Shumlin, Vermont has added about 10 new tax compliance auditors and has stepped up efforts to scour records in rural areas, and add greater scrutiny to businesses ranging from auctioneers to Internet-based cloud-computing services.
Much more at the link.
The part which caught your Editor’s eye was he sentence about the dentist being required to pay a 6% sales tax on the value of toothbrushes and floss he hands out; I had my teeth cleaned a couple of weeks ago, and, as always, the dentist’s office gives me a “care package” of a new toothbrush, a small tube of Crest toothpaste, and floss. I suppose that dentists’ offices around the country do that.
It does not bother me that states are seeking greater compliance with existing tax laws, but I have to wonder about the instance with the landscaper: what means did the state use to inform him (and presumably, his accountant) that the laws or regulations had been changed? And will the $18,000 unexpected tax bill put him out of business?
The article continues to note that some states have had more success than others with the emphasis on collecting back taxes.
The article noted that Mary Peterson, Vermont’s Tax Commissioner, acknowledged that the agency was working on better communication, but that it was the responsibility of the business owners to keep up with the tax laws. Given that sales tax is always passed on to the consumer, there was never any incentive for the landscaper not to charge the sales tax if he knew about it, and it would have been against the law for him to charge the sales tax on an item he believed not to be taxable. In the end, though, the tax collector always wins.
However, what the article left unsaid was at least as important as what was printed: there is a huge, underground cash economy in this country, an economy in which goods and services are provided off the books, cash-only, and business, personal income and sales taxes are not paid. There will always be some of that, because people will always want to avoid taxes where they can, but the Editor wonders just how much of this is motivated by the inherent inequality of the tax system in the first place. Mr Lowe, the landscaper, was surprised to discover that the material he thought was not subject to the sales tax actually was, but that is due, in significant part, to the fact that some items are taxed and others are not; if everything was taxed equally, there would be no confusion.
This is a huge problem with our tax system, from top to bottom. Politicians set income tax rates, and then they put in different rates for different people, based on their productivity, and then try to compensate for taxing the top producers more by having an absolutely dizzying array of exemptions, deductions, credits and lower rates for particular businesses and forms of income. Would it be any wonder that, for example, a hard-working roofer might consider doing a few jobs for cash, off the books, when he can see other people who don’t work as hard — or at all — paying far less in taxes, if any taxes at all?
“Would it be any wonder that, for example, a hard-working roofer might consider doing a few jobs for cash, off the books, when he can see other people who don’t work as hard — or at all — paying far less in taxes, if any taxes at all?”
It would be a wonder if that same roofer didn’t do jobs for cash, off the books. Then of course, the same roofer might ask himself; “Why am I doing any jobs on the books?” Hell, he can charge less to the consumer, undercut his competition, and deliver his product and labor for far less than the cost to others. He might even consider hiring “undocumented aliens” as a source of labor to avoid even their taxes. All this while avoiding thousands of crazy regulations, evading taxes (yes, evading not avoiding) and keeping a low profile toward the government.
Or, perhaps, if the regulations and taxes were reasonable and consistant to all roofers and tax payers he might just find it easier to comply. Wow! What a nutty thought! Equal treatment under the law. How “revolutionary”. What could be more equal on this Memorial Day?
First of all, Hoagie, thank you for your service to our country, as I’m thinking of you on this Memorial Day. The same sentiment I send to John Hitchcock, and to the daughters of our Editor, and to other commenters on here who have stepped up to serve our country in the military.
Secondly, do I take it correctly that you are recommending that contractor’s work should be compensated off the books, when possible?
Have you ever received compensation off the books, Hoagie?
Just askin’!
You never stop with that crap, do you Passive-Aggressive Perry?
A smart roofer would do most of his business on the books, because he is still going to have to buy materials, and it’s the kind of job where he has to have insurance. But over the course of two weeks, assuming that he’s busy, he ought to be able to buy enough material to do 11 roofs and have only 10 on the books. He takes one cash job, pays his workers their overtime rate, in cash, and they get it all, rather than losing part of it to taxes. They are still covered by his insurance, and if there is an accident on that job, even though he took it for cash, he can simply put that job on the books, and everything is covered.
The problem isn’t just that taxes are too high, but that we have so many different taxes.
Sounds to me like Hoagie, koolo, and our Editor are all in favor of breaking the law, that from the fine upstanding citizens fine, upstanding, law abiding citizens they portray their Conservative ideals to be. Here is suggestive evidence that they are not! And yes, this avoidance of their tax liabilities, if that is what they do, increases the deficit, independent of who might be the President.
They also forget that our Federal Taxes are the lowest they have been post WWII. Sure, State Taxes in general have gone up. For this, you need to blame Cheney/Bush, for their spending on wars of choice, Medicare Part D, and their Great Recession. And Romney wishes to make it worse with his adoption of the Ryan Plan of austerity.
Sure I keep repeating this stuff, and will continue to do so, because you folks don’t seem to get it!
Over time, the Dems have done a superior job in holding down government spending, contrary to the myth you folks keep pushing out, therefore, I remind you: President Obama is a Democrat!
Do not change horses mid-stream, else disaster!
“I worked for Reagan and wrote for National Review. But the new hysterical right cares nothing for truth or dignity.” This op/ed was written by Mike Fumemento, who was an airborne combat veteran, three in Iraq and one in Afghanistan. and is well worth the read, especially for Conservatives! Do you have the guts to read what the man has to say? I don’t think you are going to like it one bit!
Correction:
Fumemento==> FumentoWagonwhel says:
“First of all, Hoagie, thank you for your service to our country, as I’m thinking of you on this Memorial Day. The same sentiment I send to John Hitchcock, and to the daughters of our Editor, and to other commenters on here who have stepped up to serve our country in the military’
No, thank you my friend. When you speak like that, you speak like an American.
“Secondly, do I take it correctly that you are recommending that contractor’s work should be compensated off the books, when possible?”
No, I’m not saying they should do it, I’m saying they could do it. Just to avoid taxes and regulations. Now honestly, do you believe they don’t?
“Have you ever received compensation off the books, Hoagie?
Just askin’”B
Yes I have, haven’t you? When I was a young boy working for a Greek, yes. I got some pay under the table. I also learned the restaurant busines. Best years of my life ( save war ).
WW wrote:
Silly stuff. We are pointing out that it is easy to avoid taxes for some people, and that our unfair and unwise tax system encourages doing so. If taxes were simpler and more equally imposed on everybody, there would be less incentive to cheat on taxes because there would be less of a sense among people that they were being targeted unfairly.
There will, of course, always be tax cheats, regardless of how a system is constructed, but the idea is to reduce the reasons that people would want to cheat, and reduce the incentive to cheat by making the monetary value of cheating lesser, and therefore a worse calculation against the odds of getting caught.
Yes, I will make a big deal against the attitude expressed in this example, called willingly breaking the law.
Thus we have here a piss poor attitude by our Editor regarding obeying the law, certainly not consistent with the Law and Order Conservative whom I thought we have here. Avoiding paying federal and local taxes in this manner is breaking the law, of which there is no question. I suppose I should not be surprised, that a person who refuses to obey the law regarding the wearing of seat belts, would condone illegally avoiding taxes. This corresponds to a Libertarian attitude of invincibility, that being in control of everything is indeed possible with the proper focus and intelligence, so the law need not apply to these special peopld. Pshaw!
On the other hand, do I ever break the law? Yes, on the open road I typically exceed the speed limit by 5-7 mph. I call that skirting the dividing line. You can call this pot…..kettle. So yes, I’m guilty!
Nevertheless, it is also interesting how our Editor puts the burden on the government for empowering folks to break the law by working off the books. So this is the government’s fault, he says. I suppose one could rationalize in like manner about those who refuse to wear seat belts, or any law they do not like!
Maybe our Editor has elevated himself to the level of Martin Luther King Jr, who broke certain laws which he deemed unjust, in the name of civil disobedience, in order to right a fundamental wrong. What does the Priest in the Confessional have to say about obeying “Caesar’s Laws”?
PS: In answer to Hoagie’s question, whether I have ever worked off the books: I have not.
Perry, you have NO business pontificating about “Civility” given some of the vicious name calling (Dictator Walker) that you engage in when referring to our side. You even have directed it at some of the regulars here, calling John Hitchcock a “Terrorist” because of his stand on abortion, a stance that you pugnatiously refused to apologize for.
Now you know why people call you “Passive-agressive”?