Where is the Money?
It is a documented fact that 47% of all U.S. housholds failed to file a 2010 tax return. Persons who commonly fail to file a tax return are:
- Employees claiming the maximum deduction of 9 dependants,(without being challenged as permitted by the State of Maryland). Since no income taxes were paid, why file a return.
- Contractors and subcontractors of residential services and remodeling.
- Independent contractors involved in the scrap\recovery industries.
- Recipients of Employment and Welfare benefits.
Will those who don't pay income tax be able outvote those who do?
The IRS checks and cross checks tax returns that are filed but does not cross check an employers records identifying to whom he paid wages against filed returns.
The cost and abuses of social insurances are driving small employers to hire individuals not as employees but as subcontractors, which saves the employer the costs of mandated insurance premiums for those workers.
At this same time, employers are the primary collection agents of our government revenues. Employers with-hold payroll taxes , collect sales tax and remit these revenues to both State and Federal Government.
However, payroll taxes are collected only from W2 employees, not from their self employed subcontractors. Unfortunately, the practice of hiring workers as independant contractors adds to the burden on taxpaying citizens.
In addition to the potential for subcontractors to fail to file a tax return, there are also a greater number of workers without programs such as workmer's compensation and health care. The lack of the latter can result in people using an emergency room as their doctor's office, which ultimately impacts health care costs for everyone else.
States such as Maryland further aggravate this situation by allowing employees to claim as many as 9 dependants without question. Thus, in addition to the subcontractors who evade paying income tax, we also have W2 employees who pay no taxes.
Additionally, there is no way of knowing how many people are receiving social insurance subsidies, such as welfare, medicaid, or disability, while also earning unreported wages.
However, evading paying income tax has a definite downside for those claiming to be independant contractors and avoiding their tax obligation. With no proof of income, they will not be able to obtain credit. In addition, even if they somehow come up with the cash up front, these workers can never own real estate, because that would put them in the system. Evading responsibility as a taxpayer means forfeiting the American dream of owning one's own home, which a foundation of financial security.