AskQuestions.org Questions U.S. Tax Policies
Who Really Pays Taxes in America?

April 15, 2004 (Berkeley, CA) -- Recent news articles about
skyrocketing tax fraud and corporate tax dodging have prompted a high
level of public concern about the overall fairness and effectiveness of
our current tax system. AskQuestions.org – an online news site that
addresses issues raised by public demand – released a report today on
“Who Really Pays Taxes in America?”

Drawn primarily from government statistics, the report describes not
only how the tax burden has shifted from corporations to private
citizens over the past 20 years, but also a disturbing new twist: the
richest American households pay about 30 percent less tax – which
includes federal, state, and local taxes combined -- than middle-income
households pay. And the public apparently understands what’s going on:
an AP poll released Tuesday reports that 49 percent of Americans
believe their taxes have gone up, not down, as a result of the Bush tax
cuts, considering all the new local and state taxes imposed in response
to withering Federal grants to the states. A new CNN/Money magazine
poll reports that “60% of Americans said the Bush tax cut did not
personally help them.”

In his proposed budget for 2005, President Bush cuts another $6 billion
in federal aide to states, even though 30 states already face
shortfalls totaling about $40 billion next year and more cutbacks in
state spending are inevitable, as well as more increases in local
taxes. People may receive a $300 tax refund from President Bush, but
wind-up spending $1,200 more in local parcel taxes to keep the
neighborhood public libraries and schools open.

At the same time, the independent IRS Oversight Board reported that tax
fraud is $311 billion dollars per year – more than federal spending on
Medicare in 2003 and greater than the gross revenues of either Walmart
or General Electric. The Board continually requests funding to
strengthen resources for IRS enforcement, but because some of the
biggest campaign contributors may be the country’s worst tax cheaters,
the incentives for auditing tax cheats is nil. As a result, audits are
focused on those at the bottom of the income scale.

Yesterday, David Cay Johnston reported in The New York Times that
corporate audit rates have dropped by half in recent years, and noted
that in 2003 the IRS conducted face-to-face audits with only seven out
of 1000 corporations (compared to 29 per thousand in 1992).

“If we simply collected the taxes cheaters are withholding from the
system, we would have enough money to pay the college fees of every
student in America, or to provide health insurance for small business
employees,” says the AskQuestions.org report.

AskQuestions.org practices “bottom-up” journalism by inviting the
public to submit questions. The most popular questions are handed over
to professional researchers and reporters. Answering “Who Really Pays
Taxes?” required the AskQuestions.org team to assemble a dozen
practical suggestions from a range of experts about increasing the
fairness of the tax code while also making it more effective at
stimulating sustained economic growth.

Neither Presidential candidate is likely to talk about fraud and
favoritism during the election campaign, but voters apparently want
answers on these very issues. And the AskQuestions report frames the
debate from a voter’s perspective, so that people will be armed with
the information they need in order to raise their concerns with the
candidates.

The full report is available online, along with the public questions
and comments that prompted the article,
www.askquestions.org/details.php