President Barack Obama and Governor Mitt Romney continue to tussle over tax rates and deductions. Ignored, however, have been questions about tax collection and enforcement—tools presidents use to achieve their economic policy goals. Hit a wall ramming your tax hike or cut through Congress, simply increase or decrease tax enforcement and audits.
Under the Obama Administration, the Internal Revenue Service has placed small and medium-size businesses—the engines of job creation—in its auditing crosshairs.
According to IRS statistics, from 2009 to 2011, the coverage rate (number of audits as a percentage of total returns filed) for corporations with assets between $10 million and $50 million has increased 32 percent. The coverage rate for corporations with assets between $50 million and $100 million has increased at the same rate. Some businesspeople file individual returns, and those with incomes higher than $1 million have experience a 94 percent increase in their coverage rate, and a 29 percent increase in the actual number of exams since 2009. Those with incomes $200,000 and higher have seen a 36 percent increase in their coverage rate.
So, has ratcheting up audits on small and medium-size businesses produced more revenue bang for the IRS’s buck? Hardly.
Using 2011 IRS data, the Transactional Records Access Clearinghouse (TRAC) at Syracuse University found that audits of a company with assets between $10 and $50 million yielded $702 in recommended additional taxes per hour. For large corporations with assets of $250 million or more, the recommended additional taxes are $9,173 per hour. Yet while the coverage rates of companies with assets between $10 to $50 million are up 32 percent, rates for companies with assets of $250 million or higher are up just 7.4 percent.
Read More at Real Clear Politics . By Peter Schweizer.
Photo credit: terrellaftermath
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