Socialist Alternative

Tax Fraud is “Perfectly Legal”

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Most working Americans know we’re being ripped off when we pay our taxes, but most of us can’t pinpoint just how it’s being done.

A new book, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich – and Cheat Everybody Else by Pulitzer Prize-winning New York Times journalist David Cay Johnston, documents the way the tax system is organized to benefit the top 1% and punish the rest of us.

The book details how some corporations avoid paying any federal income tax at all. Corporations spend millions hiring experts who find loopholes in tax laws that benefit the rich elite. Meanwhile, the working poor are seven times more likely to be audited than everybody else.

The IRS is massively underfunded, and honest auditors who pursue rich tax cheats put their careers on the line. The IRS was once handed the complete bank records of 1,600 moneybag tax frauds; only four were prosecuted. The IRS had documented knowledge of the Enron fraud two years before the scandal broke. In most of the cases that corporate tax fraud was exposed, CEOs walked away with millions while workers were cheated out of retirement plans.

Johnston’s book also deals with the way that laws, lobbyists, and the media attempt to cover up corporate crime. The new law entitled “Limited Liability Partnership” makes it perfectly legal for corporate lawyers and tax experts to withhold information about the fraud of their clients and partners. The media portrays Enron and Martha Stewart as “bad apples,” when, in reality, dishonesty about business practices is entirely commonplace.

Johnston’s book, although extremely informative, is a bit of a boring read (any book about tax codes is destined to be). The book also puts forward “tax reform legislation” as the solution; however, the politicians in office cannot be depended on to pass laws that benefit working people. We need a movement built in the streets, workplaces, and communities to take power out of the hands of the corporations, their lobbyists, and their politicians.

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