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Tax cheaters

Just another example of how law and policy favors those who make money from investments, and disfavors those who make money from work:

Overstating of Assets Is Seen to Cost U.S. Billions in Taxes

Published: January 24, 2005

Investors, entrepreneurs and landlords annually avoid paying at least $29 billion in taxes by overstating the price of stocks, businesses and real estate, two professors say in an article being published today in Tax Notes, an influential tax policy journal.

...Congress could easily reduce this cheating to a minor problem through changes in tax laws that, the professors wrote, would apply the same rules to those harvesting capital gains that now apply to workers, home owners and parents.

...The problem, the professors wrote, is that the Internal Revenue Service has no effective means to determine the price, known as the basis, paid for an asset that has been sold.

Capital gains and losses are reported on an honor system, unlike the rigorous verification regimes that Congress has imposed for wages, home mortgage interest deductions and tax breaks for parents.

Until Bush's "ownership society" frees us all from making a living with our hard work, we'd best keep trying to find a way to live on our investments.

Good luck.