The Tax Gap Returns To Haunt Micros
Apr 13th, 2009 | By Dawn Rivers Baker | Category: RegulationsBarack Obama may have sailed into the White House on a rousing chorus of The Times They Are A-Changin’, but one thing that hasn’t changed a bit is that the tax gap is a headache for microbusinesses that is not going away. In fact, President Obama has been in office for less than 100 days and already it’s coming back to haunt us. Late last month, Peter Orzag, Director of the Office of Management and Budget (OMB) mentioned that the President’s Economic Recovery Advisory Board had recently been charged with forming a Task Force on Tax Reform. And one of its primary jobs would be “examining ways of being even more aggressive on reducing the tax gap.” Closing the tax gap, Orzag said, could pay for the Make Work Pay tax credit that was stripped from the fiscal 2010 budget.
That was enough for the National Association for the Self-Employed to register its protest that lawmakers had blamed small businesses for a large portion of uncollected taxes and to express its concern that the Obama Administration was about to do the same thing. But Orzag did not seem to be talking about the self-employed when he spoke of complex international transactions and transfer pricing and more. That sounds more like the high net worth types responsible for more than three-fourths of the uncollected money involved. And none of this should be taken to suggest that the non-compliant self-employed should be ignored when they underpay their taxes. It is to suggest, however, that there is a certain logical inconsistency to crafting burdensome enforcement regimes that target the self-employed in order to pay for a tax credit for (among others) the self-employed.
