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Interesting fact of the day:
In the USA current estimates have the total Tax Avoidance of the top 1% wealthy at 500 million per year collectively or 5 trillion per decade.
By comparison the total tax avoidance of all the middle class and poor who work under the table totals about 2 trillion per year, four times more.
Remind me again how the rich avoiding taxes are the main problem?
Sources:
https://www.cnbc.com/2019/11/19/tax-avoidance-by-the-rich-could-top-5-trillion-in-next-decade.html
@freemo
Existence of informal economies is an indication of bad state of the economy, the rich in the informal economy might also be evading more tax than their poor counterparts, we just don't have the data for that due to the complexity of arriving at such information about the informal market.
The rich criminal still makes more than a poor criminal, just like the rich non-criminal, I think that's quite obvious.
@prasoon If you truly just mean the whole of the informal economy.. namely those businesses the government cant regulate because there is no paper trail.
That absolutely is still tax avoidance. If someone is washing windows on a street corner they are legally obligated to report their income ont heir tax returns. But since ther eis no paper trail if they lie, while technically illegal, they can be certain they wont be persecuted. So they can easily get away with it.
But it is still absolutely tax evasion and is technically illegal even though impossible to actually enforce.
Just because they can get away with it doesnt make it any less of a Tax Evasion.
@prasoon Any sources to back that up by chance? Personally i doubt the rich even engage all that much in the informal economy.
@freemo
I guess we'd not know conclusively but, I'll try to look it up.
One way to take a guess would be to understand the supply and demand side of the informal economy - when I, as a rich person, buy an expensive illegal substance I contribute to it, even though it is a tiny portion of my income.
If we include gig economy here, we might get some very interesting things as well.
@freemo
Precisely. This is exactly what's explained in the npr interview with similar anecdotes.
My assertion is that the rich of the informal economy are responsible for more tax avoidance than the poor in the informal economy just like the rich in the formal economy are responsible for 70% of the tax evasion.