Have You Fudged Your Return Yet?

Have you started cheating on your taxes yet? An estimated 30 to 40 percent of us do, although one poll a few years back found that almost 4 of 5 Americas said such behavior is wrong. And you thought only politicians lie and cheat. Maybe they get it from us.

Of course, the later statistic means that one American in five believes quite forthrightly that shortchanging the government is perfectly alright. I know someone who hates taxes so much that he has unilaterally lowered his annual tab, and feels pretty darn patriotic in the bargain.

If you’re like me, you’ve paid cash to a tradesman or business person who pointedly asked for remuneration in greenbacks, or with a check made out to cash. We all can guess where all of that income is going. I ran into one such cash-oholic at a local watering hole recently; he bought me a drink.

Who among us hasn’t “rounded up” an itemized deduction or “estimated” an expense from memory when we couldn’t locate the documentation in our helter-skelter filing system? When I co-owned a business years ago, I deducted all of the expenses for the company car, which I also used on my days off. I was never much good at fractions, so Uncle Sam paid me a house call and helped me do the math.

Of course, to take this “don’t tax me, tax that man behind the tree” philosophy to the next level requires no nonsense lawyers and creative accountants, a dynamic duo most of us can’t afford. Generally, we have one primary source of income and our employers deduct the taxes every week — end of story. Many of us short-form it and call it a fiscal year. People who own businesses or are self-employed account for a large portion of unpaid tax revenues.

Our most affluent fellow Americans are also adept at dodging the taxman. Logic suggests that the fringe benefits of being fabulously well-to-do would include a tendency toward gleeful generosity and the freedom from fretting about dollars and cents. Alas, for both them and us, such is not the case. The über-rich work hard at not contributing, and they have many more legal options than Joe Six-Pack or Charlene Chardonnay.

For example, if you own a rental property, you can spend your two-week vacation there, rent it the other 50 weeks, deduct operating expenses, earn a healthy cash flow — and by “depreciating” your asset each year establish a tax “loss” to subtract from your overall adjusted gross income. What a country: make more money, pay fewer taxes. Studies also have shown that the wealthy, on average, contribute a lower percentage of their income to charity than people of modest means. Ask any waitress who the big tippers are.

Billionaire Warren Buffet, who is a born again philanthropist and a something of a traitor to his class for denouncing tax breaks for the rich, has made the point that while he pays more in taxes than his secretary, he actually pays a lower percentage of his income than his employee.

This is as American as apple pie lately, or as the late Leona Helmsley averred, “Only the little people pay taxes.” There’s an entire national party devoted to helping the well-heeled walk away from their tax obligations, and the other party isn’t too far behind.

Tax cheating is on the rise. During a period when our nation has been fighting two-plus wars, more people are deciding that they come first. Unreported income is up almost 40 percent since 2000, according to a recent IRS report. Hard times can’t account for all of that. Some people are not too fond of government of late, and that undoubtedly inspires some to break the law.

They may even convince themselves that they are doing the right thing for both themselves and their country. But the vast majority of tax cheats are probably just plain old unalloyed selfish. They know where they’re going to spend the money, but they are not too sure how they’re going to benefit if they send it to Uncle Sam.

The result is not inconsequential. An IRS study on unreported income and improper deductions for one year pegged the losses at $345 billion, which is almost equal to the federal budget deficit for 2007. Like the weather, everyone moans about the deficit but doesn’t do anything consequential about it.

If taxes are too high, one reason is that many Americans aren’t pulling their weight. Let’s call them civic shoplifters. They travel the same roads we do, visit national parks, dial 911 when they need help, collect Medicare and Social Security and unemployment benefits, maybe even support the troops and an aggressive foreign policy, and probably fly the flag on the Fourth.

But pay all of their taxes: not on your life, sucker.