How TO Control Tax Evasion
Tax evasion is one of the biggest problems faced by the country despite stringent tax laws. It is believed that $345 billion in taxes were not paid by Americans in 2007 resulting in huge losses. A large number of development programs had to be postponed and overall the nation has been at a loss. About 47% of American do not pay any tax and the remaining 53% end up paying for the development of the entire country. It is believed that if tax evasion is reduced or eliminated, the tax rates will be drastically reduced and the government will have more money to operate as it should. The modern tax laws are not enough to control evasion of tax, which is considered illegal. The common practices followed are detailed below.
Corruption by tax officials
The biggest problem that needs to be addressed at once is the existence of corrupt tax officials who help people avoid and evade tax in lieu of a nominal payment by overlooking tax laws.
Role of middleman
Tax lawyers and chartered accountants, even those working in reputed organizations help people in evading tax. It is suggested that the human interface should be removed and each and every person should file their own returns on the basis of income as per existing tax laws.
Tax evasion is a crime but the punishment varies from one country to another. On one end is a country like China that offers death penalty and on the other hand is Switzerland where the punishments are almost nonexistent. In the United States the laws are strict but need to be made stricter so as to ensure that anyone and everyone thinks a number of times prior to evading tax.
Privatization of tax enforcement
Certain countries believe that privatization reduces the leakage of revenue and increases the amount the government gets. However, this is a double edged sword and it can become difficult to control private tax collectors.
This is the oldest means of collection of revenue and the government allows a private entity to collect revenue on its behalf. The returns are improved but the truth is that this is subject to abuse as tax farmers can become unrestrained at times.