Finding ways to tax Americans without their being
aware of it seems to be the name of the game for politicians and
bureaucrats, and generally what should be readily transparent to
taxpayers is deliberately obscured.
For example, we usually don’t think of the fines that are generated by
our local police or sheriff’s department for traffic and other
infractions as taxes - or, city and county fines for violations of
building codes, or OSHA fines for workplace safety violations, or FCC
fines for inappropriate radio and TV programming. Many of these fines
can be exceedingly harsh, especially for small businesses or
non-profits, many of which have a hard time staying afloat.
Just about every government agency levies some sort of fines for
infractions of various rules. And, although estimates of potential
revenue from these sources are included in the annual budgets of most
government agencies, they are really just another form of stealth
taxation. As far as I know, other than city councils, county boards of
supervisors and the like, not one citizen of any community ever has the
opportunity to vote on them.
Property has often been confiscated and sold, even though the owner was
not involved in anything criminal, and they did not have to be accused
or charged with a crime. The police have been able to go to court and,
without a trial, obtain a court order to confiscate and sell the
property of someone who was suspected of a drug crime. The mere fact
that the property was involved in some way has been sufficient. The
theory that makes this possible is based on “a technicality in the law
that allows the government to claim that it is suing only the item of
property, not the property’s owner.”
Even if that’s justice, what happens to the money?
Between 1991 and 1995, Federal confiscation of property under the
forfeiture laws increased by 1500 percent, to a total of $644 million.
And, seizure of property by state and local governments also amounted
to hundreds of millions of dollars.
But the amount of money that’s generated by forfeiture laws is only a
small part of the total funds received by government from fines and
penalties, ranging from the lowly citation for illegal parking to major
penalties imposed by agencies such as the SEC, FCC, etc. For example,
in 2004, Time Warner agreed to a settlement with the Securities and
Exchange Commission (SEC) that included a $750 million fine. And, in
1995 the international accounting firm KPMG agreed to pay a $456
million fine to the SEC in a case that involved tax shelter investments.
When an agency takes in a fine amounting to hundreds of millions of
dollars, the money disappears into the black hole of government
accounting, and no one ever seems to ask what happened to it.
The explanation usually given is that these fines are levied to recover
the costs of investigation and enforcement incurred by the agency
involved. However, funding of government agencies does not appear to be
reduced by the fines and penalties it collects in excess of those
amounts that may be built into their budgets. If that’s the case and
the investigating agency recovers more than the amount of revenue
budgeted from this source, why isn’t their funding reduced accordingly?
If you think about it, fines and penalties are actually another form of
stealth taxation: first the public is taxed to fund the operation of an
agency, law enforcement, regulatory, etc. And, when revenue from fines
exceeds budgeted amounts, instead of using the excess to offset
operating expenses, the money is used for some other purpose. At the
very least, the public pays the cost again by virtue of the fines that
are not applied to help cover the costs of funding the agencies
involved by a like amount.
Another interesting fact is that fines and penalties are not tax
deductible. When violators, corporate or individual, pay their income
taxes, in effect they pay additional taxes on the amount of the penalty
that has been imposed because it cannot be included as part of the cost
of doing business. Thus, a $450 million corporate fine could actually
amount to something on the order of $600 million ($450 million plus
$150 million tax).
When it comes to finding ways to fleece taxpayers without their even
being aware of it, politicians and bureaucrats are usually found at the
head of the class.
But, that’s just my opinion.
©2008 Harris R. Sherline, All Rights Reserved
NOTE: Read more of Harris Sherline’s commentaries on his blog at
“opinionfest.com.”
Article Source: http://www.articlesbase.com/taxes-
articles/stealth-taxation-part-iii-373315.html
About the Author
Harris Sherline, 79, is a retired Certified Public
Accountant and executive. His diverse business background includes
experience as a partner in a public accounting firm, as a principal in
a number of business ventures and as CEO of a hospital. His
conservative commentaries appear weekly in two Santa Barbara
newspapers. In addition, he writes editorials for a widely read weblog,
which has a world-wide following of about 200,000 readers. His weblog
is “Opinionfest.com.”
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