How to Net Corrupt Politicians and Help Fix the Economy
By Gail Lakritz
The IRS has a law that if you pay for legal services, you can and should issue a 1099 to the lawyer, with a copy going to the government. It appears to only be required that corporations have to file such documents, but it does not say that the American public at large can not file them.(1) Most politicians are lawyers, and such documents are required for other services paid by individuals, e.g. nannies and house cleaners, why not file them for lawyers?
The average reported salary for a lawyer, according to Pay Scale is only $114,445 after 20 years. It appears that most lawyers are living well above their means. The lawyers that I see are driving expensive cars and living in very nice homes.
The cost of a new Mercedes C Class to own and operate for one year is $41,589. (2) Housing prices vary according to location, but at the low end of the scale, $200,000, a thirty-year mortgage assuming a 10% down payment and not including taxes and insurance, costs $15, 849 per year at 8% interest. Income taxes, assuming a 30% tax bracket, amount to $43,320. The total expenses for these three items alone, is $100,398, leaving just over $14,000 for living expenses such as food, electric, property taxes, insurance, saving for vacations and retirement.
I propose that the Internal Revenue Service ask the American public, using Form 1099-MISC*, to report all legal fees paid for the last five years. A computer comparison of these forms to wages reported for such fees could net billions in unpaid taxes. In doing so, as most politicians are lawyers, the net effect would be to show unreported income by thousands of these people across the country. The IRS depends solely on what the lawyer or law firm reports to them. Everyone has heard of “unreported” income from other professions, why not lawyers and politicians? Of course, the American Bar Association would argue that all lawyers and politicians are honest, hardworking professionals and that they are being unduly singled out. I would counter that with “If so, than you should back this action to once and for all put to rest the American public’s distrust of these people.
This could be carried further by a computer comparison of legal fees declared on tax returns to name matches of lawyers these fees were paid to. With the 1,100,000 (est., American Bar Association) lawyers in the US, it could be costing our economy in the billions of dollars. That’s money we could use right now.
This idea of unpaid taxes could be extended to other professions where the checks and balances are dependent on self-reporting, e.g. doctors, dentists, anyone to whom large cash payments are required.
This is not a hair-brained scheme. IRS targets certain groups of taxpayers every year. They have never bothered to target unreported income from these people, and the solution to finding it is simple. When, given the figures, these people should be declaring bankruptcy, why not investigate? This idea could be tested on a onetime basis, and if it is fruitful, it could be extended to a yearly requirement via a one-line entry on all tax forms.
*1099-MISC Forms are available from IRS.
(1) Internal Revenue Service, 2009 1099-Misc Instructions.
(2) automobilemag. com and Edmonds.com