WASHINGTON — People and businesses underpaid their taxes by an estimated 17 percent in the most recent year studied, failing to send the government a massive $450 billion that it was owed, according to an Internal Revenue Service report released Friday.

The study covered 2006, the most recent data the IRS said was available. The amount of underpaid taxes far exceeded the size of the entire federal budget deficit at the time.

After IRS audits and other enforcement efforts, non-compliance in 2006 shrank to 14 percent. That left the final amount of unpaid taxes at $385 billion, the agency said.

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.... [font size="3"]the total of unpaid taxes in 2006 was larger than that fiscal year's budget deficit of $248 billion. [/font]
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At a time when the U.S. government needs every dollar of revenue it can get, alarm bells should be sounding in Washington about a new IRS study showing that the Treasury is losing a fortune to tax evasion.

The study, released last Friday, found that the government missed out on $385 billion in uncollected taxes in 2006, the most recent year for which the IRS has complete data. If we extrapolate the IRS’s assumption that the U.S. government only collects about 85 percent of total tax liabilities, the revenue lost by the Treasury in the past decade exceeds $3 trillion.

That is serious money–nearly equal to all the new federal debt incurred during the Bush years. And without tougher action against tax cheats, the U.S. government stands to lose trillions more over the next decade.

Many of the biggest tax cheats are wealthy earners. While most working stiffs–the W-2 crowd–get their taxes automatically withheld from their paychecks, business owners and self-employed professionals have lots of ways to cheat. And cheat they do: Unpaid taxes by businesses and corporations accounted for nearly half of the total tax gap in 2006.
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President Obama railed against Republicans on Thursday for [font color="blue"] “licking their chops”[/font] and using a spike in gas prices as a political opportunity.

Appearing at the University of Miami in a high-profile speech on energy, Obama aimed to deflect the criticism his administration has received for its energy policies and for higher gas prices.

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[font color="blue"] “Only in politics do people greet bad news so enthusiastically,” [/font]Obama said before a crowd of students.

[font color="blue"]“You pay more and they’re licking their chops? And you can bet since it’s an election year, they’re already dusting off their three-point plans for $2 gas. I’ll save you the suspense: step one is drill, step two is drill, and step three is keep drilling.

“We heard the same thing in 2007 when I was running for president,”[/font] he continued. [font color="blue"]“We hear the same thing every year. We’ve heard the same thing for 30 years.” [/font]
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By Associated Press, Published: February 1

WASHINGTON — U.S. manufacturing activity grew in January at the fastest pace in seven months, boosted by a rise in new orders. And builders ended a poor year for construction by spending more on homes and projects for the fifth straight month.

<continuing, the article points out that other reports also show a strengthening U.S. economy:>

The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its manufacturing index rose last month to 54.1 from 53.1 in December. Readings above 50 indicate expansion.

Consumers are buying more cars and trucks, while businesses ordered more machinery and other equipment. [font size="3"]That has driven manufacturing, which expanded for the 30th straight month.[/font]

Both new orders and order backlogs rose to nine-month highs. Increasing order backlogs suggest manufacturers are lacking the capacity to meet demand. That could mean more growth in production and employment in the near future, economists said.
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