Topical thread: Oil gusher stories July 1, 2010 Dan Crawford | July 1, 2010 1:35 pm Tags: oil spill Comments (26) | Digg Facebook Twitter |
Ok, my story. My wife caught a story on NPR about people down in the Gulf having trouble collecting money for lost wage, lost business etc. Now BP has already paid out north of $100 million and put up the $20B fund so far – but this is not a BP story. What got my wife and I interested was the fact that lots and lots of the economy down there is on a cash bases. So people have no records to make a claim of lost wages or business. The funds to be dispersed must have some record of lost wages – basically last year’s IRS forms will do, receipts etc. to prove your loss.
But in the cash economy down there, there are no records to base a claim on. Complaints have mounted to Senators and Congressman who can only shrug.
We were curious (yes, I know a bad habit of ours) and called up our friends who live and work down there and have family (all in Louisiana and Mississippi) along the coast. They confirmed the NPR report in spades. Two anecdotes from these families I’ll repeat (there are more).
One family business (brother of our lawyer friends), sold ice, gas, and miscellaneous to boaters and fishermen, made what they believe is somewhere north of $400K last year gross (they don’t know for sure, most of the business was cash and carry – including buying/selling gas!). But, they basically lived just above the poverty line in Louisiana and could barely afford food – according to what they told the IRS and the state taxman. Now they are in a super hole. If they try to come clean to get the lost revenue…well the IRS enforcement division is not known for their sense of humor on tax evasion. The family is pulling their hair out and may lose the business…
The second story is about the father of another ex-neighbor. He lives modestly but does fairly well. Nice guy, met him a couple times. He works basically off the books on the sport-fishing boats as a deck hand and other jobs on the coast. All for cash only, and has no way to prove lost wages at all….They are sending him money, but he may have to sell his house since he can’t pay for electricity or water (house is paid for). Yet he can’t get any of the BP or Fed money to help people.
From the earful we got, there seems to be a huge cash economy down there that’s getting wiped out, but no one can help these people (other than normal welfare) because they have no records. No way to prove that the BP spill actually hurt them. We saw some of this when we lived in Shreveport but have been told it’s much more prevalent “down south”.
I haven’t found the link to the NPR story that started all this, but for an economics blog I thought it was an interesting vignette on another side of the oil spill.
I heard the story. And I have to say this bleeding heart liberal feels no pity. It is unlikely these folk will learn anything, such as why we pay taxes, or have regulations, but they are sure to find some reason to blame the government for the hole they put themselves in.
Maybe they should have paid their taxes.
And these are the people who are out there saying the government should let the industry police itself.
And they eat local oysters to prove that damage to the ecosystem doesn’t matter.
And they think the government has no business protecting fools.
But the first thing you notice about a fool is that he doesn’t think he is a fool.
And if 99% of the people are fools, the government needs to protect them, otherwise all our lives will be “brutish, nasty, solitary, poor, and short.”
I basically agree with you. It caught our attention becuase we lived there for 4 years and two of our neighbors got in a minor squable becuase one thought a transaction was ‘off the books’, and the other didn’t. So we called and got the entire story.
I figured AB would be interested…plus I rare;y have time to write something not in response to someone else…
Islam will change
Yes, most of the cash economy are tea partiers who don’t think the gumint deserves even to exist.
They ought to call Jindl. I am sure he sympathizes with their behavior to look out only for themselves and stay off the gumint radar.
Nasty old irs!
ilsm will not change.
ilsm will not change
“the government needs to protect them.”
Boy……I can’t imagine the will power it took you to prevent from saying what you really wanted to say “The government needs to protect them from themselves.” But…you didn’t say that, just implied it, so a few extra credit points for the effort.
somewhat similar to what your Hero Ronnie said:
“The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.'” – Ronald Reagan
The words you will never hear:
‘I’m from the company store and I’m here to help.’
If you fear big gumint what do you think of someone who will bankrupt you and profit from your suffering?
If you think that is.
ilsm will not change.
One should consider that a lot of the people in this cash economy aren’t there entirely by choice. If you are the employee of one of these businesses what can you really do? Remember you are most likely a poorly educated person who is perpetually broke just doing what you can to get by. Can you really sort out your taxes or afford to have your employer discovered and the reputation that will give you with the rest of the underground economy?
Being below the law isn’t the boon being above it is. No SS, no unemployment, no workers compensation fund, no EITC, etc.
I was worked for a small company which went under spectacularly a decade ago (one of the CEO’s ended up in jail for two years). I spent probably 30 hours trying to get my payroll statements, w2’s and bank records for that last year to agree enough that I could fill out my taxes, but I know it did not end up matching reality perfectly and that things like SS and medicare taxes had not been paid by the company. In the end I just did the best I could to make it all internally consistent and vaguely close to reality and hoped not to be audited for the next 4 years or whatever the limit is (not like I made much money that year anyway).
However the business owners and others at the top of the underground economy… I have little sympathy for.
It is not clear exactly what you are saying here!
If you are asking if I have a problem with people who are sucessfull stepping on the heads of everyone around them to get to the top, just as long as they follow established laws…The answer is absolutely NOT! and the only problem I would have with that is if they whine about it when they themselves are used for the next guys stepping stone.
If your asking whether I fear Corporate Power is the Puppet Master of the American Government…The answer is Yes, and you msut be some kind of fool to not understand that’s how America began it’s massive decline. The difference is, we can control who are leaders are, but we can’t control the leaders of Corporate America. Americans do not understand that the most powerful tool one has in a Capitalist society is the freedom of choice, and American’s real power lies in what they decide to buy, and what they decide not to buy. Corporations only have a one track mind, and that is profit, you control their profit then you control the Corporation, this is not the case with the Government!
Yes and the folks off the books don’t get unemployment either. The employeer has to file and pay the tax. Now the question is did these business pay the state sales tax? If so you have a volume estimate for the place, to start with. Of course this is why gasoline tax is collected by the wholesaler, its easier to police them, and it argues for the vat if sales tax is being evaded, the vat means a lot less of the price is evaded. The further up the supply chain one runs the harder it is to hide.
thanks for pointing out something i overlooked. still, my sympathy for even these people is limited.
if they were getting paid under the table, they can’t expect to be bailed out by the government. give them something to think about next time.
basis for my hard heart is i talk to the worker-folk often enough to know they agree with their bosses about the gummint.
good point. why i advocate taxes ONLY corporations. they got the accountants and have to have the records. of course they will pass on the cost to their customers. so what. that makes it all work out in the end.
ronnie and i disagreed on that point, though i knew exactly what he was talking about.
and protect them from themselves went without saying. but these people also need protecting from the predators and the incompetent contractors that they have no way to protect themselves from.
it is not clear exactly what you are saying here.
In my younger days I did a lot of damage calculations relating to litigation, and it was always interesting when the tax returns was absolute BS, but the client wanted to be reimbursed for the “real” income. Sorry, doesn’t work that way.
This region of the US reminds me a lot of the Greeks and Italians.
I have absolutely no sympathy for the business owners who evaded taxes this way. I hope these stories get circulated far and wide. Maybe more people will think twice about dodging taxes in the future. If you can’t pay your taxes, you don’t really deserve government (read: other citizens who actually pay their taxes) help or compensation for lost phantom wages.
Lesson to be learned: If you want to be part of the off the books economy you’ll just have to self-insure with your tax savings. lol.
Now, if someone truly didn’t have a choice I do have some sympathy for them. Generally, no matter what culture you grow up in you’ll most likely adopt the prevailing societal norm and don’t even think about it. But for that culture to change, everyone has to see how much better a change would make things, or how bad the current norms really are. The lack of access to compensation could be just the thing to change the culture in this area.
Without the rest of society telling these people, repeatedly, that they screwed up and are not going to be bailed out, they probably won’t learn a thing. The whole region needs a good talking to. Everybody from the President to the majority and minority leaders in congress to the governors and state legislators along with all the prominent citizens of the region need to tell these people they are just S.O.L this time and in the future they need to just swallow hard and pay their taxes. Unfortunately, I can’t see the disfunctional group of children who run this country doing anything of the sort.
I for one won’t be surprised in two, six, or twelve months when we start hearing about enterprising individuals who collected hundreds of thousands of dollars in oil-spill compensation with fake documents they ran off on their laser printer. Or who made money faking tax or other records for the cash-economy citizens.
The question I have is how a retail business can get away without paying sales taxes? Gasoline taxes are gotten at the wholesale level however so they are paid. Suppliers have to have invoice copies of things they sold to them. This actually set forth the dirty little secret of the US we have lots of laws but no means to enforce them. We are unwilling to pay for cops and courts to enforce the laws we already have. Recall that in a congressional hearing the IRS said that below some size they don’t bother to go after tax cheats because its not worthwile from a business case point of view. (Likley a number of these stores fall in that category as net profits are not that high). This type of thing is why the new 1099 requirement on companies sending 1099s to all companies that the pay more than $600 comes in. While claimed to be a major hassle, if a company keeps books on quicken or the like it should just be a matter at the end of a year of invoking a function (likley supplied by the software vendor) that prints all the docs out. If in todays environment you don’t use quicken or the like you probably have a fool for an accountant and a lawer. Many of the ravings against things like this assume people are still doing accounting with pencil and paper, if so they are fools in business. The cost of a computer is low enough to make keeping the books there rational.
i have lived among these people. They will not learn from this. They will find a way to blame their hardship on the government.
From my own experience, the big problem with taxes is that an ordinary person can’t figure them out. And it is hard for most people to maintain a records system. If the government would address this problem. Make the tax code simpler, and write a brochure / tutorial to explain a record keeping system, manual or electronic, I think it would be a huge help.
The other part of the agony of taxes is that it is impossible not to feel cheated when you are figuring out your taxes. The allowed deductiois and not-allowed decutions always leave room for the taxpayer to say “that’s not fair.” And then when you try to talk to the IRS about something, you get treated rather badly. From mindless telephone answering trees, to incompetent “advisers,” to nasty enforcers.
Now that’s at my level. I suspect that if I had a lot of money, it would pay me to pay an accountant and a lawyer to find ways to cut my tax “burden” and i’d feel i was beating the system, but still free to complain about it and lobby for more cuts that honored my special contribution to the economy.
Thats where if you are a small business man quicken (or similar) comes in. It does the record keeping for you, all you have to do is enter the data. One can get someone to set the program up for the business so that entry is all one has to do. A cash business has a cash register, so I suspect that it is possible to download the entries from it, and clearly the checks you pay out have to go somewhere. (But then how many even keep their check account balanced?) If you use Turbo Tax or the equivalent you don’t have to figure them out, the program asks you questions, and you have a filled in form. The business versions allow import from quicken and the like. So you don’t have to figure them out the program does it for you. One fairly simple thing is to get a scanner and scan bills in and then pay them, you now have a records system.
thanks. and if i don’t take your advice it’s my own fault.
but i was suggesting that the government would do well to provide detailed instructions to people who would not otherwise even hear about quicken or even the concept of saving the checks and receipts in a shoebox. there really are people like that. you have to remember that half the population has iq’s of less than 100. and most of the rest of us spend most of our time operating at “less than 100.”