OPINION:
Niger Innis, national spokesman for the Congress of Racial Equality, is correct (“Give nannies their due,” Letter, June 5). The so-called “nanny tax” compliance rate is embarrassingly low, and household workers are the ultimate victims of this tax avoidance by some of America’s wealthiest individuals. The cost to the employee in denied benefits is enormous. Mr. Innis, however, understates the cost to the U.S. Treasury and to U.S. taxpayers.
There are as many as 3 million household employees in the United States. According to the Internal Revenue Service, a mere 225,000 families with employees pay the legally required employment taxes and report their employees’ wages. As a result, the Treasury fails to collect $12 billion to $20 billion each year from household employment.
Collections of these taxes could close much of the $300 billion tax gap that the Volcker Commission is charged with collecting over the next decade (“Democrats out to close elusive tax gap,” Nation, March 31). Enforcing the employment tax on America’s wealthiest taxpayers would be simple and needs to be a priority, especially when we are facing historic budget deficits. Is it possible that if the Treasury just collected the taxes already on the books there would be little or no need to raise tax rates for many Americans?
As someone who has hired nannies and housekeepers over the past 17 years and always paid taxes, I find it outrageous that so many people are ignoring the law. Collections of these taxes should begin immediately.
ARNOLD SANOW
Vienna
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