When Republicans took control of the House in January 2023, their first order of business was a bill was to cut additional IRS funding from the Inflation Reduction Act. President Joe Biden fought them off and managed to retain $60 billion of that needed money.
Had Republicans succeeded in keeping the IRS enforcement budget at starvation levels, the deficit would have grown nearly $115 billion over 10 years, according to Congressional Budget Office estimates.
Thank you, alleged party of “fiscal responsibility.”
As it happened, the beefed-up enforcement has yielded an extraordinary $1 billion in revenues. This wasn’t from any tax increase; it was from collecting $1 billion in back taxes and penalties that wealthy households owed.
The rich can hire lawyers and skilled accountants to hide income, find deductions and invent them. The taxes owed by working people, on the other hand, get taken right out of their paychecks. Folks on a payroll have few places to hide income.
This notion that skimping on the IRS’ ability to enforce the tax laws is a way to control government spending is — how do we put this? — insane. That’s like saying landlords could save a lot of money if they stopped paying collection agencies to retrieve rents from deadbeat tenants.
It takes overheated language and half-truths to con ordinary wage earners into believing that beefed up enforcement of the tax laws was going to hurt them. Tom Cole, Republican of Oklahoma, gave it a try.
“We don’t agree with this heavy-handed enforcement rule that’s designed to extract tens of billions from the American people,” Cole, a member of the House Appropriations Committee, said about efforts to increase IRS funding.
A means to extract billions from tax cheats? Where do we sign?
When he was accused in 2016 of grossly evading taxes, Donald Trump responded that not paying taxes “makes me smart.” When investigators got their hands on some of Trump’s tax returns, it was revealed that he had 26 businesses with zero revenue for which he claimed hundreds of thousands in tax deductions for expenses.
Halfway through Trump’s administration, the poorly funded IRS “spent far more money auditing the working poor than the 24,457 households with incomes of $10 million and up in 2019,” tax expert David Cay Johnston wrote.
Meanwhile, “not even 500 of the nearly 25,000 households reporting incomes of $10 million or more in 2019 were audited. That’s 2% — just 1 in 50. Only 66 audits were completed.”
As an aside, Americans can pretty much drop the notion that entrepreneurs need lax tax laws to get rich. Sweden has high taxes to fund social spending and a well-oiled infrastructure that strong economies need. But that hasn’t stopped Swedes from innovating and getting fabulously rich.
Sweden has twice as many billionaires per capita as the United States does. Skype, Spotify and other household tech names were started there.
Nothing wrong with making a fortune. All we ask is that the wealthy pay their taxes as everyone else does. We often hear that the top 1% of taxpayers account for the vast majority of income taxes paid. Nothing wrong with that. The rich who pay their taxes are still rich, and America’s wealth gap continues to widen.
Look, I don’t like paying taxes, and I don’t pay any more than I have to. But yes, I pay what I owe. The middle class shouldn’t have to pay more than its share to make up for cheating by the rich.
When the rich don’t pay their taxes, who pays? Most of us other taxpayers can find the answer by looking in the mirror.
