The government has just admitted that it doesn’t really try to collect taxes from the rich

According to some estimates, the richest 1% of Americans are able to avoid paying about a quarter of a trillion dollars in taxes owed each year. Now, new government data shows that audits of super-wealthy and large corporations have hit a new low, leaving billions of dollars of tax unpaid just as lawmakers say new revenue is needed to finance infrastructure and climate investments. .

In response, two progressive Democratic lawmakers have enacted legislation that represses tax evasion.

The new figures from the Internal Revenue Service compiled by researchers at Syracuse University show that, in the last eight years, there has been a 72% drop in the number of audits of those earning more than $ 1 million. In all, 98% of those earning more than $ 1 million did not undergo an audit last year.

There was also a 55% drop in the number of audits by America’s largest corporations. In 2012, almost all corporate giants were audited. In 2020, however, almost two-thirds of these companies were not audited.

Amid this decline in scrutiny by the rich, a letter to the Biden administration of 88 progressive groups noted: “Since 2011, audit fees for millionaires, who are disproportionately white, have dropped more than twice as much as for taxpayers who claim o Income Tax Credit), who are disproportionately people of color. Audit coverage is now the heaviest in many low-income, black majority counties. “

The sharp reduction in audits of the wealthy contributes to the fiscal gap between the amount of taxes due and paid. In 2012, audits by wealthy individuals and large corporations recovered about $ 29 billion in revenue. Eight years later, the very least audits recovered less than $ 7 billion. The IRS’s referrals for Department of Justice criminal cases and tax convictions reached a low point.

“At a time when Americans are facing growing economic inequality and financial difficulties caused by the COVID-19 pandemic, the IRS is letting billions of dollars in tax revenue slip from their fingers,” wrote Syracuse researchers. “As public attention focuses on how the country can restore faith in our democratic institutions, one area that should not be overlooked is how the nation can ensure that our income tax laws are administered fairly and effectively. . “

“High-income taxpayers are generally not a charging priority”

The situation is a result of both the agency’s priorities and funding cuts.

A recent report by the inspector general of the Treasury Department concluded that, in the IRS, “high-income taxpayers are generally not a collection priority, nor is there a strategy in place to deal with non-payment by high-income taxpayers. “. As evidence, the report showed that the agency has failed to recover more than 60% of the $ 4 billion in back taxes owed by those earning more than $ 1.5 million.

At the same time, general oversight has been hampered by draconian budget cuts that have resulted in 43% fewer IRS revenue officers and 26% fewer IRS criminal investigators in the past decade, according to data from Syracuse.

Between 2010 and 2018, the IRS budget was reduced by more than 20 percent, and its oversight budget was cut by 24 percent, according to the Center on Budget and Policy Priorities.

“The IRS is effectively the accounts receivable department of the United States government,” wrote the National Taxpayer Advocate, an independent oversight body within the agency. “However, the IRS budget does not reflect the critical role that the agency plays and, as a result, its shrinking workforce and the need to update its IT resources continue to hamper the agency’s work.”

Progressive Democratic lawmakers push for repression

Following the approval of the $ 1.9 trillion stimulus bill, the beat of the drums for budget cuts and austerity is already getting louder among Washington lawmakers and think tanks trying to raise the alarm about the national deficit. It may seem that this can complicate any attempt to increase the IRS budget, but in fact it is the other way around: increasing the agency’s resources would likely reduce the deficit.

A July 2020 report by the nonpartisan Congressional Budget Office found that increasing funding for the IRS application by $ 40 billion would increase revenues by more than $ 100 billion in the next decade. New York University professor of tax law, Chye-Ching Huang, noted that in 2013, the Treasury Department estimated “that every additional dollar dedicated to the application of the IRS results in the direct recovery of about $ 6 in taxes due “.

To that end, MPs Ro Khanna (D-Calif.) And Peter DeFazio (D-Ore.) – both members of the Congressional Progressive Caucus – recently introduced separate bills that would increase the IRS oversight budget and audit fees .

Khanna’s legislation is the more aggressive of the two. The project would increase IRS funding by $ 70 billion and require the agency to audit 95% of large corporations, 50% of individuals who report more than $ 10 million in annual income and 20% of individuals who report more than $ 1 million income.

“After years of Republican budget cuts and distorted priorities, the IRS now audits those earning $ 20,000 at roughly the same rate as the top 1%, although the vast majority of unpaid taxes are attributable to wealthy tax cheaters,” said Frank Clemente, of Americans for Tax Justice, who advocates higher taxes on the wealthy. “Mr Khanna’s bill would go a long way to fixing things. It requires minimum levels of auditing for wealthy and large companies and gives the IRS the funding it needs to help ensure that those at the top pay their fair share of taxes. “

This story was published in conjunction with The Daily Poster