The government has just conceded that it is not really trying to collect taxes on rich people

According to some estimates, the wealthiest 1 percent of Americans fail to pay taxes every quarter of a trillion dollars. Now, new government data shows that audits of the super-rich and big companies have reached a new low, leaving billions of dollars in uncollected taxes at exactly the moment when lawmakers say new revenue is needed to fund infrastructure and climate investment.

In response, two progressive democrats have enacted legislation to curb tax evasion.

New figures from the Internal Revenue Service compiled by researchers at Syracuse University show that the number of audits of those who have done more than $ 1 million has dropped by 72 percent over the past eight years. A total of 98 percent of those earning more than $ 1 million did not have an audit last year.

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

Amid this decline in the survey of the rich, a letter to the Biden government of 88 progressive groups points out: ‘Since 2011, the proportional audits of millionaires, who are disproportionately white, have more than doubled. for taxpayers who claim that the (Earn Income Tax Credit), which are disproportionate people of color. Audit coverage is now the heaviest in many black provinces with a low-income majority. ‘

The sharp reduction in audits of rich people contributes to the tax gap between the amount owed and paid. In 2012, the audits of wealthy individuals and large corporations recovered approximately $ 29 billion in revenue. Eight years later, the fewer audits received less than $ 7 billion. IRS referrals for criminal prosecution and tax convictions from the Department of Justice both reached a low point.

“At a time when Americans are experiencing growing economic inequality and financial hardship caused by the COVID-19 pandemic, the IRS is slipping billions of dollars in tax revenue through its fingers,” Syracuse researchers wrote. ‘As the public’s attention is focused on how the country can restore confidence in our democratic institutions, an area that should not be overlooked is how the country can better ensure that our income tax legislation is applied fairly and effectively.

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

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

A recent report by the Treasury’s Inspector General concluded that the IRS ‘high-income taxpayers are generally not a priority advance, nor is there a strategy to non- payment by addressing high-income taxpayers. ‘ As evidence, the report showed that the agency did not recover more than 60 percent of the $ 4 billion refunded tax from those who earned more than $ 1.5 million.

At the same time, the general application is applied by draconian budget cuts that, according to Syracuse data, resulted in 43 percent fewer IRS revenue agents and 26 percent fewer IRS criminal investigators.

Between 2010 and 2018, the IRS’s budget was reduced by more than 20 percent, and its enforcement budget was reduced by 24 percent, according to the Center for Budget and Policy Priorities.

“The IRS is, in fact, the Accountable Division of the U.S. government,” wrote the National Taxpayer Advocate, an independent watchdog in the agency. “However, the IRS’s budget does not reflect the critical role that the agency plays, and consequently the shrinking workforce and the need to upgrade IT capabilities limit the agency’s work.”

Progressive Democratic lawmakers are campaigning for repression

Following the passage of the $ 1.9 billion stimulus bill, the budget cuts and austerity drums are getting louder among lawmakers and think tanks in Washington who want to sound the alarm about the national deficit. It may seem like it could complicate any attempt to increase the IRS budget, but it’s actually the other way around: increasing the agency’s resources is likely to reduce the deficit.

A report by the Non-Partisan Budget Office in July 2020 found that increasing funding for the IRS’s application by $ 40 billion would increase revenues by more than $ 100 billion over the next decade. New York tax law professor Chye-Ching Huang noted that in 2013, the Treasury Department estimated “that every additional dollar allocated to IRS enforcement results in you owing about $ 6 in taxes. is.”

To that end, representatives Ro Khanna (D-California) and Peter DeFazio (D-Ore.) – both members of the Progressive Caucus of Congress – recently introduced separate bills that would increase the IRS’s maintenance budget and audit rates.

Khanna’s legislation is the more aggressive of the two. The bill would increase IRS funding by $ 70 billion and require the agency to audit 95 percent of large corporations, 50 percent of individuals reporting more than $ 10 million in annual revenue, and 20 percent of individuals reporting more. as $ 1 million in revenue.

“After years of Republican budget cuts and skewed priorities, the IRS is now investigating those who earn $ 20,000 at about the same rate as the top-1 percent, although the vast majority of unpaid taxes can be attributed to affluent tax fraud,” Frank Clemente of Americans for tax justice, which they strive for higher taxes on rich. “Khanna’s bill will help a lot to fix things. It requires minimum audit levels for wealthy and big companies and gives the IRS the funding it needs to help ensure those above are paying their fair share of taxes. . “

This story is published with The Daily Poster