Yesterday, the Dow broke another record— up 56.81 points to 37,305.16, an indication of improved sentiments among investors, who are feeling positive about the prospects of the economy and major corporations. The hope is that this confidence is a sign of a broader economic recovery, with increased consumer spending and business activity which can lead to— and define— increased investments, spending and economic growth. The administration (and Biden campaign) interprets this as a sign that investors are responding positively to the administration's economic policies (Bidenomics), such as infrastructure investments, clean energy initiatives, and middle-class tax cuts. They’re pointing to this as validation of the administration's efforts to stimulate economic growth and create a more equitable economic environment while avoiding a recession while powering job creation and higher wages without triggering an inflationary cycle.
Trump was in Iowa at MAGAt rallies this past week, telling his idiot followers that if he isn’t elected the U.S. economy would plunge into a Depression. Charisma Madarang reported that Señor Trumpanzee “accomplished the feat of becoming the first president since Herbert Hoover during the Great Depression to leave the country with fewer jobs by the end of his one-term presidency.” His story— fake news— is that the “Biden administration is running on the fumes of the great success of the Trump Administration… Without us this thing would have crashed to levels never seen before, and if we’re not elected we’ll have a depression the likes of which I don’t believe anybody has ever seen… maybe 1929?”
Despite signs that the U.S. economy is getting stronger, Trump dug into the president and tasked supporters on Wednesday with naming “one thing” that has gotten better under Biden’s leadership (to which we ask, how long you got?) Trump also urged state residents to vote in the upcoming elections, saying, “We are leading by a lot but you have to go out and vote. That margin of victory is so, so powerful.”
During the ex-president’s first visit to Iowa, Trump declared that he’d swoop the blue states if Jesus himself “came down.” On his second return, he evaded questions on whether he would abuse power if he were re-elected president. When asked whether he’d exact retribution, he opted instead to say he’d make an exception “for Day One.”
The Congressional Budget Office is predicting a soft landing for the economy with no recession and a normal rate of inflation, despite Trump’s 4 years of mishandling of the economy. The Fed made similar projections a few days earlier, which is why they didn’t raise interest rates and why there is already talk about lowering rates next year. All well and good, but what about a little more equity? No one wants to see the rich continue to get richer and the poor continue to get poorer while the middle class shrinks?
Yesterday, the Patriotic Millionaires asked us to remember, in August 2022, Biden and the Dems “passed their signature healthcare, climate, and tax reform package, the Inflation Reduction Act, “which, among other things, allocated $80 billion in additional funding to the IRS over the next ten years. The $80 billion was desperately needed. Thanks to years of budget cuts over the last decade driven by Republicans, the IRS was in a pretty dilapidated state. Since 2010, the IRS lost a fifth of its staff and millions of phone calls went unanswered. Between 2010 and 2019, the overall audit rate dropped 58%, while the audit rate on millionaires specifically fell by a whopping 71%. This isn’t altogether surprising given how difficult and costly it can be to process returns from high-income earners, who usually have varied and complex income sources, not to mention armies of tax lawyers that help them reduce their tax bills as much as possible. In short, with the IRS crippled, America was left with an estimated $600 billion tax gap— i.e. the difference between taxes owed and paid— with $160 billion of it coming from just the top 1% of taxpayers alone.
It's only been a little over a year since the IRS received its infusion of new funds from the IRA, but they have already made a substantial difference. This past filing season, the IRS answered nearly 90% of phone calls it received, reopened taxpayer assistance centers, and even began piloting a direct online e-file system. Perhaps the most significant difference that the funding made, however, is that it has enabled agents to go after wealthy tax cheats who previously were not audited. This year, thanks to those high-income audits, the IRS has collected $160 million in back taxes from just a few hundred wealthy evasion cases. According to one estimate, if the agency keeps these efforts going, it may collect up to $500 billion in additional revenue over the next decade.
We think it’s great that, with its new infusion of funds, the IRS is stronger, healthier, and better equipped to crack down on wealthy tax evaders. But, unfortunately, Republicans don’t agree with us. Ever since the IRA passed, Republicans have thrown everything against the wall to try to rip the $80 billion in new funding away from the IRS.
In April of this year, at the start of the now infamous debt ceiling negotiation fiasco, House Republicans voted to pass a bill that would raise the debt ceiling but also rescind most of the $80 billion in funding that the IRA granted the IRS. It didn’t pass the Senate or President Biden’s desk, but in order to pass a debt ceiling bill a month later, Democrats had to make a handshake deal to claw back $21.4 billion in the IRS’ new funding over the next two budget cycles. The Congressional Budget Office (CBO) estimated that this cut will ultimately result in $40.4 billion in lost revenue collection.
If that wasn’t enough, in early November, House Republicans, joined by a handful of Democrats, also voted to pass a military aid package with a poison pill amendment to strip the IRS of an additional $14 billion. The CBO estimated that this move would result in $26.8 billion in lost tax revenue, so it’s a relief that the Senate didn’t consider it and the President promised to veto it if it ever got to his desk.
At this point, you’re probably wondering: what do Republicans have against the IRS? Why wouldn’t they support fully funding the agency to enable it to better catch ultra-wealthy criminal tax cheats— not to mention better serve average taxpayers?
While we can speculate as to what that answer might be, here’s what we do know: anyone who evades taxes is a criminal, plain and simple. And anyone who supports efforts that will intentionally hamper the IRS’ ability to catch those criminals is a criminal apologist, plain and simple.
Republicans like to stake their claim as the party of “law and order,” and they’re certainly waving this flag around with the recent news breaking about Hunter Biden. But that couldn’t be further from the truth. In reality, the modern-day GOP is the party of criminal apologists and abettors.
We’d like to close by highlighting the difference between tax avoidance and tax evasion. Tax avoidance involves wealthy taxpayers reducing their tax bills by taking advantage of loopholes, exemptions, and lower rates specially designed for them. It’s bad, but it’s entirely lawful. Tax evasion, on the other hand, is 100% unlawful. It involves rich taxpayers lying and cheating the system to escape paying taxes that they owe by law.
The Patriotic Millionaires are trying to convince the public and lawmakers that it’s time to end tax avoidance by the ultra-rich. Until then, we don’t think it’s too much to ask that the rich be required to pay the taxes that are on the books now.
