The House passed the Inflation Reduction Act yesterday— 220-207. Pelosi noted that it “saves the planet while keeping more money in your pockets… increas[ing] the leverage of the public interest over the special interests, and expands health and financial security now and for generations to come.” It could have been a lot better but it does slightly increase taxes on corporations while beefing up the IRS— to the tune of $80 billion— to make sure that the very rich start paying their fair share, something that they have grown accustomed to not doing.
Republicans seem to have realized that attacking the FBI on Trump’s behalf might not be a winning career strategy. Pretending armed IRS agents are going to be barging down the doors of the middle class and confiscating their money is something many of them seem to feel is more comfortable for the GOP base to wrap its arms around.
It’s worth watching that Robert Reich video above. On Thursday, Reich wrote that the IRS allocations should worry, not the middle class but the “wealthy Americans who dodge taxes. Recent figures estimate that the richest 1 percent are hiding more than 20 percent of their earnings from the IRS, accounting for more than a third of all unpaid federal taxes. Some estimates show that collecting all unpaid federal income taxes from the wealthiest Americans could generate anywhere from $200 billion to $1.75 trillion over the decade.
So why hasn’t our government been able to collect all that untaxed money from the richest of the rich? Because the IRS has been underfunded and severely understaffed— thanks in large part to a decades-long campaign from Republicans to transfer wealth to the top.
Over the past 10 years, the IRS budget has been reduced by roughly 20%. Its staffing is at a level not seen since 1973 although the American population is about a third larger now.
On top of that, the tax returns of the wealthy are very difficult, time consuming, and incredibly costly to audit— and rich taxpayers often have platoons of lawyers and accountants that shield them from tax liabilities.
Without proper resources, it’s harder for the IRS to go after the wealthiest Americans who avoid paying their fair share.
As a result, just 2% of the richest Americans had their taxes audited in 2019, down from 16% in 2010.
Meanwhile, the poorest Americans— who often claim a tax break known as the earned income tax credit— are five times more likely to get audited because their tax returns are less complex, and because of pressure from congressional Republicans to root out incorrect payments of the credit.
When the IRS can’t function properly, all taxpayers aren’t off the hook evenly— and the result is a tax system stuck in a cycle where the working class bears the brunt while the rich hoard wealth that could be used to invest in America.
So, don’t believe the lies coming from the oligarchs and their propaganda machine— it’s all fear mongering. The 1% have an incentive to keep the IRS hobbled and unable to excavate their hidden wealth.
They also know the public is against them— boosting the IRS budget to strengthen tax enforcement on high-income taxpayers is a popular policy supported by more than two-thirds of registered voters.
IRS funding is a good thing. It means the agency can finally go after the real freeloaders in America: The super-rich.