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It’s time to defend—not defund—the IRS


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https://www.thenation.com/article/politics/irs-taxes-inflation-deficit-inequality/

 

 

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By Katrina vanden Heuvel

January 19

House Republicans’ first official act—or 16th, if you include all the failed votes for Speaker Kevin McCarthy—was to introduce legislation that would cut new IRS funding allocated by the Inflation Reduction Act.

The bill is unlikely to get through the Senate or past the president’s desk. But this could be a rare issue where Republicans have public opinion on their side. The agency is historically unpopular, with only a third of Americans giving it a favorable review.

Republicans are exploiting Americans’ preternatural fear of the taxman by falsely claiming that the funding will create a “new army of 87,000 new IRS agents.” The truth is that number represents all of the new full-time positions that would be created within the agency—including customer service and IT staff—to make it run more smoothly.

That Republicans are targeting the IRS should come as no surprise: The agency has the authority to hold the wealthy accountable. Democrats ought to make sure it has the funding to do so.

If Democrats could reclaim the narrative on tax policy, they could remind voters that rebuilding the IRS is critical, both to ensure tax compliance for the wealthy and to help small business owners get refunds backlogged by the beleaguered agency.

House Republicans’ so-called Family and Small Business Taxpayer Protection Act hits the trifecta of right-wing politics: It would enrich wealthy Americans under the guise of protecting the middle class; it would increase the deficit; and it is driven by a disinformation campaign suggesting that “Biden’s shadow army” of IRS agents will soon be banging down doors across middle America.

In reality, it is precisely the prolonged underfunding of the IRS that has made the agency more likely to audit low- and middle-income Americans. Hampered by computer systems from the 1960s and limited staff, the agency relies on cheaper automated audits that disproportionately hit everyday taxpayers—even though corporations and wealthy individuals are far more likely to underreport income and underpay their taxes.

With the top 1 percent of earners evading as much as $163 billion in taxes annually, giving the IRS the tools to investigate those making over $400,000 a year could yield $1 trillion over the next decade.

In contrast, the Congressional Budget Office estimated that passage of the Republican bill would increase the deficit by $114.4 billion by encouraging tax cheating and growing the “tax gap”—the almost $500 billion a year that is owed but never paid to the government.

Permitting that gap—which primarily comes from the wealthiest Americans’ outgunning the IRS—also undermines American democracy. Tax policy expert Vanessa Williamson has found in her research that Americans “see taxpaying as an important civic duty,” but two-thirds say the belief that some are not paying their share undermines their faith in the system. (Take, for instance, former president Trump paying just $750 in federal taxes in 2016 and 2017.)

If we want a healthy democracy—one where, as Williamson says, citizens feel a sense of pride when they invest in infrastructure, schools, and parks—we must fight for a tax system that demands accountability from the corporations and individuals who have evaded it for too long.

 

 

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I won’t bash the IRS but I will point out the horrible tax code created by the Congress of the United States. 

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