You pay your taxes. Why shouldn’t the rich?
We all know that wealthy individuals and corporations are able to save vast amounts of money by abusing loopholes in our tax code, but the truth is that some of them use the worst tax evasion tactic of them all – lying to the IRS.
Because federal lawmakers have systematically cut funding for IRS enforcement, wealthy corporations and individuals are now able to simply cheat on their taxes with almost no chance of getting caught. A dire shortage of tax investigators means that each year fewer than 5 percent of households making over a million dollars are audited by the federal government.
This is a huge problem. A small number of rich people are essentially stealing over $400 billion in tax revenue each year because Congress refuses to give the IRS the tools it needs to find that money. That’s nearly 20 percent of all federal tax receipts. Although few of us have a real soft spot in our hearts for the agency that makes us pay our taxes, the IRS is an incredibly important part of the federal government, and weakening it does all of us a disservice.
There’s no way an understaffed agency can compete with the armies of accountants and tax lawyers fielded each year by wealthy individuals and corporations.
All they can do is pursue the simplest, most clear-cut cases, which in many instances means a disproportionate focus on poor and middle-class Americans. It is much easier to match up someone’s wages to their W2 than it is for the IRS to verify that businesspeople are properly reporting and calculating their taxable income.
In recent years the IRS has particularly targeted taxpayers who make use of the Earned Income Tax Credit, which is only available to low-income households. It is absurd that poor Americans are being targeted for audits when billionaires are getting away with much worse.
A serious re-alignment of agency priorities is clearly necessary, but that’s not going to be possible without giving the IRS the resources necessary to really go after the top-level tax cheats.
Our government’s inability to catch tax evaders has been a problem for decades, but it’s only getting worse.