Should IRS Force Millionaires To Pay Their Taxes? GOP Says That's A Big N-O!

Why should they get audited when somewhere a waitress didn't report her tips?

The Tax Man cometh, so get ready to PAY UP, FUCKERS! That's what President Joe Biden will announce tomorrow, in advance of his speech before Congress, although he'll probably phrase it slightly differently.

As the New York Times was first to report, the White House is going to finance some of its social spending by empowering the IRS to crack down on tax cheats.

The administration estimates that giving the I.R.S. an additional $80 billion over a decade could raise at least $780 billion in new tax revenue, for a net gain of at least $700 billion. Mr. Biden plans to use money raised by the effort to help pay for the cost of his "American Families Plan," which he will detail before addressing a joint session of Congress on Wednesday. It will be the largest single revenue raiser for the plan.

Over the past decade, IRS enforcement declined precipitously as the agency was starved of resources and staff. As ProPublica reported in 2019, millionaires in 2018 were 80 percent less likely to be audited than their wealthy peers in 2011. And indeed the top 1 percent of earners were audited at the same rate as those making less than $20,000, people who are likely to wind up owing no federal income tax at all (more or less).

Even Larry Summers (hardly a bleeding heart liberal) says Uncle Sam is leaving trillions of dollars on the table. In a 2019 paper published with University of Pennsylvania professor Natasha Sarin, currently serving as Deputy Assistant Secretary for Economic Policy with the Treasury Department, the scholars emphasized that concentrating on high earners would drastically improve the efficiency of American revenue collection, while maximizing the bang for the buck.

In 2013 the IRS estimated that an extra hour spent auditing someone who earns $200,000 annually generated only $650. An extra hour spent auditing someone who earns $5 million or more per year generated around $4,900. It is thus hard to explain from an efficiency perspective why in 2018 individuals who made $500,000 or more were audited at similar rates as earned income tax credit recipients whose top income is below $50,000.
  
To understand the revenue-raising potential of focusing examination resources on high-income earners, consider the following: The IRS spent more than $8 billion in 2018 on its 75,000-person workforce. Assuming a 40-hour work week, the average IRS employee earns around $55 per hour. Even if overhead costs for audits of individuals who earn $1 million or more annually are five times this size, an extra hour spent auditing a high-income individual amounts to a 1,800 percent return on investment.

What exactly is the purpose of auditing someone who makes minimum wage? Why is the federal government expending the same amount of energy chasing down a waitress's unreported tips as it does on a titan's failure to report income?

That's a trick question — it's bad optics, and bad math, any way you slice it. The real issue is how Republicans are going to spin effective collection as woke socialism. Particularly since we're not talking about raising taxes to soak the rich; this is money people owe, and they've just decided not to pay it. As the Washington Post notes, a recent paper from the National Bureau of Economic Research estimates that high income earners underreport their income by as much as 20 percent on average. 

But the GOP has never been scared off by a little thing like objective reality. Republican Rep. Kevin Brady, who cheerfully tacked trillions of dollars onto the national debt with Trump's 2017 tax giveaway, decried the plan as "tax hikes on the American people to pay for the socialist agenda."

While Grover Norquist, of the ubiquitous Club for Growth, just attacked the math.

"Nothing says these guys are going to raise money," he told the Times , without actually engaging in any of the calculations which undergird the proposal. "The I.R.S. has been highly politicized for a long time. They've done nothing to fix it."

Naturally both men were gleeful supporters of the Trump tax cut, premised on the preposterous assumption that the government could increase revenue by collecting less in taxes.

But if that's the field these assholes want to play on, then fine, have at it . Let them try to explain to Americans that we can't have universal pre-school because the GOP opposes auditing millionaires. Knock yourself out, fellas!

Shit, no wonder they'd rather make up nonsense about Biden banning cheeseburgers. 

[ NYT / Tax Notes / WaPo ]

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