March 28, 2021
Pearl River A bunch of researchers led by the London School of Economics, allowed access to Internal Revenue Service tax reporting data, issued a report card on how well the rich were doing in dealing with the taxman. The short summary is that are winning even bigger than we – and the IRS – had feared, and that means that we are losing very, very badly and paying for their victory as well.
This latest report credits the rich with failing to report “21% of their income, with 6 percentage points of that due to sophisticated strategies that random audits don’t detect.” The superrich in the top 0.1% or one-thousandth of a percent are likely avoiding even more according to the researchers. They might be getting away with avoiding as much as double what the IRS, using its standard, conventional methodologies, had figured. Of course, Congressional inaction, led by Republicans, but facilitated by Democrats, has starved the IRS of critical support for the last decade leading to drastic reductions in audits of all kinds. The current head of the Service, as reported by the Wall Street Journal, claims that “each additional dollar spent on tax enforcement could yield $5 to $7 in revenue.” Talking recently to Chuck Collins of IPS’ equity project, beating the “wealth defense industry” for the rich could yield over one-trillion in additional revenue over the next decade.
Justice should dictate more aggressive efforts to assure that the rich are paying fairly, but real tax collection may be rising to the top of the list finally as President Biden is looking for any available revenue sources to pay for his couple of trillion-dollar infrastructure proposal. All reports indicate that getting the rich to pay and rolling back some of the giveaways that corporations and the rich collected from the Trump administration and Mitch O’Connell’s Senate majority in the 2017 tax package are high priorities. The details behind both the infrastructure package and the potential revenue package are still in flux even though the broad outlines are becoming clearer, but getting the votes to approve either are going to mean finding more money to pay the bills.
Justice doesn’t seem enough to get fair payment of taxes, but it might turn out that when the carrot is this large for everyone in the country and the politicians wanting their districts to benefit as well, they may finally be willing to wield the stick against big business and endless wealth.