Thanks to GOP budget cuts, the IRS allows rich people to avoid paying billions while persecuting the working poor
Republican cuts have crippled the Internal Revenue Service’s ability to audit rich tax cheats, while pressure from those same Republicans has led the IRS to increase audits of the working poor.
An investigation by ProPublica and The Atlantic found that years of Republican-led budget cuts have gutted the agency, causing a steep loss in government revenues. According to ProPublica, the cost to taxpayers may be “at least $18 billion every year, but the true cost could easily run tens of billions of dollars higher.”
According to the report, the IRS conducted 675,000 fewer audits in 2017 than it did seven years earlier. Because of the repeated cuts, the IRS has drastically stopped pursuing “nonfilers” who do not submit their tax returns. The number of investigations into nonfilers fell from 2.4 million in 2011 to 362,000 in 2017. The agency has also drastically reduced its investigations of filers who do not pay their tax debts. In 2010, the IRS let $482 million in old tax debt lapse, but by 2017, that number increased to $8.3 billion.
Corporations and billionaires have been the “biggest beneficiaries” of the IRS cuts, because large-scale audits require specialized personnel, ProPublica reported, noting that the federal government has left 18 to 20 percent of potential tax revenues uncollected as a result.
But even as the cuts have gutted the IRS’ ability to go after rich tax evaders, the agency, “under continued pressure from Republicans,” has made auditing the working poor who receive the earned income tax credit, one of the largest anti-poverty programs in the country, a higher priority.
The average earned income tax credit recipient earned less than $20,000 last year. Despite that, 36 percent of last year’s IRS audits targeted EITC recipients, who are now “ examined at rates similar to those who make $500,000 to $1 million a year,” ProPublica reported, adding that “only people with incomes above $1 million are examined much more frequently.”