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If You’re an Honest Taxpayer New IRS Budget a Good Thing



The Inflation Reduction Act (IRA) won’t actually reduce inflation much but will have other desirable results. One benefit: increased Internal Revenue Service (IRS) resources for catching wealthy corporations and individuals who cheat on their taxes.

Since someone must pay for government, tax cheating means honest people have to pay more. This writer can understand can why tax cheats want to leave the IRS underfunded, understaffed, and reliant on ancient computers.

But, what is not understadable, is the Republicans’ unanimous vote against this legislation.

Republicans have denounced the increased support for the IRS (which will produce a lot more tax revenue than it costs) as a vicious attack on small businesses and the little guy.

But contrary to those partisan talking points, additional auditing will focus on where it can produce the most revenue, on very wealthy taxpayers.

As IRS Commissioner Charles Rettig, appointed by Donald Trump, has pointed out:

“Wage-earning taxpayers like firefighters, construction workers, teachers and police officers are among the most compliant taxpayers, given that their incomes come from Forms W-2 and 1099.”

Rettig also noted that “these [new] resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans.”

It’s bad enough so many Republicans have ascribed to never raising any taxes.

As conditions change, increases and decreases in taxes are appropriate. It’s irresponsible to vote for decreases but then to oppose increasing them when new conditions call for that.

But to oppose enabling the government to collect taxes already on the law books is going too far. One should not lightly accuse leaders of being bought off, but the Republican stance does not pass the smell test.

Members of Congress spend a huge percentage of their time raising money for their next election campaigns. Wealthy cheaters, who save on their taxes because the IRS is enfeebled, happily support candidates who vote to preserve this happy situation.

After all, it’s cheaper to donate than to pay the taxes one actually owes.

Republicans don’t have a monopoly on catering to the wealthy. Sen. Kyrsten Sinema, D-Ariz., recently forced a change in the Inflation Reduction Act, threatening to withhold the 50th vote needed to pass the Senate (with Vice President Harris casting a tie-breaking vote).

This change eliminated language reducing the ability of fund managers to pay lower taxes on their billion dollar earnings — the “carried interest” loophole.

One wonders if Sen. Sinema wasn’t simply the designated fall guy (or gal?) for other Democrats who also wanted to avoid offending these wealthy donors.

Democratic leader Sen. Chuck Schumer, D-N.Y., himself, as this writer recalls, prevented similar legislation some years ago.

The excessive complexity of our taxes provides cover for this kind of political maneuvering. The need for donations to finance expensive re-election campaigns provides motive.

Publicly financed election campaigns have often been proposed as a solution for this problem. But public financing of all election campaigns is a terrible idea.

Why?

The money for challengers would be distributed according to legislation enacted by incumbents, a financial equivalent of gerrymandering.

However a good way to reduce the leverage of wealthy taxpayers over Congress might be to finance the campaigns of incumbents from the government treasury, prohibit them from accepting private donations, and make offering such donations a serious crime.

No longer needing to accommodate fat cats, our representatives might promote the general welfare. Helping wealthy cheaters avoid taxes would no longer be in their political interest.

People could still donate to candidates challenging incumbents.

Wealthy donors might hope that their candidate will be grateful if he or she wins.

But political gratitude has been sarcastically, but accurately, defined as a lively sense of future favors. Once candidates get into public office their donors could no longer confer any more favors on them.

After a few disappointments, perhaps these wealthy donors would decide to pay their taxes honestly in the first place. A newly strengthened IRS would make such decisions even more probable.

Paul F. deLespinasse is Professor Emeritus of Political Science and Computer Science at Adrian College. Read Professor Paul F. deLespinasse’s Reports — More Here.


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