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Over 1.4 million of wealthiest Americans didn't bother to file required tax returns from 2017-2020 [1]

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Date: 2023-09-28  

While House Republicans waste the nation’s time squandering taxpayer dollars on their Fox News-inspired, sham impeachment inquiry, the people who they actually represent — the wealthiest of the wealthy — continue to thumb their noses at paying their own share of taxes, with many of the nation’s ultra-rich simply refusing to file returns at all, often escaping and avoiding any tax payments for years.

For the most part, Republicans seldom (if ever) condemn the prevalence of this tax cheating among the country’s “elite;” in fact, they seem to condone it, probably because it dovetails well with their ultimate goal of crippling the federal government’s ability to function. In fact, the slogan “Defund the IRS” would probably be a key plank in the Republican party’s platform (if they ever bothered to write one). It’s pithy, mindless, and misleading: and thus perfectly suited to their incurious base. As noted by Mark Sumner reporting earlier this month, it’s only when tax avoidance is committed by one of their political enemies — President Biden’s son, Hunter, for example — that Republicans find something of value about the Internal Revenue Service. In those circumstances, however, their argument turns on its head and instead of being demonized for being too intrusive, the I.R.S. is castigated instead for not enforcing the law harshly enough.

But that happens rarely, because the people most literally “invested” in cheating on their taxes are the same people the Republican party exists to protect. And now we have some real numbers that clarify just how much that protection costs the rest of us, who actually try to obey the law.

In their very first legislative act after attaining their narrow majority, the Republican-led House voted to rescind billions of dollars in additional funding for the Internal Revenue Service, money that was intended to crack down on tax cheats. That funding, included in the Inflation Reduction Act passed by Democrats in the prior Congress, enabled the agency to at least partly reverse its fairly calamitous decline in technological, staffing and enforcement capabilities. Every Republican member of the House Judiciary Committee now involved in prosecuting the current impeachment inquiry (attempting to impugn President Biden for the alleged financial transgressions of his son, Hunter) for example, voted to rescind those funds. Afterwards, Republicans loudly touted this “achievement,” claiming they were doing ordinary Americans a big favor by cutting funding to an agency they have maligned for decades. As usual, the task of explaining the truth to the American people was left to Democrats; the rescission of the added funding has zero chance of becoming law as long as Democrats control the senate and the White House.

Now we have some clear data revealing the reality of what the Republicans’ push to further “defund” the agency that collects our taxes actually means in terms of lost revenue. As the Washington Post’s Greg Sargent reports, new information from the Internal Revenue Service, provided in a letter by Oregon’s Democratic Sen. Ron Wyden, addressed to the commissioner of the IRS and provided to the Senate Finance committee, reveals that over the period from 2017-2020, over 1.4 million wealthy Americans failed to file required federal tax returns, potentially depleting the U.S. Treasury of over $65 billion in available funds. Those are the same funds that pay for things like food stamps, interstate highway repairs, and the equipment needed for our armed services to function.

From Sen. Wyden’s letter [footnotes omitted]:

In response to a request from my staff, on July 21st the IRS provided detailed information on the population of high-income taxpayers for tax years 2017 –2020 that had not yet satisfied their filing obligations with the IRS. This data revealed that over1.4 million wealthy tax cheats had still not filed required tax returns for these years and that the total amount of unpaid taxes potentially owed by this population is a whopping $65.7 billion. [***] Perhaps most alarming was the extraordinary amount of unpaid taxes owed by a small subset of ultra-wealthy non-filers. According to the data, 8,729 high-income non-filers for tax years 2017 – 2020 each had potential balance of unpaid taxes in excess of $500,000. I also received information related to the top 500 high-income non-filers for each of these years (a total of 2,000 taxpayers total). This group represents a select group of sophisticated individuals earning millions of dollars every year. These taxpayers have access to professional advisors and are well aware of their filing obligations with the IRS. The IRS found that this select group of2,000 non-filers owed $923 million.

That’s $65 billion that — if Republicans have their way — ordinary Americans will never see returned to them in the form of any government-sponsored services, projects, or benefits.

Sargent interviewed Wyden for his Post article.

“These are people who essentially blow raspberries at the IRS,” Wyden told me. “They’re sophisticated people. They know this is wrong, wrong, wrong. And they do it anyway.”

Of course they do. They have an entire political party dedicated to allowing such cheating to thrive, by pushing relentlessly to gut enforcement of the nation’s tax laws. As Wyden points out in his letter [footnote omitted]:

Over the last decade, Congressional Republicans have led the push to cut IRS resources in order to let wealthy tax cheats off the hook—and according to this data they’ve succeeded. Odds are, if you’re a wealthy tax cheat that doesn’t even bother to file a tax return, you’ll get away with it. As Republicans continue to clamor for a highly selective prosecution and the incarceration of Hunter Biden, the evidence shows that thousands of other wealthy scofflaws have managed to avoid prosecution without ever filing tax returns or paying the large sums of back-taxes owed. What’s more, those same Republicans are insisting on more cuts to IRS enforcement funding, in order to shift more of the burden of tax enforcement from the wealthy and onto working people.

Republicans like to premise their attacks on the IRS by suggesting that the GOP is standing up for ordinary workers. Sargent (interviewing Jean Ross of the Center for American Progress) makes the point that by opposing funding to target high-income tax scofflaws, Republicans actually do the exact opposite. It’s not the lowly salaried wage worker --whose income is reported directly to the IRS by his/her employer — who hires high-priced lawyers to dream up tax avoidance schemes: it’s the multi-millionaires seeking to “shield income” from multiple sources through a complex web of evasion tactics, who pose the greatest challenge for the IRS. As Sargent observes, that’s why providing the IRS with the resources to run down these high-end tax cheats is important: Because it levels the playing field, and makes the system fairer to all.

As Sargent observes:

On taxes, this disconnect is particularly stark: If Republican efforts to defund the tax police prevail, the real winners will not be workers and small businesses but a subset of wealthy elites — who will chortle all the way to the bank.

Meanwhile, Hunter Biden paid back the taxes he owed (although you wouldn’t know that from House Republicans). But of the 10, 272 “repeat offenders” cited in Sen. Wyden’s correspondence with “multiple years” of non-filed returns and “six figure balances of unpaid taxes,” only a small fraction (154 in all) have ever been criminally investigated. That’s because, as Wyden states, “Due to resource constraints and prosecutorial discretion, most of these cases never get referred to the Department of Justice(DOJ) for criminal prosecution.”

That state of affairs may be fine for Republicans. But for the vast majority of Americans — who actually pay their taxes -- it’s unacceptable. And that’s why Congressional Democrats, led by President Biden, moved to change it.

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[1] Url: https://www.dailykos.com/stories/2023/9/28/2196073/-Over-1-4-million-of-wealthiest-Americans-didn-t-even-bother-to-file-tax-returns-from-2017-2020

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