Saturday, November 4, 2023

It is patriotic to pay ones taxes.

     “If Republicans had an ounce of shame they wouldn’t condition support for Israel and Ukraine on giveaways to wealthy tax cheats."

              Senator Ron Wyden, Chair, Senate Finance Committee

The new House Speaker plants his flag: Cut IRS enforcement.

We get one chance to make a first impression. The new Speaker of the House, Mike Johnson, used his chance to condition funding of $15 billion in aid for Israel by pairing it with a cut to money for IRS enforcement of our tax laws. It was a statement of principle and priority. Speaker Mike Johnson told Fox the intent was to "decrease the woke and weaponized federal government."


This choice required Johnson and the Republican Congressional Committee to say two things that were demonstrably untrue. The first is that cutting money for the IRS reduces the deficit. It does the opposite. It raises the deficit. The Congressional Budget Office guideline is that enforcement pays for itself at a rate of about two to one. 

The second untruth was that reducing IRS funding benefits "average Americans" and the "middle-class." The RNCC described the trap they tried to set for Democrats: “Extreme House Democrats have a decision to make: IRS audits of middle-class Americans or supporting Israel." 

Johnson and the RNCC know better. The money used to restore IRS audits refocuses the IRS back toward complicated returns of corporations and individuals with incomes greater than $400,000 a year. The IRS said:
[IRS] focus will shift attention to wealthy from working-class taxpayers; key changes coming to reduce burden on average taxpayers while using Artificial Intelligence and improved technology to identify sophisticated schemes to avoid taxes.
The IRS is going where the tax-cheat problem is. Average Americans -- taxpayers who get paychecks and a year-end W-2 form -- have money withheld at the time they are paid. The employer sends the IRS a report of income, which easily matches up with the individual's own report. Significant tax cheating among this group is hard to do, and rare. Corporations and wealthy people operating businesses have complicated returns, with multiple schedules, deductions, expenses, depreciation allowances. These provide opportunities to find or create "gray areas" and pretexts.

Of the 703,000 tax returns filed by million-dollar-plus taxpayers, the IRS audited 7,710 with an agent-present audit and an equal amount by "correspondence." There is a 2.2% chance of any audit at all. Taxpayers with multiple opportunities can choose to take "a very aggressive tax stance." That is a polite way to say "cheat." With only a tiny chance of an audit, the IRS likely won't notice.

Increasing tax compliance is a social good. It lowers the deficit. It makes paying taxes more fair, because it better levels the playing field between honest taxpayers and cheaters. It increases the public's sense of respect for government institutions.  

I am hopeful Democrats don't position this as an attack on prosperous people. This shouldn't be about class warfare. It is OK in America to get rich, and Democrats should support that. Prosperity is better than poverty. Getting more money is why most people work hard, look for promotions and better-paying jobs, join unions, start businesses, take risks with new enterprises, and exert themselves. Democrats should be the pro-prosperity party, where honest work and enterprise are rewarded. The audit message should be fairness and equality. 

Trump admitted in a 2016 debate with Hillary Clinton that he rarely paid federal taxes. He said it was because he was "smart." He also bragged he could shoot someone on Fifth Avenue and not lose votes. That sent a message of elite privilege. He was a happy scofflaw. It communicated that Americans should get away with whatever one can. Don't be a sap.

A better message, and one Democrats should try to renew, is one that sounds hopelessly old fashioned and corny as I write it: Honor and patriotism. "Ask not what your country can do for you. Ask what you can do for your country."  

One brick in the foundation of renewed patriotism in the country is to restore the expectation that everyone does one's fair share, and that the laws are enforced to make that a reality. It is patriotic to file an honest tax return. It is something one can do for one's country.

We will all feel better about it if we think everyone else is doing so as well.

[Corrected:  an earlier version of this used the word "Ukraine" rather than Israel, as the country whose aid was being withheld, an error.]

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Mike Steely said...

It’s called governance, Republican style: After three weeks of complete dysfunction, the Republican-controlled House is now passing spending bills which they know don’t have a chance in the senate. Unless they have a sudden epiphany that inspires them to do their job and work with Democrats on a compromise, the government will run out of money in two weeks. Having failed in their attempt to overthrow the government after the 2020 election, they now seem determined to shut it down.

Ed Cooper said...

I'm honestly torn over this. Allegedly, my VA Disability benefits, and Social Security benefits are protected, but there are hundreds, if not several thousand Federal Employees in my Congressional District who will be adversely affected by this idiocy. So while I think a shutdown will help seal the end of the Republican Party as it's composed of today, I know a lit if good people are going to be hurt. Maybe enough that we can send Qliff Bentz back to whatever grift he was running before getting into politics.

Anonymous said...

Do you mean Israel, not Ukraine, in the first paragraph?

It is not an exaggeration to say that the current GQP wants to turn the clock back a few hundred years. They are on mission/crusade.

Up Close: Road to the White House said...

Corrected. Thank you. Israel on this one, of course. Not Ukraine.

Dave said...

If Republicans had an ounce of shame- something hardcore convicts also lack. Among those hardcore psychopaths, like Donald Trump, it’s a waist of time. I’m afraid the Republicans have been corrupted and can’t unlearn the skill of hypocrisy, lies, and being shameless. Unless they experience real consequences, they will continue with this behavior and value system. I wonder if seeing Trump go to jail would work? Social learning theory by Bandura would suggest maybe so.

Mc said...

Now? Destroying America has been their goal for decades.
The GOPee is doing the work of Russia.