I don’t know about all of you, but I’m getting tired of daily news items that leave me both mystified and angry. One of the most recent causes of that combination was news that, during the Republicans’ “negotiation” (note quotes) on the infrastructure bill, they insisted on removing the measure’s additional funding for the IRS.
Please note, this wasn’t a provision allowing the government to raise taxes. This money would have provided the agency with more resources to go after tax evasion. In a sane world (which we clearly don’t inhabit), the party of “law and order” might be expected to support the notion that government should crack down on the crime of tax evasion.
Plus, we are talking about a lot of money. The Treasury Department has estimated that what they call the “tax gap,”–that is, taxes owed under current rates but not paid– amounts to more than $500 billion every year. According to Paul Krugman, some estimates put the number much higher. The Biden administration has simply proposed additional resources that the I.R.S. needs to reduce that gap.
I also want to emphasize that we aren’t talking about the obscene amounts of money sheltered by obscenely rich people in various tax havens, or monies not payable thanks to the operation of various tax loopholes. We are talking about money people owe after their tax advisors have helped them take advantage of these handy little mechanisms.
When people who owe taxes don’t pay them, the rest of us have to make up the difference. Given the economics of what constitutes today’s GOP base, why wouldn’t Republican officeholders want to spread the burden–in this case, the costs of repairing America’s crumbling infrastructure–to the citizenry as a whole?
In his column, Krugman shares my mystification–although he’s a bit more cynical.
Just to be clear, I’m not surprised to learn that a significant number of senators are sympathetic to the interests of wealthy tax cheats, that they are objectively pro-tax evasion. I am, however, surprised that they are willing to be so open about their sympathies.
There is, after all, a big difference between arguing for low taxes on the rich and arguing, in effect, that rich people who don’t pay what they legally owe should be allowed to get away with it.
Just to be equally clear, I was surprised that even these Senators would be “objectively pro-tax evasion.”
For one thing, I don’t think even right-wingers would dare make the usual arguments for low tax rates, dubious as those arguments are, on behalf of tax evasion. Who would seriously claim that the only thing keeping “job creators” going is their belief that they can dodge the taxes the law says they should pay?
Krugman asks the question that I also ponder: who are the constituents for this startling position? Granted, a bigger budget deficit might cut into the social spending Republicans detest, but–as he points out– it also leaves less room for legal tax cuts.
Tax evasion certainly isn’t limited to the rich–Krugman reminds us that when plumbers or handymen ask for payment in cash, we can pretty much figure out why–but it is definitely concentrated among the well-do-do.
Opportunities to hide income are concentrated at the top; one recent estimate is that more than 20 percent of the income of the top 1 percent goes unreported.
It’s certainly possible that big political donors are among the biggest tax cheats. Krugman thinks that their clout within the G.O.P. “has actually increased as the party has gotten crazier.”
There have always been wealthy Americans who dislike the right’s embrace of racial hostility and culture wars but have been willing to swallow their distaste as long as Republicans keep their taxes low. But as the G.O.P. has become more extreme — as it has become the party of election lies and violent insurrection — who among the wealthy is still willing to make that trade-off?
Some rich Americans have always been right-wing radicals. But as for the rest, the party’s base within the donor class presumably consists increasingly of those among the wealthy with the fewest scruples and the least concern for their reputations — who are precisely the kind of people most likely to engage in blatant tax evasion.
This seems like a stretch. On the other hand, I have no better explanation.
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