Republicans have long sought to shrink the tax-collecting agency, but Biden aides believe hundreds of billions of dollars go uncollected each year. [that's a lie --they know that hundreds of billions of dollars go uncollected each year, everyone on the inside knows that]
White House officials plan to make a massive [puny -- WaPo is full of baloney on this point] increase in enforcement at the Internal Revenue Service a central component of the tax proposal they will unveil this week alongside a $1.8 trillion spending package, according to four people briefed on the matter.But probably the single biggest source of new revenue in the plan comes from dramatically expanding the clout of the nation’s tax agency. It seeks to beef up the number of agents and give the IRS new tools and technology to execute collections and crack down on avoidance, the people said. White House officials have eyed raising as much as $700 billion from toughening IRS enforcement and auditing over 10 years, two of the people said, although the precise amount in the plan remained unclear. Enforcement will be focused on the wealthy, the people said.
The people spoke on the condition of anonymity to discuss private administration deliberations. Officials cautioned the plan had not been finalized. White House officials are looking at increasing the agency’s budget by $80 billion over 10 years, a figure first reported by the New York Times.If approved, the coming White House proposal would represent a remarkable change to the IRS, which has been beset for more than a decade by problems from steep budget cuts and a growing list of responsibilities. The IRS lost roughly 18,000 full-time positions after 2010, due primarily to cuts pushed by Republicans in Congress under President Barack Obama, with the number of auditors falling to lows unseen since the 1950s.
Those changes have hampered the IRS’s ability to collect taxes even from those who legally owe them, particularly among the rich. Former IRS commissioner Charles Rossotti joined economists Larry Summers and Natasha Sarin in a recent analysis that found the tax agency could raise as much as $1.4 trillion in additional tax revenue with better data, technology, and personnel.
Germaine's analysis
What?? Now it's $1.4 trillion???? WTF! The last time I checked (April 22, 2021), it was a mere $1 trillion/year. A 40% increase in one week? I smell rotting some fishes here.
The latest estimate I was aware of was that each additional dollar the IRS gets to enforce tax law and recovery of unpaid taxes will result in about $4 recovered. So the return on investment is 400% for the tax year that taxpayers paid for additional tax law enforcement. That is pretty good. Right?
So, is this $80 billion over 10 years is great stuff? Right?
No, it isn't. It sucks hard. It is an insult to honest taxpayers.
The annual tax gap is about $1 trillion/year (or $1.4 trillion?). Averaged out, an added $80 billion over ten years (~$8 billion/year) will grab about $32 billion/year from tax cheats. $32 Billion/year out of $1 trillion/year amounts to recovering about 3.2% of the annual theft-fest (less than that if it's $1.4 trillion).
In other words, this is a pissant level investment in vindicating the rule of law and treating honest taxpayers respectfully. Actually, it is an outrageous insult to taxpayers and a slap in the face. But, it's not a surprise.
An actual pissant -- it is a real thing
The March 24, 2021 post here on Dissident Politics about the tax gap included this prescient insight from Germaine:
Janet Yellen commented blandly that the current gap is running at $600 billion/year and she would take a look at it.
Translation: She will do nothing about it and could not care less.
Well, that prediction turned out to be true, unless one defines this pissant 3.2% act as something and caring in view of the size of annual theft festival.
Of course, one can reasonably shift most of the blame for this outrageous insult to taxpayers to the corrupt GOP in congress. Any more of an effort from Biden and democrats would trigger a crapstorm of who knows what awfility[1] from republicans who want to protect their tax cheats.
One can reasonably imagine that the added tax enforcement dollars will go to low income folks. Rich folks will not tolerate such an intrusion on their sacred feng-shui.
Questions: Who is more responsible for the annual theft-fest, congressional democrats, congressional republicans or are both about equally responsible. Does anyone care?
Footnote:
1. Awfility is not a real word, but my old room mate from Rutgers, a chemical engineer and hard partying friend of the drop trou Rutgers football team*** used the word when appropriate. It stuck in my little brain all these years.
*** The football team my old room mate partied with crashed parties and liked to drop trou before stealing the beer keg(s) and driving off to the next party to crash and steal more beer keg(s) from after dropping trou again in salute to the next party. There was much trou dropping and beer keg stealing in the Rutgers neighborhood way back in the 1970s. Of course, that was far better than what the football team at my old alma mater used to do. Those fine students used to go to a college student bar and randomly pick out some guy to drag out and beat the shit out of him for fun and then go back in and find another victim.
Ahh, college days. What fun, as long as one avoided the fun-filled football teams. I avoided my football team with a vengeance. They were a bit too feisty for my taste and I was a bit too puny to defend myself. Well, OK, way too puny.
Hm. Moral question: What's the worst? (i) The GOP protecting tax cheats in stealing about $1 trillion/year from the US treasury and honest taxpayers, (ii) some high spirited football team members crashing parties, dropping trou in salute and then stealing beer kegs, or (iii) high spirited football team members beating the shit out of people they randomly pick out of a bar? Jeez, who would have known how complicated morality could be.
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