Donald J. Trump paid $750 in federal income taxes the year he won the presidency [in 2016]. In his first year in the White House, he paid another $750. He had paid no income taxes at all in 10 of the previous 15 years — largely because he reported losing much more money than he made.
—The New York Times, September 27, 2020
Trump Organization found guilty of tax fraud in scheme hatched by top executives
—PBS, December 6, 2022
Frank J. Bisignano is the Chief Executive Officer of the Internal Revenue Servicewhen he is not working as the Commissioner of the Social Security Administration. Yes, he simultaneously holds both positions. Bisignano told Congress that the current IRS staffing level is perfect. There is reason to be skeptical about Bisignano’s claim, and not just because there is no dedicated full-time CEO of the IRS. The IRS workforce was cut by 27 percent last year. There are fewer people working at the IRS today than there were in the mid-1980s while our tax system has become more complex and the population has grown by 50 percent.
President Trump’s budget calls for a cut of $1.4 billion or 12.5 percent from the IRS’ budget. This is after IRS funding was cut 9 percent last year, the fourth consecutive year of flat or reduced funding.
This was not supposed to happen. Seeing that the IRS was grossly understaffed, was operating using technology from the 1960s, and was using places like a cafeteria and hallways as storage rooms for some of the 10.2 million unprocessed paper tax returns, the Biden administration succeeded in obtaining funding for the IRS in the Inflation Reduction Act of 2022 to address these and other problems. ButRepublicans outmaneuvered the Democrats in the following years, and now much of that funding has been clawed back. This continues the tradition of Republican leaders attacking IRS, making it easier for the rich to avoid paying their taxes.
A major problem for our country’s finances is that there is about $700 billion per year in tax evasion. This means that the country has larger deficits and has more difficulty paying for all the things the government does like health care, education, veterans’ benefits, and so on. Most of this tax evasion occurs among the rich.Nearly 30 percent of unpaid tax dollars are due to tax evasion from the richest 1 percent. Half of all unpaid tax dollars are due to the top 5 percent.
The Yale Budget Lab estimated that the increased IRS funding in the Inflation Reduction Act would have brought in over $600 billion in revenue over 10 years. Now, because of the success of the anti-IRS movement by Republicans in Congress, much of that revenue is lost. The IRS division that audits billionaires has been pushed to cut 38 percent of its staff.
Billionaire tax cheats are breathing easier.
This first appeared on CEPR.
