We are outgunned
Right Hand Man, in Hamilton
New York Times op-ed: The I.R.S. Is Outgunned, by Natasha Sarin (Penn Law & Wharton):
The president of the United States paid less in federal taxes than all but the poorest Americans the year he was elected. This is in large part because he lost more money than nearly anybody else in this country for years, a troubling fact given his promise to “run America like his business.”
But the responsibility for his meager $750 tax bill does not lie with President Trump alone, nor with his tax advisers. Instead, the newest revelations put a very famous face on a problem that has long existed: The wealthy aren’t paying what they owe, and our tax system allows it.
This is not a new problem, but it is one that has gotten worse in the last decade, the result of a partisan attack on the I.R.S. that has deprived it of the resources it needs to police evasion aggressively. In the last decade, the I.R.S.’s budget has fallen (in real terms) by nearly 15 percent. Its enforcement budget has fallen 25 percent over this period, and its work force has been slashed by 20 percent.
These grim numbers do not even take into account the growth in the economy and the increasing complexity of tax returns. In fact, as a share of gross tax collections, the I.R.S. budget is down nearly 50 percent from its peak in 1993.
As my work with the former Treasury Secretary Lawrence Summers shows, the result of this underinvestment is that the I.R.S. today cannot administer tax laws effectively. Based on current trends, in the next decade the I.R.S. will fail to collect an estimated $7.5 trillion in owed tax. That “tax gap” corresponds to nearly 3 percent of G.D.P. annually.
The beneficiaries of a gutted I.R.S. are the elite. ...
a robust attack on the tax gap will signal an end to our two-tiered tax system, where those with enough money are able to subvert the tax laws with little fear of repercussions. At a time when inequities in the criminal justice system are appropriately a cause of significant concern, those same inequities in tax administration deserve the attention of policymakers.
A quotation from Justice Oliver Wendell Holmes is etched on the wall at I.R.S. headquarters: “Taxes are what we pay for a civilized society.” President Trump is one insidious example of the wealthy not paying their fair share. We have to invest in tax compliance so they are forced to.