Wasting wealth

In 2020, the Trump term’s last full year, US households annually making over $1 million faced fewer tax audits than households with incomes low enough to qualify for the Earned Income Tax Credit. That had never happened before.

But the blame for this plutocratic about-face, a new Americans for Tax Fairness report makes clear, doesn’t belong to the Trump crew alone. Rich people-friendly members of Congress gave Donald Trump his tax-cutting playbook. Ever since 2010, they had been squeezing the IRS budget big-time, forcing the agency “to drastically pull back on auditing the ultra-wealthy.”

How drastically? Between 2010 and 2020, audits on millionaires dropped a whopping 92 per cent.

Our rich have taken full advantage. Close to a thousand taxpayers making over $1 million per year, Senator Ron Widen from Oregon has just pointed out, haven’t even bothered “to file tax returns over multiple recent years.”

Widen, the chair of the Senate Finance Committee, wants to see the IRS devote more of the $80 billion increase in funding the agency gained last year – after President Biden signed the Inflation Reduction Act into law – to helping increase the audit rate on America’s richest.

Republicans in Congress, meanwhile, are pushing a budget for next year that would chop IRS funding by $67 billion. That deep a cut, Americans for Tax Fairness calculates, would leave the nation right back where the Trump gang left it: with millionaires pocketing one-sixth of the nation’s household income getting audited less than 1 per cent of the time.

But even if we had an IRS with the auditing capacity to take on our super rich, those rich would have little real cause for concern. Yes, many rich do currently cheat on their taxes. But most rich don’t have to cheat or even cut corners. Our deepest pockets can legally sidestep any significant tax bill, thanks to a wide constellation of loopholes their lobbyists have managed to shoehorn into federal tax laws.

One example of the games rich people can now play – and always win: the donate-to-nonprofits dodge.

Most of us hear the word “nonprofit” and think Red Cross or some other familiar charity. These traditional charities fall under section 501(c)(3) of the U.S. tax code. People who donate to 501(c)(3)s can get an income tax deduction for their donations.

Other nonprofits – most notably those that come under the tax code’s 501(c)(4) – can’t offer their donors a charitable deduction at income tax time. But these C4 nonprofits can engage in activities that have next to nothing to do with providing charitable services. They can own companies indefinitely, as Forbes details, and benefit private individuals. They can lobby lawmakers as much as they want and “get directly involved in politics.”

This has been excerpted from: ‘Share the Wealth vs Waste the Wealth’. Courtesy: Counterpunch.org