July 8, 2020; Congressional Budget Office
As we face profound job losses resultant from the pandemic combined with ever-richer billionaires, we may ask ourselves, “What is wrong with this picture?” Sen. Bernie Sanders (I-VT), as always, is helping to answer this question.
A Congressional Budget Office (CBO) report requested by Sanders and released yesterday, Trends in the Internal Revenue Service’s Funding and Enforcement, finds that between the years 2011 and 2013, the estimated amount of taxes owed but ultimately unpaid was $381 billion on an average annual basis. A study written up last November in the Washington Post by Lawrence Summers and Natasha Sarin finds that roughly 70% of this is money left owed by this country’s top one-percent.
“In 2011, more than 12 percent of individuals making $1 million or more annually were audited,” they write. “Last year, only 3.2 percent were. Audit revenue declines proportionally to the declining audit rates.”
Sen. Sanders, who asked for the CBO study to be done, commented:
With the money that these tax cheats owe, this year alone, we could fund tuition-free college for all, eliminate child hunger, ensure clean drinking water for every American household, build half a million affordable housing units, provide masks to all, produce the protective gear and medical supplies our health workers need to combat this pandemic, and fully fund the US Postal Service. That is an absolute outrage, and this report should make us take a long, hard look at what our national priorities are all about.
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Meanwhile, his office points out, Congress has cut the IRS’s funding and staff dedicated to enforcement by about 30 percent in the last decade. Consequently, the IRS examination rate for corporations with $20 billion or more in assets declined by half between 2010 to 2018, and taxpayers with more than $1 million in annual income saw their audit rates fall by 63 percent.
“For every dollar we invest in getting the IRS the staffing and resources it needs, we get three dollars back in unpaid taxes,” said Sanders. “Make no mistake: the primary beneficiaries of IRS funding cuts are wealthy tax cheats and large corporations.”
The new CBO report also found that increasing IRS funding by just $20 billion over the next 10 years would actually decrease the deficit by $40 billion over the next 10 years.
CBO estimates that increasing the IRS’s funding for examinations and collections by $20 billion over 10 years would increase revenues by $61 billion and that increasing such funding by $40 billion over 10 years would increase revenues by $103 billion.
This estimate is conservative, since it does not include the considerable indirect impact that increased funding would have on deterrence.—Ruth McCambridge