Critics of the GOP tax-cut legislation brought up these under-reporting dangers before the bill's passage, and the bill's supporters did insert into the final legislation various clauses designed to prevent richer Americans from exploiting the new pass-through deduction.
But these clauses need to be enforced to be effective, and GOP lawmakers have been doing their best, for quite some time now, to make that enforcement impossible. For almost a quarter-century, they've been demonizing the IRS as a den of thuggish storm troopers out to gouge average Americans, and these relentless GOP attacks have had a major budget impact. Over the past eight years, lawmakers have squeezed about $1 billion -- and 18,000 staff positions -- out of the IRS.
And that brings us to the second step Congress took this winter to keep tax evaders safe and nurture new ones. Earlier this month, with spring fast approaching, lawmakers put the finishing touches on an omnibus federal budget package that leaves the woefully underfinanced IRS woefully underfinanced.
The new budget legislation gives the IRS $77 million less than what the agency requested to implement the tax legislation passed in December. The new budget does increase overall IRS funding, after years of GOP cuts to the agency, but funding for the IRS remains, the Washington Post reports, "down from the $12.1 billion the IRS received in 2010, a year in which the tax collection agency was not tasked with enforcing the biggest overhaul of the federal tax code in several decades."
The most recent IRS study on taxpayer income that's going unreported covers the years 2008 through 2010. That study put the "overall voluntary compliance rate" of American taxpayers at 81.7 percent. Or, to put the matter more starkly, over 18 percent of income nearly a decade ago was evading taxes.
That figure will now likely get significantly worse, and so will inequality, unless we undo what this past winter has wrought.
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