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internal revenue service
Democrats' IRS Crackdown on Millionaires Draws in $1 Billion
"This is what happens when you fund the IRS," said one tax fairness group. "Anyone trying to cut IRS funding just wants to protect rich tax cheats."
Jul 11, 2024
As the U.S. Internal Revenue Service announced Thursday that it had recovered $1 billion in unpaid taxes from wealthy individuals, economic justice advocates said the news served as a reminder of a top priority for the Republican Party: ensuring that tax evasion can continue among the richest Americans.
The IRS was able to recover the tax payments "thanks to historic funding from Democrats," said Rep. Bill Pascrell (D-N.J.). "Every single Republican in Congress voted against it and Republicans are hellbent on helping millionaires [to] keep stealing from you."
The Biden administration and Democrats in Congress pushed for the inclusion of $80 billion for the IRS in the Inflation Reduction Act (IRA) in 2022, with the money earmarked to allow the agency to hire more tax evasion enforcement staff and hold wealthy people and corporations accountable for tax avoidance.
When former House Speaker Kevin McCarthy (R-Calif.) took the gavel last year, he said a proposal to repeal the funding would be the "very first bill" introduced by the party, claiming the Democrats aimed to force working Americans to pay more in taxes.
The GOP managed to repeal $20 billion of the funding as part of a deal to suspend the debt ceiling in May 2023.
"Our message for these taxpayers is that now that we are resourced, we can do the job of ensuring that they pay."
Stopping the IRS from cracking down on wealthy tax cheats, said Bobby Kogan, senior director of federal budget policy for the Center for American Progress, "is THE biggest GOP priority."
Under former Republican President Donald Trump's administration, an analysis by Americans for Tax Fairness (ATF) showed last year, the IRS audited low-income Americans at a higher rate than millionaires for the first time.
The IRS said the new funding allowed it to track down and contact 1,600 taxpayers with more than $1 million of income who owed more than $250,000 in tax debt.
"Our message for these taxpayers is that now that we are resourced, we can do the job of ensuring that they pay," said IRS Commissioner Daniel Werfel.
Last month the IRS proposed a rule to stop "partnership basis shifting," which allows a business or individual to move assets to avoid paying taxes. The rule could recover more than $50 billion in revenue over a decade, according to the Treasury Department.
The results announced Thursday come from the agency's spending of $5.7 billion—about 10%—of its IRA funding.
"This is what happens when you fund the IRS," said ATF. "Anyone trying to cut IRS funding just wants to protect rich tax cheats."
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'The Guy Is a Hero': IRS Contractor Who Leaked Trump Tax Returns Gets Max Sentence
"Billionaires control our lives and our government and pay... lower tax rates than the rest of us, but this is the bad guy who should be punished with a five-year prison sentence?"
Jan 29, 2024
As the U.S. tax season began Monday, a former Internal Revenue Service contractor who leaked to the media the tax records of wealthy Americans including ex-President Donald Trump was sentenced to five years in prison and ordered to pay a $5,000 fine.
U.S. District Judge Ana C. Reyes, an appointee of President Joe Biden, handed down the maximum sentence to Charles Littlejohn, who pleaded guilty to unauthorized disclosure of tax returns and return information in October. Littlejohn gave The New York Timesinformation on Trump—who is expected to face Biden in the November election—and shared with ProPublica data on Jeff Bezos, Michael Bloomberg, Warren Buffett, Bill Gates, Rupert Murdoch, Elon Musk, Mark Zuckerberg, and more.
While Reyes called the decision to release Trump's filings "an attack on our constitutional democracy" and Littlejohn told the court that he "acted out of a sincere but misguided belief that I was serving the public," others framed the 38-year-old's move as heroic.
"This guy is a hero who showed us how the superrich steal from the American public,"
Slate politics writer Alexander Sammon said Monday. "Naturally, the judge gave him a max sentence, claiming it was 'a moral imperative' to punish him as harshly as possible."
Jeff Hauser of the Revolving Door Project noted that "this whistleblower's cause has been ignored by a LOT of people who have defended much more intrusive leaking. (Tax returns were public in the past, are in some countries now, and should be fully transparent—they're inherently public information, unlike, e.g., John Podesta's emails)."
People's Policy Project founder Matt Bruenig similarly pointed out that "in Finland, these returns are public record available to anyone who wants to see them."
After decades of presidential candidates voluntarily releasing income tax returns, Trump declined to do so—breaking his promise to make them public. The Republican also unsuccessfully fought to block Congress from receiving some of his tax records.
After the sentencing on Monday, Littlejohn's attorney told reporters that his only statement was to thank the court for consideration of the case. Meanwhile, Acting Assistant Attorney General Nicole M. Argentieri of the U.S. Department of Justice's (DOJ) Criminal Division said that his "sentence sends a strong message that those who violate laws intended to protect sensitive tax information will face significant punishment."
When Littlejohn pleaded guilty last year, ProPublicadeclined to comment other than reiterating that the news outlet "doesn't know the identity of the source who provided this trove of information on the taxes paid by the wealthiest Americans."
Charlie Stadtlander,a spokesperson for the Times, said last year that "we remain concerned when whistleblowers who provide information in the public interest are prosecuted. The Times' reporting on this topic played an important role in helping the public understand the financial ties and tax strategies of a sitting president—information that has long been seen as central to the knowledge that voters should have about the leader of our government and the candidates for that high office."
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'MAGA Math Doesn't Add Up': Democrats Rebuked for Backing GOP Cuts to IRS
"Appeasing Republican extremists with cuts to the IRS," said Groundwork Action, "is both fiscally and morally irresponsible."
Jan 09, 2024
Democratic leaders assured the U.S. public that a budget deal keeping non-military spending at its 2023 level would "protect key domestic priorities," but economists and economic justice advocates on Monday criticized the party for appeasing the GOP and permitting the inclusion of its top objective: accelerating cuts to the Internal Revenue Service in order to benefit wealthy tax evaders.
The deal, which provides $772.7 billion for "non-defense discretionary funding," also includes a provision allowing $10 billion in funding cuts to the IRS—which the GOP insisted upon last year in the so-called Fiscal Responsibility Act to raise the debt ceiling—to go into effect in 2024 instead of 2025.
Rebuking a statement from Senate Majority Leader Chuck Schumer (D-N.Y.) and House Minority Leader Hakeem Jeffries (D-N.Y.), who said the deal will "maintain important funding priorities for the American people and avoid a government shutdown," the Center on Budget and Policy Priorities (CBPP) warned the agreement is "at best a funding freeze at a time when costs have risen, meaning that public services that people and communities count on will be cut."
Sharon Parrott, president of the progressive think tank, said that while Democrats rejected "further, deeper cuts that some House Republicans demanded"—a "critical" move—the acceleration of IRS funding cuts in the deal was "deeply unfortunate."
With the provision, said Parrott, the deal puts "tax cheaters' interests ahead of honest taxpayers."
"Any further cuts to the IRS should be rejected," she added. "House Republicans continue to create showdowns they claim are about spending and deficits, only to demand IRS funding cuts that would weaken tax enforcement, allow for more unlawful tax cheating, and increase the deficit."
Critics have warned that slashing IRS funding will not only make it more difficult for the government to stop tax evasion by the rich—costing an estimated $38.1 billion in lost tax revenue, according to a Center for American Progress (CAP) analysis—but will also make it more difficult for working people to access IRS services.
"Says a lot that this is a top conservative priority," said Bharat Ramamurti, former deputy director of the National Economic Council.
The 2022 Inflation Reduction Act increased IRS funding, noted David Kass, executive director of Americans for Tax Fairness last week, cutting wait times and adding services for taxpayers "while simultaneously allowing the IRS to recoup funds from super-rich tax cheats."
Yet "Republicans continue to be laser-focused on a single issue—protecting the wealthiest from paying their fair share in taxes," Kass said. "Republicans continually shout about the size of the deficit, using it as an excuse to try to cut services that Americans rely on. Yet according to the Congressional Budget Office, cutting the IRS budget costs our country billions. Why then, would Republicans work so hard to slash this funding and add to the deficit? We know the answer: to protect mega-rich tax cheats rather than helping hard working Americans."
Bobby Kogan, senior director of federal budget policy for CAP, pointed out that the deal finally reached by Republicans and Democrats includes about $32.5 billion in "real spending offsets"—less than the amount of government revenues that are lost when the IRS loses funding to hold tax cheats to account.
"For every $1 the IRS spends auditing wealthy tax cheats, America sees $22 in return," said campaign group Groundwork Action. "MAGA math doesn't add up."
"Appeasing Republican extremists with cuts to the IRS," the group added, "is both fiscally and morally irresponsible."
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