Anti-democratic Anti-business Tax Cheaters

The Republican Party has made it very clear. They are all theses things.

Each year, about $600 billion in taxes legally owed are not paid. For scale, that’s roughly equal to all federal income taxes paid by the lowest-earning 90 percent of taxpayers, according to Treasury Department data.

These unpaid taxes — often called the “tax gap” — are predominantly owed by wealthy individuals. The richest 1 percent alone duck an estimated $163 billion in income taxes each year.

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There are some types of income, however, for which little or no third-party reporting exists. These income categories — including partnership, proprietorship and rental income — accrue disproportionately to high earners. The government has much less ability to tell when these filers are misreporting; as a result, they can more easily get away with cheating.

And some of them do.

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When it comes to ordinary wage and salary income, taxpayers are remarkably forthcoming, with noncompliance averaging only 1 percent; for those more “opaque” income sources, noncompliance is an estimated 55 percent.
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Financial institutions already report certain information to the IRS about their clients’ accounts, such as interest income accrued over the year. Under Democrats’ latest proposal, banks would — once a year — also report the sums of all deposits and withdrawals for certain accounts. Not every transaction; just the year-end totals. Only accounts with flows of more than $10,000 not tied to wage income or exempted benefits would be affected — the idea being that the IRS already knows about the wage income anyway.

The reporting proposal is estimated to bring in $200 billion to $250 billion in revenue over the next decade, according to Treasury.

This is revenue that would be collected without having to raise a single tax rate, which you’d think Republicans would applaud. Instead, the GOP, backed by the bank lobby, has fought every version of the reporting policy tooth and nail.

Just as they did with Obamacare “death panels,” Republicans have megaphoned misinformation. They allege that Democrats would create a Marxist “surveillance program designed to target low- and middle-income earners” (false) in which the government would “monitor every single transaction you make” (false) with “no limits” (definitely false).

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The GOP seeks to exploit the confusion of honest, rank-and-file taxpayers. Their income is already quite well reported to the IRS: Three billion 1099 forms alone will be issued this year, and Americans haven’t considered this a “dragnet” or “infringement on personal privacy.” But suddenly it is — when similar reporting is proposed to ensure high-income people’s tax compliance, too.

Republicans also presumably have another shameful aim: communicating to tax cheats that, now and in the future, the GOP has their backs.