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Should only ordinary people pay taxes?

2021-07-24T02:07:28.411Z

The strength of the fraudsters has grown as the Republican Party has gone berserk New York City street.SPENCER PLATT / AFP I am the biggest skeptic of politicians who see in reducing taxes for the rich the solution to all problems. In fact, the claim that tax cuts can work magic is a terrific example of a zombie idea, an idea that lives on, despite the overwhelming evidence against it, because its survival pays off to wealthy donors. More information Can the rich afford a bet



New York City street.SPENCER PLATT / AFP

I am the biggest skeptic of politicians who see in reducing taxes for the rich the solution to all problems.

In fact, the claim that tax cuts can work magic is a terrific example of a zombie idea, an idea that lives on, despite the overwhelming evidence against it, because its survival pays off to wealthy donors.

More information

  • Can the rich afford a better America?

But even I was taken by surprise that Republicans negotiating a potential infrastructure bill ruled out paying for it in part by giving the Internal Revenue Service (IRS) more resources to pursue tax evasion. This is something very important. The Treasury Department believes that the "fiscal gap," taxes due but not paid, exceeds $ 500 billion annually; some estimates give a much higher figure. And the Biden administration proposes giving the IRS enough resources to reduce this gap, as a way to help pay for investment in America's future.

But if the government follows this path, it will apparently do so without the backing of the Republican Party.

Let's be clear: I'm not surprised to learn that a considerable number of senators are sympathetic to the tax fraud interests of the rich, who are objectively favorable to tax evasion.

It does surprise me, however, that they are willing to show their sympathy so openly.

At the end of the day, there is a big difference between arguing that we must lower taxes on the rich, and in fact arguing that we should allow the rich who do not pay what the law says to get away with it.

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  • Biden plans to raise taxes on the highest incomes to fund new social programs

To begin with, I do not think that even the rightists would dare to use the usual arguments in favor of lowering tax rates, as dubious as they are, to defend tax evasion. Who would seriously argue that the only thing keeping “job creators” moving is their belief that they can evade the taxes that the law requires them to pay?

And who are the potential voters here? When a millionaire or billionaire evades taxes, they do so at the expense of everyone else: a larger deficit could mean less scope for social spending, but it also means less scope for legal tax breaks. So everyone should be in favor of taking action against fraudsters - that is, everyone except the fraudsters themselves. We might even think that wealthy Americans who pay what they owe, either out of scruples or because they care about their reputations, would be especially angry with those of their peers who break the rules.

One thing before I go on: I've been writing as if tax evasion is an activity that only the wealthy do.

Clearly, that is not completely true;

If a plumber or car mechanic has offered you a discount for paying in cash, you probably have an idea of ​​what the reasons are.

But for the most part, Americans get their income from wages and salaries, both with withholding and automatically reported to the Administration, so they have little opportunity to defraud.

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  • America's super-rich pay less taxes than the working class for the first time

Thus, tax evasion mainly affects corporate income or, rather, income from “companies”, because it occurs mainly through companies and other entities, such as S-type corporations, which do not produce from made goods and services, but are mainly accounting fictions. There are some legitimate reasons why these entities are allowed, such as helping with retirement planning. But they also offer ways to hide income from the tax authorities: income statement below the real figure, exaggeration of expenses, personal benefits - such as the apartment that the Trump Organization provided to its financial boss - declared as business expenses and not as Income of natural persons.

And these rent-hiding opportunities are concentrated at the top; recently it has been calculated that more than 20% of the income received by the richest 1% of the population remains undeclared. How then can anyone justify that these abuses are not prosecuted? As far as I've seen, Republicans who oppose tightening anti-fraud measures don't even try to justify themselves, except by making old and long-discredited allegations that the IRS is directly targeting conservative groups. But they seem determined to defend the privileges of wealthy tax fraudsters. Why?

Some big fraudsters are also big political donors. What I would suggest is that the strength that fraudsters have in the Republican Party has actually been increasing as the party has gone mad. There have always been rich people who dislike the right wing taking on racial hostility and culture wars, but are willing to swallow their disgust as long as Republicans keep taxes low. But as the Republican Party has grown more extreme, as it has become the party of electoral lies and violent insurrection, which rich are still willing to accept that compensation?

Some wealthy Americans have always been radical rightists.

But for the rest, the party base within the donor class is increasingly made up of the less scrupulous and reputation-conscious wealthy, who are precisely the kind of people most likely to blatantly evade taxes.

So perhaps one way to understand opposition to strengthening the IRS is that it represents an unholy alliance between white supremacists and tax crooks.

Isn't this an amazing country?

Paul Krugman

is a Nobel Laureate in Economics.

© The New York Times, 2021. translated by News Clips

Source: elparis

All business articles on 2021-07-24

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