We Do Get Outgunned When Trying To Enforce Taxes On Wealthy
Man. The IRS commissioner just came out and said what everybody already knew. Charles Rettig told the Senate Finance Committee that when it comes to actually collecting taxes from rich people and big corporations his agency gets straight up outgunned. His exact words. “We do get outgunned, theres no other way to say it.”
Think about that for a second. The federal agency whose entire job is collecting taxes openly admits they cant keep up with the lawyers and accountants that wealthy people hire to avoid paying. Thats not me saying it. Thats the guy running the IRS.
The Numbers Are Absolutely Wild
Rettig testified that the “tax gap” – difference between what people owe and what actually gets collected – could be approaching or maybe even exceeding ONE TRILLION DOLLARS a year. Thats not a typo. Not a rounding error. Thats real money that should be funding roads and schools and yeah probably some government waste too but point is it belongs in the Treasury and it isnt there.
Since 2010 the IRS lost 21,000 employees. Budget declined about 20 percent when you factor in inflation. Meanwhile tax returns got more complicated, rich people hired more lawyers, and the technology gap kept growing.
Where The Cuts Really Hurt
The agency is down to roughly 6,500 front-line revenue agents handling complex individual and corporate cases. These are the people supposed to be auditing billionaires with byzantine offshore structures and partnerships layered on partnerships layered on LLCs.
Those billionaires have white-shoe law firms on retainer. Big Four accounting shops. The IRS has dedicated but overmatched agents working cases spanning thousands of pages. Knife to a gunfight except the knife is rusty and hasnt been sharpened in a decade.
Who Actually Gets The Audit
Heres the real kicker. As resources dried up the IRS actually INCREASED audits on low-income people claiming the Earned Income Tax Credit. Why? Because those audits are simple. Computer flags the return, letter goes out, person has to prove their kids exist. Easy pickings.
Meanwhile audit rates for millionaires dropped off a cliff. The people with the most complex returns and biggest opportunity to cheat are the least likely to face scrutiny. System is basically designed to let rich tax dodgers walk while hassling poor folks over their refund checks.
So Whats The Fix
Biden administration proposed boosting IRS funding big time with most of that money aimed at enforcement on wealthy taxpayers and corporations. Theory is every dollar spent on high-end enforcement returns several dollars in collected taxes. Whether Congress actually appropriates that money is another story. IRS isnt exactly popular. But if youre wondering why the rich keep getting richer, part of the answer is the cops on the tax beat are understaffed underfunded and by their own admission, outgunned.
