Top Legislative Priority of the New GOP House Majority? Protecting Rich Tax Cheats

It’s official—Republicans’ day-one agenda is to protect wealthy tax cheats.

It’s official—Republicans’ day-one agenda is to protect wealthy tax cheats.

In their first legislative vote of the new Congress (assuming the party can ever take control of the chamber by choosing a Speaker), House Republicans plan to use their majority to repeal nearly all of the $80 billion in restored funding over ten years that was provided to the Internal Revenue Service in the Democrats’ Inflation Reduction Act last year. 

That $80 billion will increase federal revenue by $204 billion, for a net revenue increase of $124 billion. The GOP’s legislation would slash nearly $72 billion, or $9 out of every $10 in new dedicated funding, including $45.6 billion for tax enforcement activities to catch wealthy and corporate tax cheats and $25.3 billion in operations support for that enforcement and for taxpayer services, which is critical for ensuring taxpayers get refunds on time and phone calls answered.

The GOP is fulfilling its election-year campaign promise to its wealthy donors to gut new tax enforcement funding provided to the IRS, even though the new funds are being used to hold rich and corporate tax cheats accountable for paying the taxes they owe without raising a penny in taxes on people making under $400,000 a year. These funds are also necessary so that the IRS can provide quality services to taxpayers, such as sending them timely tax refunds and having their phone calls answered promptly.

The richest 1% avoid paying $160 billion a year that they owe in taxes due to inadequate tax enforcement. Republicans are voting to let them keep on cheating the rest of us.

Since 2010, IRS annual funding has declined by 20%, from around $15 billion in 2010 to $12 billion in 2021, adjusted for inflation. That includes a 25% cut to the IRS enforcement budget.  IRS staffing is down 22% since 2010, declining from more than 94,500 full-time equivalent workers in 2010 to nearly 73,500 in 2021. Enforcement staff was cut by 31%, with the number of dedicated revenue agents dropping by 40%. 

As a predictable result of these cuts, IRS audit rates declined 58% overall between 2010 and 2019, with audit rates among large corporations declining 54% and audit rates for millionaires dropping 71%. In 2011, taxpayers earning $1 million or more were about six times more likely to be audited than low-income families receiving the Earned Income Tax Credit. By 2018, millionaire audits were only twice as likely as audits of EITC recipients.

And even as inadequate IRS funding allowed rich tax evaders to get away with cheating, regular taxpayers have suffered. As of June 2022, nearly 21 million taxpayers were waiting for their tax returns to be processed from last season. In 2021, the IRS received a record 282 million calls, but only 32 million (11%) were answered by customer service representatives.

Now Republicans want to repeal the funding the IRS needs to offer good customer service and enforce tax law against wealthy cheaters. You can tell which side a party is on—the rich and corporations, or working families—by looking at their priorities.