Republicans have been amplifying the claim lately that their party has undergone a “populist” makeover, rendering it both anti-elite and pro-working class. One way Republicans purport to illustrate this is by attacking President Biden’s expanded funding for the Internal Revenue Service, insisting that it empowers a strike force of bureaucrats to prey on ordinary Americans.
New data on ultra-rich tax cheats wrecks the ‘working-class GOP’ ruse
But new data on tax avoidance by the ultrarich badly undermines GOP claims to being an anti-elite, pro-worker party. It shows that if Republicans get their way with regard to the IRS, a nontrivial number of very rich Americans would continue to underpay taxes they owe, effectively making out like bandits — some literally so.
Nearly 1,000 tax filers who earn more than $1 million per year have still not filed federal tax returns for at least one year from 2017 to 2020, according to IRS data provided to Senate Finance Committee Chairman Ron Wyden (D-Ore.).
What’s more, the 2,000 people who represent the highest-income non-filers in one or more of those years owe a total of more than $900 million in federal taxes, the data shows.
“These are people who essentially blow raspberries at the IRS,” Wyden told me. “They’re sophisticated people. They know this is wrong, wrong, wrong. And they do it anyway.”
The data underscores that when the IRS is underfunded, wealthy tax cheats benefit in a big way. An underfunded IRS is what Republicans are advocating for.
To illustrate the realities of elite tax avoidance, Wyden’s staff asked the IRS for a breakdown, by income, of high-end earners who didn’t file returns during at least one of those years. The senator’s office obtained only numerical data about those categories, not specific names of non-filers.
The data is detailed in a letter that the senator wrote to the IRS, urging it to respond to the situation with more aggressive enforcement policies. The information helps illuminate the true nature of the political and ideological dispute over IRS funding, undermining GOP talk of a “working class” makeover.
Biden’s Inflation Reduction Act, signed last year, included $80 billion in additional IRS funding. Biden sought it specifically to bring in more revenue by targeting wealthy tax cheats.
But House Republicans voted this year to repeal that funding. Many GOP presidential candidates, including Florida Gov. Ron DeSantis, Sen. Tim Scott (S.C.) and businessman Vivek Ramaswamy, have attacked it. Republicans claim it will be used to target small businesses and workers — burnishing the GOP’s supposed pro-worker credibility.
Unfortunately for Republicans, enforcement funded by that law has paid off — bringing in more than $38 million from 175 rich tax delinquents, the IRS announced in July. And this month, the agency announced plans to use the funding for still more efforts targeting wealthy tax avoiders.
Starving the IRS has been a longtime Republican project. Indeed, GOP efforts to cut agency funding had some success in creating precisely the state of affairs that Wyden’s data illustrates.
We don’t yet know how far the IRS will get in using the new funding to target wealthy tax avoiders. As Wyden wrote to the IRS, the information on non-filers shows that the IRS must do still more, including making criminal referrals to the Justice Department. But one thing is clear: Both the Biden administration and congressional Democrats such as Wyden are pushing for more enforcement directed at high-earning avoiders.
An irony to the GOP’s “working class” positioning is worth noting. Jean Ross, a tax expert at the Center for American Progress, points out that high-end avoiders — such as those documented in the IRS data — often can afford lawyers and accountants who aggressively shield income. By contrast, wage earners’ incomes are reported to the IRS by employers.
So while Republicans claim that funding the IRS will disproportionately hurt ordinary Americans, doing so actually makes it more likely that elites and workers will be treated equivalently. “It moves us closer to a world where everybody pays the taxes they legally owe,” Ross says, “rather than continuing current disparities, where unpaid taxes are disproportionately owed by the very wealthy.” Republican policies would make those disparities worse.
The GOP “working class” makeover is dubious in other ways. As Paul Krugman details in the New York Times, the MAGA-loyal House Republicans who lean hardest into “populist” positioning are also the most insistent on deep spending cuts that would hurt working people. There is an opening for Republicans to fuse right-wing positions on social issues with a more pro-worker economic agenda, but they just aren’t taking it.
True, some populist-sympathetic thinkers have a real agenda to align GOP policies with the interests of working-class voters, mainly by strengthening unions and worker bargaining power, as Eric Levitz demonstrates in New York magazine. But the Trump administration weakened labor protections in numerous ways that tilted the balance of power away from workers and toward employers.
On taxes, this disconnect is particularly stark: If Republican efforts to defund the tax police prevail, the real winners will not be workers and small businesses but a subset of wealthy elites — who will chortle all the way to the bank.
Opinion by Greg Sargent