Right-Wing Groups Mobilize Against Effort to Counter Tax Dodging by the Rich

Right-wing political advocacy organizations bankrolled by wealthy Americans and large corporations are reportedly mobilizing against a bipartisan agreement to boost IRS funding by $40 billion, money that would go toward cracking down on rich tax cheats who have benefited from the Republican Party’s gutting of the agency in recent years.

The proposed increase in the IRS budget — which was cut by an estimated 20% between 2010 and 2018 — is part of an infrastructure package negotiated by a bipartisan group of senators and President Joe Biden, who had originally pushed for $80 billion in additional IRS funding over the next decade.

The $40 billion boost proposed by the bipartisan group is presented as a way to “reduce the IRS tax gap,” the difference between taxes owed and taxes actually collected by the federal government. Treasury Secretary Janet Yellen suggested in May that the gap could be as large as $7 trillion.

As the Washington Post reported Wednesday, the IRS provision of the bipartisan infrastructure plan “is drawing opposition from well-funded conservative groups, which are strongly opposed to expanding the reach of a tax-collection agency that they long have alleged is politically motivated.”

“Among the conservative groups spearheading the opposition are the Committee to Unleash Prosperity, FreedomWorks, the Conservative Action Project, and the Leadership Institute,” the Post noted. “They are preparing a letter that warns Republicans should not negotiate with the White House unless they agree to ‘no additional funding for the Internal Revenue Service.'”

The groups are expected to send their letter to Senate Minority Leader Mitch McConnell (R-Ky.), who has yet to endorse the bipartisan framework and has threatened to give his Democratic counterparts a “hell of a fight” over their infrastructure priorities — an indication that he could be open to the conservative groups’ appeal.

Last month, McConnell blamed “somebody at the IRS” for leaking the tax returns of some of the wealthiest people in the U.S. to the investigative outlet ProPublica, which used the documents to publish a series of stories detailing pervasive tax dodging by the rich.

“Our tax returns are, by law, confidential because of just this kind of shenanigans,” McConnell said in an interview. “These people ought to, whoever did this, ought to be hunted down and thrown into jail.”

Deep cuts to the IRS budget over the past decade have resulted in a sharp decline in enforcement, a trend that has principally rewarded the wealthy and large businesses. Between 2010 and 2018, according to the Center on Budget and Policy Priorities, IRS audit rates for the biggest U.S. corporations and American millionaires fell by 51% and 61%, respectively.

In 2019, ProPublica reported that due to inadequate funding and resulting staff shortages, the IRS “now audits poor Americans at about the same rate as the top 1%.”

Well-heeled conservative organizations have long opposed any effort to remedy the harms caused by Republican-led budget cuts at the IRS. In May, Politico reported that right-wing groups “launched a campaign of TV ads, social media messages, and emails to supporters criticizing [Biden’s earlier] proposal to hire nearly 87,000 new IRS workers over the next decade to collect money from tax cheats.”

“So you’re telling me they’re against catching tax cheaters?” Rep. Ro Khanna (D-Calif.) mockingly asked in response to the right-wing campaign. “Pretty bold move, GOP.”

According to the Post, the organizations leading the latest effort to prevent an IRS finding hike “include those that have received funds from major conservative donors, including the Mercer Family Foundation, the Sarah Scaife Foundation and Donors Trust, a donor-advised fund that gives to conservative and libertarian causes.”

“One signatory of the letter, Phil Kerpen of American Commitment, worked for five years at Americans for Prosperity, the main political arm of the influential Koch network,” the Post reported.