One of the main jobs of the Internal Revenue Service (IRS) is to act as a collection agency. Like any collection agency, it is tasked with making sure that the monies coming in and out are lawfully accounted for.
The much-feared “auditing” that the IRS can pursue on Americans and companies is supposed to be a process by which the IRS keeps people and large companies “honest” about paying their rightful amount of taxes. Ideally, the IRS carries out audits on people and institutions with the potential of hiding or lying about how much of their private revenue belongs to all of us to use on the programs and functions we, as a country, need. Historically, the IRS has, like many government departments, been hamstrung and directed to take it relatively easy on the people with the most money.
The Earned Income Tax Credit (EITC) has been a part of our country’s tax codes in some shape or form since the mid-1970s. The basic idea grew out of the national conversation on what to do about poverty in our country. A country as wealthy as the United States should not need to squeeze water from a stone, especially when there are so many people and companies flush with profits. The majority of people claiming the EITC earn around $20,000 a year—and they are also more likely to be audited by the IRS than Americans making 20 times as much. ProPublica explains that this is the result of a couple of things.
For one, budget cuts to the IRS’s collection apparatus have hamstrung the agency’s ability to go after potentially more complicated tax evasion practices. The other reason is that Republicans have been pushing their now-standard racist and classist attacks on ‘fraudulent’ government spending, solely on the backs of people making the least amount of money.
Put another way, as the IRS has dwindled in size and capability, audits of the poor have accounted for more of what it does. Last year, the IRS audited 381,000 recipients of the EITC. That was 36 percent of all audits the IRS conducted, up from 33 percent in 2011, when the budget cuts began.
If there is any positive news here, it is that those making more than $1 million have seen their rate of auditing declining as slowly as those making $20,000. The IRS argues that while they do not believe the majority of incorrectly claimed EITC are purposefully fraudulent, it amounts to $17 billion in lost revenue. That’s a sizeable number, and for an agency handling its own budget cuts, makes for a good excuse for why they must continue to audit those with the least at such high rates. However, according to the Center on Budget and Policy Priorities, the IRS’s pursuit—and their data—is fundamentally flawed.
- IRS studies of EITC overpayments suffer from methodological problems that likely cause them to overstate somewhat the actual EITC overpayment rate, as analysis by the IRS National Taxpayer Advocate, Nina Olson, has concluded.
People making $20,000 or less do not have the time or the income to deal with an audit from the IRS. They are also more likely to “lose” their audit appeal because they are less likely to have the kind of representation one needs to prove one’s legitimate claim.
The Republican Party’s tax giveaway to the wealthiest citizens and financial entities in our country was a huge blow to alleviating the stark problems of income inequality in the United States. One of the most important and fundamental flaws of this kind of lopsided economics is that it isn’t simply a direct robbery of the country’s coffers to pay out people who are already wealthier than they need to be. It’s also a statement of the ruling party’s intent to exploit and put even more financial responsibility on the most financially vulnerable Americans. The ballooning deficit will now bring out the “fiscal” in these fake “fiscal conservatives,” who will theatrically throw up their hands and tell Americans that we can’t continue to spend money on things like Medicare and Medicaid, Social Security, and food stamps because we don’t have the revenue.
This is a Creative Commons article. The original version of this article appeared here.