I received my usual Republican Representative’s email a couple of days ago; one has to subscribe to the opposition’s propaganda, for the humor if nothing else.
Tennessee Rep. Diane Black’s most recent “update” is titled, “Does This Seem Fair to You?”, a condemnation of IRS employees with delinquent tax bills. Now we all know Republicans are hell-bent on dismantling the IRS, so Black’s latest nonsense dutifully follows the party marching orders. She writes:
As if we needed more proof that the IRS does not have its house in order, an Inspector General’s report released just last Wednesday found that nearly 1,600 IRS employees willfully evaded their own tax payments over a ten year window. Worse, of those employees who knowingly violated tax law, over 60 percent retained their employment with the IRS and roughly 30 percent received awards and promotions.
To put it another way, the very agency tasked with making sure you comply with our tax laws is knowingly keeping tax-cheats on the payroll – and you’re shelling out for their salaries. This is another example of the Washington political class saying “do as I say, not as I do.” It is immoral, and we have a responsibility to stop it.
If Rep. Black wants to talk about “keeping one’s house in order”, I would point out that one of her own houses, the U.S. Congress, had delinquent taxes of 8.5 million as of 2014. The website Don’t Mess With Taxes reported:
Almost 5 percent of all House employees, including Representatives, have unpaid tax bills. That legislative chamber’s 4.87 percent delinquency rate [is] slightly four times higher than that of the Treasury Department.
In dollars, the 486 tax-owing House employees, out of 9,979 total, account for about $5.8 million due Uncle Sam.
On the other side of Capitol Hill, Senators and their staff have a 3.2 percent delinquency rate, with 228 of 7,030 employees in that chamber owing $2.7 million in taxes.
USA Today points out:
… federal workers are better at paying their taxes than the average taxpayer. Their delinquency rate of 3.19% is far lower than the 8.7% for the population at large.
[and] Tax delinquencies on Capitol Hill are four times more common than at the Treasury Department…
Tax delinquencies will only get worse in the future. When Republicans don’t like a particular government agency (and that would be all of them except the Defense Department), they take a budget cleaver to them until they become inefficient, then point to the inefficiency as a reason to dismantle them. Such is the case with the IRS, as the L.A. Times reported:
Republican lawmakers have managed to slash the tax agency’s budget by more than $1 billion over the last five years and eliminate about 13,000 jobs.
Ordinary taxpayers have the bulk of their income reported by employers, and most taxes are automatically withheld. But businesses self-report much of their performance, just as wealthier taxpayers are supposed to come clean on capital gains.
…cutbacks … could mean that about $2 billion in tax revenue will go uncollected.
And that will not be the average Joe cheating on his taxes, it will be the 1%. In fact, if Rep. Black really wants to go after tax cheats, how about the untaxed $2.1 trillion parked overseas by wealthy folks and corporations. Oh wait, I forgot, some folks in Congress want to give them another “repatriation holiday” to bring that money back.
Yes, Senators Barbara Boxer (D-CA) and Rand Paul (R-KY) want to give our corporate blackmailers a 6.5 percent tax rate to bring their money back, with the revenue earmarked for the Highway Trust Fund. Americans for Tax Reform explains why that’s a foolish idea:
American taxpayers and Main Street businesses should not have to pick up the tab for the taxes owed by some of America’s richest companies – such as Apple, General Electric, Microsoft, Pfizer, Merck, IBM – that have the most untaxed profits sitting offshore. And our tax system should not be encouraging corporations to shift jobs or profits offshore, as this proposal would do. Untaxed offshore corporate profits have grown by 250 percent since the 2004 repatriation holiday in anticipation of this legislation.
It is not clear how this plan raises revenue to rebuild our infrastructure. A repatriation tax holiday at a 5.25 percent tax rate will raise $20 billion in the first two years but lose nearly $100 billion over 10 years, according to the Joint Committee on Taxation.
“Numerous studies have harshly criticized the 2004 repatriation tax holiday. It gave huge tax breaks to the worst tax dodgers – those companies that stash the most profits in offshore tax havens. It did not increase U.S. jobs and economic growth. Instead, it cost jobs and gave a windfall to wealthy shareholders and bigger bonuses to corporate executives. The measure is not even necessary, as most untaxed offshore corporate profits are actually invested in U.S. financial assets and institutions.
They cite these nine findings from the U.S. Senate Permanent Subcommittee on Investigations report: Repatriating Offshore Funds: 2004 Tax Windfall for Select Multinationals:
1. U.S. Jobs Lost Rather Than Gained.
2. Research and Development Expenditures Did Not Accelerate.
3. Stock Repurchases Increased After Repatriation.
4. Executive Compensation Increased After Repatriation.
5. Only a Narrow Sector of Multinationals Benefited.
6. Most Repatriated Funds Flowed from Tax Havens.
7. Offshore Funds Increased After 2004 Repatriation.
8. More than $2 Trillion in Cash Assets Now Held by U.S. Corporations.
9. Repatriation is a Failed Tax Policy. The 2004 repatriation cost the U.S. Treasury an estimated net revenue loss of $3.3 billion over ten years, produced no appreciable increase in U.S. jobs or research investments, and led to U.S. corporations directing more funds offshore.
What I find most egregious about Rep. Black’s zeroing in on IRS workers is the fact that their average starting salary is $27,431. , or a little over $500. a week. That’s less than the average income in her own state of Tennessee, which still ranks 45 out of 50, far less than the $174,000. she earns as a member of Congress, and a pittance of Mrs. Black’s 2013 reported net worth of $147 million.
Should IRS employees be held accountable for delinquent taxes, of course they should; they can get in line right behind the Microsofts, Romneys, and politicians in the country.