Weaponizing the IRS for class warfare is a no-win solution

Last year, as part of Inflation control lawCongress authorized the IRS about $80 billion in additional funding to fight taxpayers non-complianceAt the time, IRS nominee Daniel Warfel made a clear promise not to expand tax investigations into businesses and households earning less than $400,000 a year. Year.

But House Republicans, presumed to be unsatisfied with Warfel’s guarantees and trying to protect middle- and low-income taxpayers, recently passed legislation to eliminate additional IRS funding. And as the momentum builds up towards the 2024 presidential election, the general public is skeptical that many pundits and media insiders will regularly attack his IRS, and thus the Biden administration, in line with the economic spectrum. should expect to attack anyone for policing.

The question that emerged was whether the IRS (part of its mandate is to defraud tax compliance) is discriminatory in its enforcement practices and should limit its audits primarily to high-income taxpayers. The answer to this question should be a resounding no, supported by three compelling rationales. IRS enforcement efforts should cross socioeconomic boundaries.

First, there is the issue of messages. Tax law is just that — law. It’s a mandatory rule. fox news It recently criticized newly enacted IRS compliance measures regarding the reporting of employee tips and accused the agency of targeting the economic necks of waiters and waitresses. Income must be reported. It would set a terrible precedent if the IRS did not enforce such laws, thus giving taxpayers an implicit license to break them.

Second, there is the important issue of revenue. In reality, compared to high-income taxpayers, most middle- and low-income taxpayers tax compliance This category of taxpayers consists mostly of salaried workers whose income is subject to a third-party tax information return (Form W-2). However, not all middle- and low-income taxpayers are salaried workers who receive third-party tax information returns. As such, these taxpayers are much more likely to neglect their tax reporting practices, resulting in material loss of revenue; — something a country should not be willing to lose, especially in the face of growing deficits.

Third, tax revenue is the engine that enables civil society to thrive. for that, Senator Rick Scott (R-Fla.) recently proposed that all taxpayers, even those on the lower end of the economic spectrum, should pay a minimum tax. Scott’s stance was criticized by both his own party members and Democrats. Without delving into the specific pros and cons of the senator’s actual proposal, the fact is he expressed the fundamental social principles of democracy. obvious.

Of course, middle- and low-income taxpayers should not be audited at a higher rate than high-income taxpayers. Nor should you be expected to contribute the same amount of tax or the same percentage of income as higher income taxpayers. But they shouldn’t get a free ride. Rather, they should pay a legally mandated percentage of their income, and should be audited and ensured to do so at a percentage commensurate with high-income taxpayers.

Across the economy, the IRS should have the freedom to indulge universal tax compliance and audit all taxpayers without fear of political retaliation. All taxpayers, rich or poor, enjoy the benefits this country has to offer. Naturally, all taxpayers must comply with their tax obligations, regardless of their economic status.

Jay A. Soled is a Distinguished Professor of Taxation at the Rutgers Business School and has written, spoken, and testified extensively before Congress on how to close the tax gap.