‘IRS Recoups $1.3 Billion From Rich Tax Evaders’: Perhaps Billionaire-Led DOGE Should Take Note

     An article in Moneywise by Lou Carlozo explains the IRS’s recoup of $1.3 billion from wealthy taxpayers in the past year:

“The gains, the tax agency reports stem from the failure of rich Americans to catch up on their returns dating back to 2017. But efforts kicked into high gear in February, when the IRS found itself in a much better position to pursue those who fall into the tax brackets of between $400,000 and $1 million, or more than $1 million in annual income.”

“It involved some detective work, too, as the IRS received third-party information — much of it through W-2s and 1099s — that indicated a gulf between what rich people made and what they paid. Result: a billion-plus dollars recovered from the nearly 80% of the 1,600 millionaires with delinquent tax debt. That includes $100 million between July and September, the IRS stated.”

     That is an impressive amount for the first year of the project. Judging from Elon Musk’s net worth (estimated at close to $300 billion) that would be just over 0.33 percent of it. It seems to me we could cut government waste by increasing marginal tax rates for the super-wealthy. As Elon, Vivek, their unpaid double-shift high IQ assistants, and their colonel MTG scour government spending perhaps they should also look at the problem of government inflow or the lack thereof from taxation of the wealthy. That is a clear potential means of increasing government revenue which has the same effect as reducing government waste.

     The IRS program enabled by the IRA has been a clear success despite Congressional Republicans lowering overall IRS funding. Why would they want to counter IRS efforts to find tax evaders who cheat the government? The success was led by updating outdated systems making it easier and faster to find tax cheats. Since there are so many high-earning tax evaders it seems like the laxes of the system have been taken for granted and taken advantage of, for decades. That effort should continue. I have never knowingly cheated on my taxes and according to the IRS I never have. Why should anyone else get to do it, especially the wealthy?

     The article goes on to say:

“The implications are also clear on two other fronts. First, the rich will lose leverage to manipulate the agency (through high-powered lawyers or CPAs, for example) if they indulge in illegal behavior. And second, ordinary taxpayers who play by the rules have nothing to fear — and perhaps something to gain — as the agency turns added attention to the rogues.”

     Biden predicted when he rolled out the IRA that the increased IRS funding, originally $79.6, would result in up to $850 billion recouped after 10 years. The $1.3 billion announced so far is well below that trajectory but the amount sent so far is also well below the trajectory. A total of 21.56 billion has been rescinded by Congress, so about $58 billion remains, and as of June 2024 about $6.7 billion has been spent. That leaves just over $51 billion remaining. However, the smallest percentage was spent on enforcement, around $706 million. Thus, the net benefit is about $600 million. Of course, if the IRS agents worked 80-hour weeks for no pay, much of that $700 million spent could have been saved! In any case, to meet Biden’s original goal both spending and enforcement will have to ramp up and that is less likely to happen in a Trump presidency with a Republican-led Congress. 

According to what I have read Musk and fellow billionaire (OK his net worth is only $960 million) Vivek Ramaswamy are indeed targeting the IRS for cuts. Their plan is apparently pretty extreme as they are saying they want to eliminate multiple agencies and fire a helluva lot of people. According to Derek Saul in an article for Forbes:

“Ramaswamy called last Wednesday for a “massive downsizing,” while Musk backed a roughly 75% reduction in the amount of U.S. federal agencies,” though any widesweeping funding changes would need to get approval from Congress.”

That should sound extreme to anyone, that these two unelected something-crats can fire most of the federal government. Of course, MTG was elected, so there’s that. Oddly, or perhaps intentionally, the moniker DOGE has helped recent stock increases of the cryptocurrency Dogecoin, in which Musk is invested. It certainly can’t hurt. Of course, all cryptocurrencies have been up. Dogecoin is the 6^th largest cryptocurrency in the world with an impressive market cap of $57 billion. They want to cut up to $2 trillion from the federal budget eventually but acknowledge that $500 billion is a more reasonable near-term target. 

     While I don’t disagree that there is significant government waste that can be cut, including some that is overly partisan, I think a complementary idea to save the government money is to make the wealthy and super wealthy first pay the taxes they have evaded and then pay larger marginal tax rates.

The Trump tax cuts that cut the corporate tax rate from 35% to 21% along with other tax cuts decreased government revenue and subsequently deficit spending increased heartily under Trump. The Dems favored a smaller cut in corporate tax rates at the time and Harris had expressed interest in increasing it a little. Biden also increased the deficit significantly during his term, but less than Trump. In any case, there is potential for increasing government revenue along with cutting government waste. I think we should do both. 

 

References:

 

The IRS has recovered $1.3 billion from rich American tax dodgers since the fall of 2023 — relieving a painful burden from ‘ordinary citizens’. Lou Carlozo. Moneywise. November 22, 2024. The IRS has recovered $1.3 billion from rich American tax dodgers since the fall of 2023 — relieving a painful burden from ‘ordinary citizens’

Inflation Reduction Act Oversight. U.S. TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION. June 2024. Inflation Reduction Act Oversight | U.S. Treasury Inspector General for Tax Administration OIG

What We Know About Elon Musk’s ‘Department Of Government Efficiency’—As Marjorie Taylor Greene Enters Fold. Derek Saul. Forbes. What To Know About Musk’s DOGE: From Agencies Under Notice To Marjorie Taylor Greene