A new Treasury Department report finds that the United States is losing $163 billion per year because of tax evasion by the top 1% of earners. The story is mind-numbingly familiar: phenomenally rich people finding new and creative ways to boost their wealth even more by cheating the rest of the responsible, taxpaying public.
The $163 billion that the richest 1% evade annually accounts for a whopping 28% of all unpaid taxes by Americans, according to the report by Natasha Sarin, deputy assistant Treasury secretary for economic policy. That total lost revenue accounts for 3% of gross domestic product and is equal to all of the taxes actually paid by the lowest-earning 90% of taxpayers, she added in a Sept. 7 report.
It’s not as if the rich were hurting and needed the money. In fact, while the rest of the nation shut down and unemployment skyrocketed during the pandemic, the richest 1% found ways to profit to the tune of $7 trillion.
“Our pain has been their gain,” inequality researcher Chuck Collins, author of “The Wealth Hoarders,” told CBS News in March.
And they keep gaining more all the time, inflicting additional pain on tax revenues and boosting the bill that ultimately must be paid by the rest of the country. For the price of a relatively few accountants specializing in tax evasion, the richest of the rich save more than enough money to buy additional yachts, private jets, shoreside villas and whatever other luxury their hearts desire. They force policymakers to “choose between rising deficits, lower spending on important priorities, or further tax (increases) to compensate for lost revenue — which will only be borne by compliant taxpayers,” Sarin wrote.
Budget and staffing cuts, many of which date back to Republican anger over Internal Revenue Service monitoring of the supposed tax-exempt, nonprofit status of various tea party organizations during the Obama administration, have decreased the agency’s ability to detect and prosecute high-dollar tax evaders. Not just anyone is trained to parse the thousands of pages of complicated tax filings submitted by high earners and big corporations, Sarin says. It takes expensive, qualified specialists who are at least as talented as the people concocting evasion techniques for the other side.
The 2017 tax package engineered by then-President Donald Trump and the GOP-controlled Congress was an obvious boondoggle for the rich from the day it was proposed, and the middle class has been paying a steep price ever since. The tax cuts never made financial sense, but they make even less sense now that it’s clear that they only served as a springboard for the ultra-rich to concoct additional ways to fleece the country.
Deficit hawks and fiscal conservatives in the GOP ranks should be livid. But that would first require them to do the math, which recent history shows has never been their strong suit.