For years, wealthy families and big corporations have avoided paying the taxes they owe, employing armies of accountants and attorneys to move their money aroun...
For years, wealthy families and big corporations have avoided paying the taxes they owe, employing armies of accountants and attorneys to move their money around. As a result, our government is missing half a trillion dollars in revenue that could fund the services we so desperately need: child care, nutrition, housing and cash supports. Our tax system puts vulnerable families at a disadvantage while favoring the rich. For the equitable nation we all dream about, we need to level this unbalanced playing field. And to do this, we need to sufficiently fund the tax system so it properly supports families.
With technology dating as far back as the 1970s — the oldest in the federal government — the IRS is desperately in need of a revamp. Regular, everyday tax filers are losing out with our underfunded system, especially low- and moderate-income tax filers and households of color. The IRS currently has the fewest auditors since World War II. Audit rates for the wealthiest individuals and large corporations have dropped sharply since 2010. Families with low incomes, especially families of color, are relatively easy and inexpensive to audit compared to the rich who can protect themselves with expensive legal services. Many of the counties with the highest audit rates are predominantly Black, Indigenous and Latinx.
The wealthy are responsible for a much larger percentage of the taxes that go uncollected each year. To this end, the “tax gap,” the difference between the funds owed and the amount collected, stands at almost half a trillion dollars — money needed by families all across the nation. The chronic underfunding of the IRS has allowed wealthy individuals and corporations to avoid paying the taxes they owe, leaving less revenue to make investments that help us all. This system, ideally meant to lift up and support vulnerable communities to level the playing field, is not working.
For that purpose, the Inflation Reduction Act, signed into law last August, will provide resources the IRS has been sorely lacking for years. With $80 billion of additional funding to the agency over the next 10 years, we have high hopes that this much-needed funding will lead to a fairer tax system that better supports our BIPOC communities. As CEOs of national nonprofits dedicated to equity and justice, we cannot overstate how important this incoming IRS funding is to creating a more equitable tax system for all.
Despite what detractors are alleging, the IRS won’t be using this infusion of resources to send an army of agents into every American home. It won’t be building up its enforcement to bully tax filers and intimidate families. Rather, the IRS will be using these additional resources to make a more equitable tax system — increasing audits on the wealthy and corporations and distributing crucial tax credits for workers and families. Improving the delivery of critical tax credits, like the Child Tax Credit and Earned Income Tax Credit, benefits the economic prosperity of families during tax time.
Correcting this imbalance could easily advance gender and racial equity. The $496 billion tax gap could be invested in policies that help low- and moderate-income households, such as permanently expanding the Child Tax Credit, which can make enormous headway in ending child poverty and unprecedented progress toward reducing persistent racial and gender wealth gaps. The chronic underfunding of the IRS has exacerbated these disparities by allowing wealthy individuals and families — disproportionately men and white families — to avoid paying the taxes they owe. What’s more, this inequitable tax enforcement results in less revenue to invest in women, families of color and communities that have been historically starved of the supports they need to succeed in this economy.
The tax system has the potential to drive racial, gender and economic equity — and systemic changes that benefit BIPOC communities are long overdue. The Treasury Department’s creation of the Advisory Committee on Racial Equity demonstrates its commitment to address historical and persistent inequities in our tax systems. But adequately funding tax administration — including enforcement, customer service and technology — will also advance equity. And with more IRS changes coming around the bend, now is the time to ensure the agency is preparing for a future of equitable and resilient tax administration. As leaders of organizations working to change our tax code — and how it is implemented — we know this will change lives. Sustaining and building on the Inflation Reduction Act’s funding for IRS enforcement efforts is a critical step toward a more equitable system for all.
Indivar Dutta-Guptais president and executive director of the Center for Law and Social Policy (CLASP). Gary Cunninghamis president and chief executive officer of Prosperity Now.
To level the playing field, invest in the IRS
For years, wealthy families and big corporations have avoided paying the taxes they owe, employing armies of accountants and attorneys to move their money aroun...
For years, wealthy families and big corporations have avoided paying the taxes they owe, employing armies of accountants and attorneys to move their money around. As a result, our government is missing half a trillion dollars in revenue that could fund the services we so desperately need: child care, nutrition, housing and cash supports. Our tax system puts vulnerable families at a disadvantage while favoring the rich. For the equitable nation we all dream about, we need to level this unbalanced playing field. And to do this, we need to sufficiently fund the tax system so it properly supports families.
With technology dating as far back as the 1970s — the oldest in the federal government — the IRS is desperately in need of a revamp. Regular, everyday tax filers are losing out with our underfunded system, especially low- and moderate-income tax filers and households of color. The IRS currently has the fewest auditors since World War II. Audit rates for the wealthiest individuals and large corporations have dropped sharply since 2010. Families with low incomes, especially families of color, are relatively easy and inexpensive to audit compared to the rich who can protect themselves with expensive legal services. Many of the counties with the highest audit rates are predominantly Black, Indigenous and Latinx.
The wealthy are responsible for a much larger percentage of the taxes that go uncollected each year. To this end, the “tax gap,” the difference between the funds owed and the amount collected, stands at almost half a trillion dollars — money needed by families all across the nation. The chronic underfunding of the IRS has allowed wealthy individuals and corporations to avoid paying the taxes they owe, leaving less revenue to make investments that help us all. This system, ideally meant to lift up and support vulnerable communities to level the playing field, is not working.
For that purpose, the Inflation Reduction Act, signed into law last August, will provide resources the IRS has been sorely lacking for years. With $80 billion of additional funding to the agency over the next 10 years, we have high hopes that this much-needed funding will lead to a fairer tax system that better supports our BIPOC communities. As CEOs of national nonprofits dedicated to equity and justice, we cannot overstate how important this incoming IRS funding is to creating a more equitable tax system for all.
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Despite what detractors are alleging, the IRS won’t be using this infusion of resources to send an army of agents into every American home. It won’t be building up its enforcement to bully tax filers and intimidate families. Rather, the IRS will be using these additional resources to make a more equitable tax system — increasing audits on the wealthy and corporations and distributing crucial tax credits for workers and families. Improving the delivery of critical tax credits, like the Child Tax Credit and Earned Income Tax Credit, benefits the economic prosperity of families during tax time.
Correcting this imbalance could easily advance gender and racial equity. The $496 billion tax gap could be invested in policies that help low- and moderate-income households, such as permanently expanding the Child Tax Credit, which can make enormous headway in ending child poverty and unprecedented progress toward reducing persistent racial and gender wealth gaps. The chronic underfunding of the IRS has exacerbated these disparities by allowing wealthy individuals and families — disproportionately men and white families — to avoid paying the taxes they owe. What’s more, this inequitable tax enforcement results in less revenue to invest in women, families of color and communities that have been historically starved of the supports they need to succeed in this economy.
The tax system has the potential to drive racial, gender and economic equity — and systemic changes that benefit BIPOC communities are long overdue. The Treasury Department’s creation of the Advisory Committee on Racial Equity demonstrates its commitment to address historical and persistent inequities in our tax systems. But adequately funding tax administration — including enforcement, customer service and technology — will also advance equity. And with more IRS changes coming around the bend, now is the time to ensure the agency is preparing for a future of equitable and resilient tax administration. As leaders of organizations working to change our tax code — and how it is implemented — we know this will change lives. Sustaining and building on the Inflation Reduction Act’s funding for IRS enforcement efforts is a critical step toward a more equitable system for all.
Indivar Dutta-Gupta is president and executive director of the Center for Law and Social Policy (CLASP). Gary Cunningham is president and chief executive officer of Prosperity Now.
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