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Editorial: Problems old and new for Tax Day

Published: 4/11/2019 12:05:20 AM

Monday is the deadline for filing federal income tax returns for 2018, a year of tax code changes, confusion, a government shutdown and a continued reduction in the ability of the Internal Revenue Service to ensure that every American is paying his or her fair share. It’s also a time when taxes are much in the news.

First, there’s President Donald Trump’s refusal to release his tax returns as all modern presidents have done, and the contentious attempt by House Democrats to obtain them, as is their right under federal law. Then there’s the revelation that celebrity taxpayers, among others, have run afoul of the IRS. The list includes Stormy Daniels’s lawyer Michael Avenatti, Federal Reserve Board nominee and talk show economist Stephen Moore, and a gaggle of well-off parents charged with bribing college officials to gain entrance for their offspring, some while writing off the bribes as charitable donations.

Such problems don’t afflict most taxpayers. Their tax payments are automatically withheld from their paychecks, and they don’t itemize their returns. But many face other problems this year.

Trump’s so-called tax reform was sold as a benefit for the middle class and in the short term it is. But unlike the cut in the corporate tax rate, which is permanent unless changed by Congress, tax cuts for most filers expire in 2025.

This year, millions of taxpayers who expected a large refund won’t get one because less money was withheld from their paychecks. Others failed to withhold enough to cover their tax liability under the new law. The IRS has, however, waived the penalties for underpayment for most filers.

All taxpayers are penalized by an underfunded and understaffed IRS that audits a greater percentage of the poor than the rich and allows billions – estimates run from tens of billions per year to hundreds of billions – to go uncollected.

The IRS has one-third fewer auditors than it did eight years ago. It audits less than half of the wealthy filers it did in 2011. According to the investigative nonprofit ProPublica, while the IRS investigated 2.4 million people for not filing tax returns in 2011, it scrutinized just 362,000 in 2017. The agency audited 32,000 millionaires in 2010 but just 16,000 last year, ProPublica reported.

Meanwhile, recipients of the earned income tax credit, a subsidy for the working poor and low-income families, are twice as likely to be audited as someone making $200,000 to $500,000.

Congress has long known that the Treasury reaps $4 for ever $1 spent to fund IRS attempts to catch tax cheats, but it’s long treated the agency as a whipping boy because what voter, after all, favors more money for “revenooers.” All but those who benefit from a weakened IRS – and that’s mostly business and the wealthy – should. If you have to pay, shouldn’t they?

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