{"id":1343631,"date":"2023-11-21T06:54:39","date_gmt":"2023-11-21T06:54:39","guid":{"rendered":"https:\/\/www.counterpunch.org\/?p=305653"},"modified":"2023-11-21T06:54:39","modified_gmt":"2023-11-21T06:54:39","slug":"eliminate-some-tax-laws-not-the-irs-to-avoid-government-shutdowns","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2023\/11\/21\/eliminate-some-tax-laws-not-the-irs-to-avoid-government-shutdowns\/","title":{"rendered":"Eliminate Some Tax Laws (Not the IRS) to Avoid Government Shutdowns"},"content":{"rendered":"\"\"<\/a>\n
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Photograph Source: Flickr user reivax – CC BY-SA 2.0<\/a><\/p><\/div>\n

This month, the federal government was once again threatened with another shutdown. From November 1995 until today, there have been five shutdowns, with Republicans controlling the House and the Senate for four. This time is no different; the Republicans control the House, and we face another shutdown.<\/p>\n

While two of the past shutdowns were explicitly focused on either dismantling Obama Care or halting the construction of a massive wall on the Mexican border, the underlying discussion concerned how we can best spend public funds to avoid a deeper debt burden.<\/p>\n

Although the Republican Party mantra is to shrink government spending,\u00a0NewsMax columnist Paul deLespinasse wrote<\/a>, \u201cRepublican enthusiasm for reducing the deficit disappears when Republicans occupy the White House. They happily voted to increase the debt limit three times during the Trump administration while increasing the national debt by enacting large tax cuts.\u201d<\/p>\n

Trump\u2019s administration increased\u00a0the national debt by almost $7.8 trillion. According to Eugene Steuerle, co-founder of the Urban-Brookings Tax Policy Center, Trump set a new record. He managed to have his annual deficit become the third-biggest increase of any U.S. presidential administration relative to the size of the economy.<\/p>\n

Cutting IRS funding increases government debt.<\/b><\/p>\n

That Republican approach continued in the first week of November when\u00a0House Speaker Johnson and the House GOP\u00a0cut $14.3 billion from IRS<\/a>\u00a0funding to pay for an aid package to Israel. It passed the House with all but two Republicans supporting it.\u00a0Five years ago, Republicans demanded $5.7 billion for Trump\u2019s wall along the U.S.-Mexico border. With Trump\u2019s approval, the government shutdown in 2018 for 34 days \u2014 the nation\u2019s most extended shutdown \u2014 to get those funds. In the end, Trump got about a third of that amount.<\/p>\n

House Democrat\u00a0Brendan Boyle\u00a0<\/a>(Penn.)\u00a0argued that<\/a>\u00a0Speaker Johnson prioritized \u201cdeficit-busting tax giveaways for the wealth over helping Israel.\u201d Boyle then claimed that the Congressional Budget Office\u2019s analysis, which reports to Congress, not the President, found that the IRS cut would \u201chamstring the IRS’s ability to take on wealthy tax cheats.\u201d The report provided data showing that the IRS cut would\u00a0increase the deficit by almost\u00a0$12.5 billion over the next ten years.<\/a><\/p>\n

The funds being cut were part of the IRS budget increase provided by the Inflation Reduction Act (PL 117-169), which a bipartisan vote of Congress approved. Republicans claim that the supposed 87,000 influx of new agents over ten years would spur an uptick of audits against working-class taxpayers.<\/p>\n

That number of new IRS employees conducting tax audits is suspect, according to\u00a0Kelley R. Taylor., Kiplinger\u2019s Senior Tax Editor.\u00a0She wrote<\/a>\u00a0that it appeared\u00a0\u201cto have come from a Treasury Department estimate of the level of hiring needed to maintain IRS efficiency and keep up with retirements and other staff declines.\u201d\u00a0\u00a0The number of new IRS agents to be hired over a decade is unknown.<\/p>\n

In response to the Republican\u2019s attacks on its funding, IRS announced that it was shifting its enforcement efforts to high-income earners, partnerships, and big corporations. Consequently, the agency announced that audit rates would not increase for\u00a0those earning less than $400,000 annually<\/a>.<\/p>\n

The IRS commissioner said<\/a>\u00a0they would \u201chold our wealthiest filers accountable to pay the full amount of what they owe.\u201d He noted that the years of the IRS being underfunded has \u201cled to the lowest audit rate of well-off filers in the agency\u2019s history.\u201d<\/p>\n

His statement is backed by the National Taxpayer Advocate\u2019s 2022 annual report to Congress, which detailed how years of cutting the I.R.S.\u2019s budget has crippled its capacity to enforce the tax code. Cracking down on tax cheaters among the wealthiest sends a message that all citizens should follow the tax laws.<\/p>\n

However, the tax laws are a major cause of our government debt.\u00a0<\/b><\/p>\n

Congress needs to revoke laws that primarily benefit top-income citizens.\u00a0ProPublica provides a detailed review<\/a>of how the wealthy avoid taxes on billions in revenue by skirting a century-old law dealing with stock swaps.<\/p>\n

Even though \u201cwash sales\u201d have been forbidden since the 2021 legislation passed, the IRS has not kept up with new accountant strategies. Consequently, the one percent of citizens with more than $10 million get to manipulate outdated stock tax laws that do not apply to wages to shield their income from taxation.<\/p>\n

Eliminating inefficient and unfair tax laws is not just a left-wing cause. Conservatives argue against tax laws that distort an open market economy.<\/p>\n

The Hoover Institute \u201cpromotes personal and economic liberty, free enterprise, and limited government.\u201d In their\u00a01999 essay<\/a>\u00a0Welfare for the Well-Off: How Business Subsidies Fleece Taxpayers,<\/i>\u00a0they argue that laws providing business subsidies cost American taxpayers nearly $100 billion a year.<\/p>\n

The report noted that \u201cin 1997, the Fortune 500 corporations recorded best-ever earnings of $325 billion, yet incredibly Uncle Sam doled out nearly $100 billion in taxpayer subsidies.\u201d The Institute\u00a0blames both Republican and Democratic administrations for subsidy\u00a0programs that undermine the free enterprise system and corrupt the political system.<\/p>\n

The Republican\u2019s 2017 tax cut legislation contributed to our national debt growth.<\/b><\/p>\n

Trump\u2019s 2017\u00a0Tax Cuts and Jobs Act<\/a>\u00a0was passed solely by Republicans.\u00a0The Senate passed the bill\u00a0by a party-line vote of 51 to 49. The House passed the bill by a vote of 224 to 201.\u00a0No House Democrats supported the bill, and 12 Republicans voted no.\u00a0The law is forecast\u00a0<\/a>to raise the federal\u00a0deficit<\/a>\u00a0by hundreds of billions\u2014the Congressional Budget Office estimating $1.9 trillion\u2014over the coming decade.<\/p>\n

The new tax law dramatically reduced the corporate tax rate from 40% to 21%, roughly equivalent to the rate paid by US companies\u2019 significant competitors, the European-based multinationals. This argument seemed fair. However,\u00a0a University of Michigan Law School study<\/a>\u00a0on the largest 100 companies based in the US and the European Union in the decade ending in 2010 reveals a severe flaw in this logic.<\/p>\n

The authors note that even though the U.S. rate was ten percentage points higher than the average corporate rate in the European Union, the effective U.S. corporate tax rate was the same or lower in comparing these two groups during that period.<\/p>\n

Two tax laws have significantly increased US corporate profits since 2010. First, the percentage of income paid after tax breaks\u2014among profitable large corporations fell from 16% in 2014 to 9% in 2018 due to paying less taxes. Second, Trump\u2019s tax law did not significantly close major tax breaks. As a result, their effective tax rate is far below what their European competitors are paying in taxes.<\/p>\n

Now corporations and their owners and investors see their incomes rise ever higher, as does the nation\u2019s debt due to less tax revenue.<\/p>\n

Expect another threatened government shutdown at the end of January.\u00a0<\/b><\/p>\n

Speaker Michael Johnson avoided a government shutdown by adopting a proposal that the Republican right-wing Freedom Caucus offered. A two-step continuing resolution (CR) was passed by Congress that continued funding for the 12 appropriation bills but only for a limited period. The bills were divided into two sets.<\/p>\n

Four less controversial appropriations, like covering veterans\u2019 programs, transportation, and agriculture, would come up for a second vote on January 19 to continue their funding. It was a smart move to first vote for the ones that are most likely to get enough Republicans to fund them again. The other eight spending bills containing the most contentious issues of financing the IRS and border security will come for a vote by February 2, when their CR expires.<\/p>\n

The Republican hard right has refused to fund the IRS at Biden\u2019s proposed level and is determined to halt the flow of refugees across our southern border. They have not been willing to compromise with the Democrats and prefer a government shutdown if Johnson relies on them to pass a budget.<\/p>\n

The nation will again face the possibility of federal services stopping and the financial markets downgrading our credit. This past shadow of a possible shutdown resulted in\u00a0Moody\u2019s credit rating agency lowering the U.S. government\u2019s debt to \u201cnegative\u201d from \u201cstable,\u201d citing political polarization in Congress.<\/p>\n

Even if we get through the first quarter of next year without a shutdown, the threat will return as our national debt of $33 trillion grows. It will only cease growing when Congress decides that its candy store shelves of tax subsidies for the wealthiest citizens and businesses are finally barren.<\/p>\n

The post Eliminate Some Tax Laws (Not the IRS) to Avoid Government Shutdowns<\/a> appeared first on CounterPunch.org<\/a>.<\/p>\n\n

This post was originally published on CounterPunch.org<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"

This month, the federal government was once again threatened with another shutdown. From November 1995 until today, there have been five shutdowns, with Republicans controlling the House and the Senate for four. This time is no different; the Republicans control the House, and we face another shutdown. While two of the past shutdowns were explicitly More<\/a><\/p>\n

The post Eliminate Some Tax Laws (Not the IRS) to Avoid Government Shutdowns<\/a> appeared first on CounterPunch.org<\/a>.<\/p>\n","protected":false},"author":258,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1343631"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/258"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=1343631"}],"version-history":[{"count":2,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1343631\/revisions"}],"predecessor-version":[{"id":1347446,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1343631\/revisions\/1347446"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=1343631"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=1343631"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=1343631"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}