The U.S. Internal Revenue Service has been severely hobbled by budget cuts over the past decade. Such cuts are depleting staff who can help make sure individuals, as well as corporations, pay what they owe.
Corporations and the wealthy are the biggest beneficiaries of the IRS’s decay. Most Americans’ interaction with the IRS is largely automated. But it takes specialized, well-trained personnel to audit a business or a billionaire or to unravel a tax scheme—and those employees are leaving in droves and taking their expertise with them. For the country’s largest corporations, the danger of being hit with a billion-dollar tax bill has greatly diminished. For the rich, who research shows evade taxes the most, the IRS has become less and less of a force to be feared.
The story has been different for poor taxpayers. The IRS oversees one of the government’s largest anti-poverty programs, the earned income-tax credit, which provides cash to the working poor. Under continued pressure from Republicans, the IRS has long made a priority of auditing people who receive that money, and as the IRS has shrunk, those audits have consumed even more resources, accounting for 36 percent of audits last year. The credit’s recipients—whose annual income is typically less than $20,000—are now examined at rates similar to those who make $500,000 to $1 million a year. Only people with incomes above $1 million are examined much more frequently.
Our partner site CityLab explores the cities of the future and investigates the biggest ideas and issues facing city dwellers around the world. Gracie McKenzie shares their top stories:
Endorsed by a nearly unanimous vote, Minneapolis’s new comprehensive plan is the most ambitious upzoning guide yet passed by an American city. CityLab’s Kriston Capps spoke to the city’s mayor Jacob Frey, who said of pushback to the Minneapolis 2040 plan: “Cities evolve. That evolution can be embraced in a holistic fashion that accommodates people who need homes.”