In a recent video with The Young Turks, host John Iadarola discussed budget cuts at the Internal Revenue Service over the past 10 years, as well as those planned by President Donald Trump. The host stated that "some extremely influential people" are pleased with the president over the move, and noted that the IRS is one of the only federal agencies that "brings in money." Mr. Iadarola suggested that cutting the resources of an agency that generates revenue, under the pretense of saving money, appears "ridiculous."
TYT cited statistics from the Center on Budget and Policy Priorities showing that, since 2010, IRS funding has been cut by 12 percent, and its staff has been reduced by 14 percent, totaling 13,000 employees.
There are 12,000 fewer code-enforcement workers than in 2010, and the IRS is reporting the lowest audit levels in 10 years. Despite the reduced resources, the agency has become responsible for processing 9 million additional individual income tax returns, as well as new duties, implemented under legislation like the Foreign Account Tax Compliance Act.
Audit rates of large companies down near 50 percent
The falling audit rates include the significant highlight that the rate at which large companies are audited has fallen by close to 50 percent, from 17.8 percent in 2012 to 9.5 percent in 2016. John Iadarola, perhaps sarcastically, stated, "Thankfully, I'm sure companies are not doing any funny business with their taxes." He noted a decrease in individual audit rates, as well.
The next IRS budget cut, proposed by President Trump's White House administration, is reported to aim to trim another 14.1 percent from the agency's coffers, beginning in October 2017. Iadarola asked if President Trump isn't aware of the effects his cuts will have, reducing the audit rates of corporations, and even rich individuals.
TYT founder Cenk Uygur opined that the move on the part of the Trump administration is "no accident," and pointed to some Democrats and Republicans, alike, acting in a manner beholden to donors. Mr. Uygur noted that audit rates fell significantly when Republicans began to win majorities in 2011. He described Republican donors enjoying a "bonanza" as a result, where individuals could cheat on their taxes, with increased confidence that they would not be caught.
The TYT host pointed out that only 0.7 percent of U.S. citizens currently face IRS audits, and that this equates to a 99.3 percent chance of not being caught. For rich individuals, Uygur cited the Koch brothers, even the ability to fudge a number on a return by a small percentage amount could result in tax savings of hundreds of thousands, if not millions, or even billions, of dollars.
Fiduciary dilemma
Uygur then discussed a dilemma faced by corporate executives, who have fiduciary duties to their shareholders to maximize profits, faced with audit rates below 10 percent, deciding whether or not evading taxes on the part of shareholders is a legitimate part of their jobs. "You almost have to break the law," Uygur stated.
"They never go to jail." He noted that people who engage in such behavior often receive bonuses for doing so, as well as the fact that penalties might need to be "10 X" higher to act as true deterrents.
The TYT founder described a situation where corporate executives are "incentivized" to not pay full taxes. Uygur noted that President Trump bragged about "buying" politicians during his presidential campaign, and pondered if some conservatives felt that this was acceptable, and that "at least he was being honest about it." The host stated, "That's not really any better," and held up the fact that the president did not pay any tax, whatsoever, for 18 years. The Turkish-American host explained that the IRS is "the one" branch of government where budget increases can reasonably be expected to increase income.
