"Tax day" comes and goes each year, but unfortunately, the systemic issues that plague American taxpayers linger on without resolution well past the mid-April deadline.
The U.S. tax code has long been manipulated by corporate lobbyists and their corporate tax attorneys. (President Jimmy Carter once called the loophole-ridden tax laws "a disgrace to the human race.") A primary purpose of these perforations is to arrange the law and regulations so that certain categories of profit-rich companies can avoid paying their fair share to Uncle Sam.
In many states, it is a literal race to the bottom for elected officials to offer corporations sweeter tax deals to keep jobs in their locality -- see the 2013 Boeing controversy in the state of Washington, in which the aerospace industry, much of which is made up of Boeing, was awarded $8.7 billion in tax breaks over 16 years to produce the 777X jetliner in-state. Notably, Boeing paid zero in federal income tax that year -- along with many other major U.S. corporations such as GE and Verizon. Some of these Fortune 500 companies even get a rebate check!
According to Citizens for Tax Justice, "American Fortune 500 corporations are avoiding up to $600 billion in U.S. federal income taxes by holding more than $2.1 trillion" of retained profits offshore, which they designate as "permanently reinvested" to avoid a tax liability.
And of course, millionaires and billionaires often pay less in taxes than middle-class Americans do, taking full advantage of tax loopholes, deductions, deferrals and other forms of creative accounting. The Republican-controlled House of Representatives now intends to pass legislation to repeal the estate tax, which would see that "vast amounts of money that has never been taxed will be passed tax-free to the heirs of today's billionaires," according to Scott Klinger of the Center for Effective Government.
The end result is that, through a myriad of tax avoidance schemes, the wealthy 1 percent continue to profit using public resources, subsidies and infrastructure while the 99 percent disproportionately pay the bills for it -- all while struggling to pay their own bills, mortgages, student loans, and more. And when Wall Street runs amok, it's the taxpayers who have paid the bills for the catastrophic damage as a result of regulatory surrender. Millions of these taxpayers also lost their jobs and pensions in the 2008-2009 Wall Street collapse of our economy.
This brings us to the Internal Revenue Service -- which has been made into a dirty word to many Americans. Those Americans might be surprised to learn, however, that the current IRS enforcement budget is $10.9 billion, after a cut of $346 million from the previous year. To put that in perspective, Apple Inc. spent $14 billion just to buy back its own stock last year, a move that only serves to provide a meager benefit, if that, to its shareholders, while nourishing executive compensation packages.
The IRS loses an estimated $300 billion a year due to tax evasion. A budget proposal by the Obama administration claimed that the IRS could bring in an additional $6 for every dollar it adds to the enforcement budget. IRS Commissioner John Koskinen said that he pushes this very convincing point in Congress to little reception or reaction. "I say that and everybody shrugs and goes on about their business," he told the AP in 2014. "I have not figured out either philosophically or psychologically why nobody seems to care whether we collect the revenue or not."
The effects of these budgetary cuts are already being seen. Current staffing levels at the IRS are at 87,000 -- the lowest since the early 1980s. The agency lost 13,000 employees from 2010 to 2014 and expects to lose another 3,000 this year. In the final stretch towards April 15, many taxpayers have experienced excruciatingly long waits on hold and long lines at local IRS offices as a result. Congress doesn't care. (National Taxpayer Advocate Nina Olson, who operates independently within the IRS, detailed this degradation of service in her annual report to Congress. (See taxpayeradvocate.irs.gov.)
Republican presidential hopeful Ted Cruz has gone so far as to publicly state his intention to abolish the IRS entirely, calling that radical course of action the "simplest and best tax reform." It's not clear how Senator Cruz intends the federal government to collect revenue to pay for his presidential salary, the White House budget and expanding his giant military budget if he should be elected and not recover his senses.
It is clear, however, that significant rational tax reform is necessary. What remains unclear is who will benefit the most from such reform. Americans must seriously ask why individual U.S. taxpayers are fronting the money for hugely profitable corporations. These are funds that could potentially be used to repair critical public infrastructure, create decently paying jobs, or simply reduce the tax burden on middle-income individuals.
One solution to ensure that the interests of small taxpayers are accounted for and protected is to establish taxpayer watchdog associations across the country. These organizations would work full-time in each state to make sure that individual taxpayers get the best deal possible. After all, big corporations can afford to support an army of tax accountants and attorneys to continually update the playbook of tactics to avoid having to pay their fair share. Most taxpayers don't have this luxury. What they do have, however, is sheer force of numbers. Organization of such watchdog organizations could be facilitated by including a notice on the 1040 tax return inviting people to pay a small due and join these advocacy and educational nonprofit groups. These associations would be supported by membership dues and would receive no tax money. The members would elect a board of directors that could hire researchers, organizers, accountants and lawyers.
Such pressure from united citizen bodies would provide the organizational mechanism to enhance the influence of individuals in the tax-collection and policy-making process -- something that is much-needed in our current American plutocracy.
A simple motto to consider when asking what we choose to tax is: "Tax what they burn, not what we earn." Before we place the largest burdens of taxation on workers, we should tax areas that have the greatest potential negative or damaging influence on our economy and our society. Tax the polluters, the Wall Street speculators, the junk-food peddlers, and the corporate criminals. Consider that just a fraction of a 1-percent sales tax on speculation in derivatives and trading in stocks could bring in $300 billion a year! (See robinhoodtax.org.)
If taxpayers really want to protect their interests, they must organize and fight for them. The corporations certainly have the money -- but they can't match the manpower or votes of an organized citizenry.
In the meantime, big corporations on welfare like Walmart, Goldman Sachs, Bank of America, Pfizer, General Electric, Weyerhaeuser, and ExxonMobile should declare April 15 to be Taxpayer Appreciation Day. The corporate welfare kings should have the decency to, at least, thank smaller taxpayers who pay for all the freeloading that the corporatists have rammed through Congress. (See goodjobsfirst.org for much more on this issue.)