The IRS Barely Bothered to Audit Superrich People Last Year

Who needs the Cayman Islands when you’ve got congressional Republicans? Photo: CSA Images/Getty Images

For much of the last decade, the Republican Party has branded itself as a champion of fiscal responsibility and the rule of law — while doing everything in its power to help rich people steal from the Treasury.

Since 2011, congressional Republicans have forced through a series of aggressive cuts to the Internal Revenue Service budget. Between 2010 and 2016, the number of individual tax returns filed in the U.S. increased by 7 percent, while IRS funding fell by 18 percent.

Meanwhile, conservatives have pressured the IRS to focus its limited resources on punishing working poor people who improperly claim the earned income tax credit, and a shift in the agency’s internal culture has led its criminal investigators to devote less time to tax evasion and more to “flashier crimes” like money laundering or drug trafficking.

One consequence of these developments: It is now much easier for plutocrats to get away with cheating on their taxes than it used to be (and, as our president has demonstrated, it was never all that hard).

In 2015, about 35 percent of households earning more than $10 million dollars had their taxes audited by the IRS. Last year, that figure was 6.66 percent — the lowest since the agency started reporting such data in 2008.

Chart: Bloomberg

This drop in audits has been accompanied by a plummet in criminal referrals: In 2012, the IRS referred 589 tax violations for criminal prosecution; in 2016, it referred just 328.

The IRS is currently lobbying Congress for a budget increase, and President Trump has actually requested a 1.5 percent bump in the agency’s funding. But congressional Republicans remain skeptical. Louisiana senator John Kennedy told the Wall Street Journal Monday that he’s “not into throwing money at the wall just because the bureaucracy says we need more.”

According to Treasury Department estimates, for every $1 the government spends on enforcing tax compliance, it gets $6 back in recovered revenue.

It is unclear whether Congress will see last year’s infinitesimal audit rate as a sign that the IRS is woefully under-resourced, or as proof that the agency is functioning just as intended.

The IRS Barely Bothered to Audit Superrich People Last Year