Tax audits of rich and poor Americans
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Here’s an interesting study from Syracuse University (whose web page designers are apparently being held hostage in 1997) about the increasingly dysfunctional auditing system deployed by an increasingly overwhelmed IRS:
A large increase in federal income tax audits targeting the poorest wage earners allowed the Internal Revenue Service to keep overall audit numbers from further declines for Americans as a whole during FY 2021. That resulted in these low-income wage earners with less than $25,000 in total gross receipts being audited at a rate five times higher than for everyone else.
Meanwhile at the other end of the spectrum:
IRS was still only managing to conduct about a third of the millionaire audits it had completed during FY 2015. Then IRS had audited 39,753 millionaire returns.
Over this same short span of time, the odds of audit fell even more because the sheer number of millionaire returns has grown by 50 percent. Thus, the odds of audit have been plummeting. IRS recorded 617,505 millionaire returns filed that were available to be audited in FY 2021. With only 13,725 millionaire audits last year, more than 600,000 millionaire returns were NOT audited.
Note that “millionaires” here means people with a seven-figure AGI in 2021, which after many decades of inflation is a more useful definition now of the term than the traditional 20th century definition of somebody with at least a seven-figure net worth.
The article does a good job of outlining the extent to which the IRS is hamstrung by the long-term GOP campaign to make it impossible to conduct real audits on rich people, which perversely means that it will end up carrying out “correspondence audits” on vast numbers of poor people.
No discussion of this subject should fail to mention the totally fake IRS “targeting scandal” ginned up by the proto-fascists during the Obama years, when the IRS supposedly targeted right wing political groups, for the very biased and unfair reason that those groups were egregious tax cheats.