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Debt Ceiling Deal: A Gift to Wealthy Tax Cheats
The U.S. House and Senate have now both approved the deal struck by President Biden and House Speaker McCarthy to suspend the nation’s debt limit through 2025 in exchange for a range of cuts sought by Congressional Republicans. While the deal is not as draconian as the debt bill that passed the House earlier this spring, it includes no new revenues even though tax cuts of the past few decades have been the primary driver of deficit growth. And one provision of the deal—to claw back important funding to crack down on wealthy tax cheats—would actually increase the deficit while continuing the rig the system in favor of the most well-off.
The deal contains a $21.4 billion cut to IRS funding for tax enforcement. This includes an immediate $1.4 billion cut, and a side deal to cut, over the next two years, a quarter of the $80 billion in new funding the IRS received last year as part of the Inflation Reduction Act.
This new funding—particularly the part for tax enforcement, which is the prime target of House Republicans—is critical to allowing the IRS to do one of its most important jobs: crack down on tax cheating by the extremely wealthy and by big corporations. The IRS has had a hard time doing this lately because its enforcement budget was cut by about a fourth between 2010 and 2021. This led to 40 percent fewer revenue agents—the auditors uniquely qualified to examine the returns of high-income individuals and corporations. The number of revenue agents is the lowest it’s been since 1953.
For Republican leaders who have spent months clamoring about the deficit, these cuts to the IRS will increase the deficit by reducing the revenue the agency is able to collect from those who owe.
At the same time, rich business owners have exploited the IRS’ lack of resources by aggressively creating enormously complex “pass-through” business structures with hundreds or even thousands of sub-businesses, shell companies, and trust accounts. Dissecting these structures takes resources that the IRS has been denied. The number of partnerships with assets above $5 million – just one type of pass-through business structure—grew by 75 percent between 2010 and 2020. And by the end of the decade, the audit rate of these businesses was less than half a percent.
As a result, the gap between taxes owed and paid keeps growing, driven largely by the inscrutable labyrinth of business entities that well-paid accountants and attorneys can create for their clients. The most recent estimated gross tax gap, for 2014 through 2016, was $496 billion.
The White House says the cuts in the proposed deal shouldn’t change the agency’s plans for the next few years, since the original $80 billion was to be spent over a 10-year period. At best, however, that leaves the agency short of funds in the future. if you’ve worked around budgets for long enough you know a simple truth: a cut is a cut. And this is, indeed, a cut of significant proportions.
Ironically, for Republican leaders who have spent months clamoring about the deficit, these cuts to the IRS will increase the deficit by reducing the revenue the agency is able to collect from those who owe. (Perhaps it’s less ironic and more on-brand, given that these same Republican leaders want to quickly pivot to pushing through more big tax cuts that will disproportionately reward wealthy families and corporations.)
The smaller $1.4 billion cut will increase the deficit by $900 million over the next decade, according to the Congressional Budget Office (CBO). While the CBO has not scored the $20 billion cut, we can assume that it will lead to a much larger increase in the deficit – likely to the tune of around $30 billion over the decade, based on our back-of-the-envelope math using the CBO’s score of the Inflation Reduction Act.
Could this debt deal have been worse for tax enforcement? Absolutely, given that House Republicans’ first legislative move of this Congress was to repeal a much bigger chunk of the new IRS funding. But that doesn’t change the fact that cutting these critical funds to enforce our tax laws erodes the fairness and integrity of our entire tax system while reducing the revenue lawmakers have available to invest in the American people.
'Burn in hell': Pastor and son accused of dealing weed and mushrooms from church
A North Carolina pastor and his son have been charged with dealing drugs out of a church, according to a report.
Josh Price, 50, a pastor at South Side Baptist Church in Lexington, was arrested along with his son Matthew Price, 28, after deputies allegedly seized about 12 pounds of marijuana, nearly 32 grams of psilocybin mushrooms, 41 THC vape pens, 20 marijuana plants, and about 2 pounds of THX wax at the church, reported WBTV-TV.
“I really hope they burn in Hell,” one neighbor said. “I’m a Christian -- that is so, so wrong. It’s wrong. It’s wrong anywhere, but especially in God’s house.”
The pastor and his son were charged with manufacturing marijuana, trafficking marijuana, possession with intent to sell and deliver THC wax, three counts of felony maintaining a dwelling, possession with intent to sell and deliver marijuana, and conspiracy to traffic marijuana.
Law enforcement officers were tipped off to the operation by someone living in the fellowship hall behind the church, which Josh Hall said had been closed since the start of the COVID-19 pandemic, but former members said it had been closed even longer.
Former member Mike Lambeth said he was suspicious of Price when he first came to the church three years ago.
“I met him one time and our spirits didn’t bear witness at all and I did not think he was a pastor," Lambeth said, "and I told a lot of the members there, ‘Y’all better watch out for him.'"
'A whole new level of wackadoodle': Kari Lake promotes theory that Trump won California
Failed Arizona gubernatorial candidate Kari Lake this week promoted a conspiracy theory about former President Donald Trump having won the state of California in the 2020 presidential election -- and even some of her fellow conservatives are saying enough is enough.
Posting on Twitter early on Friday morning, Lake composed a message that simply said, "Read this thread," and then linked to a series of Twitter posts filled with false claims about voting in California during the election.
The thread begins by falsely claiming that President Joe Biden in 2020 only won in the San Francisco Bay area, whereas the rest of the state, including Los Angeles, voted for Trump.
In reality, Biden won in counties up and down the coast of California and only lost to Trump in the interior sections of the state that traditionally votes for Republicans.
IN OTHER NEWS: Trump's lawyers can't find classified document he bragged about in recently revealed recording: CNN
The theory that Lake promoted was so far out there that it drew a mocking rebuke from George Andrews, who currently serves as Chief of Staff to Republican California State Assemblyman Tom Lackey.
"This is a whole new level of wackadoodle," Andrews wrote of Lake's theory. "Not worth wasting precious kilobytes and battery power arguing over it. Just pointing it out for pure entertainment."
Conservative commentator Ryan James Girdusky, meanwhile, said that Lake's promotion of the theory showed she didn't have the smarts to be in politics.
"If you believe this tweet thread, you should not be in politics," he wrote. "You’re too gullible to even buy a car on your own."
And conservative attorney AG Hamilton argued that Lake's promotion of the theory could have potential legal repercussions.
"Kari Lake is now promoting an insane conspiracy thread claiming CA is secretly red and only seems blue because of voter fraud using Dominion and Smartmatic machines," he wrote. "Aside from being easily disprovable nonsense, this is a good way to get added to lawsuits by those companies."
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