There has been a lot of talk about the infrastructure bill and how expensive even a reduced version would be.
That the cost is astronomical shouldn’t surprise anyone. The United States has postponed basic maintenance, stopped the growth of necessary infrastructure: roads, bridges, power grids, water (with thanks to Flint, Michigan, who has seen “significant progress“In reducing lead after state officials changed the water source to save money, to hell with health, but how many other places have problems?”, And high-speed internet access.
When you delay work, problems increase as do costs. The United States has essentially used credit card financing to do not do anything, and now the cost of catching up to where we should have been becomes astronomical.
But, if you’ve been reckless in the past, you still need to understand current limitations and work within them. Are you counting on borrowing more money while Treasuries – the securities that the United States would sell to raise money – are paying so little return that, taking inflation into account, they carry negative interest rates? Many would say yes, but today you can’t just think about interest rates because the country has to refinance debt regularly. In some years, the interest you pay may increase as well as the costs.
At least part of it is raising money that is already owed to us. And what better source than people who should have paid but didn’t.
At one point, the infrastructure plan contained more money for the Internal Revenue Service so it could go after taxes owed. How some politicians like it Elizabeth Warren noted, a large and largely quiet group is the richest 1%, who “report no more than one-fifth of their income on their tax returns, and account for more than one-third of all unpaid federal income taxes.” .
The analysis comes from a initial working document published by the National Office of the Economy Research and Conduct by Researchers from the IRS, London School of Economics, Carnegie Mellon, and UC Berkeley. I emphasize the “initial” aspect because studies can change significantly with time and review. Still, the summary is instructive:
This paper studies tax evasion at the top of the US income distribution, using IRS microdata from (i) random audits, (ii) specific compliance activities, and (iii) operational audits. Based on this unique combination of data, we empirically show that random audits underestimate tax evasion at the top of the income distribution. Specifically, random audits do not capture most of the tax evasion through offshore accounts and transfer deals, both of which are quantitatively important at the top.
We provide a theoretical explanation of this phenomenon and construct new estimates of the size and distribution of tax noncompliance in the United States. In our model, people can adopt technology that better hides evasion at a fixed cost. Risk preferences and relatively high audit rates at the top drive the adoption of such sophisticated evasion technologies by high-income individuals. Consequently, random audits, which do not detect the most sophisticated evasion, underestimate the maximum tax evasion. After correcting for this bias, we find that income not reported as a fraction of true income increases from 7% in the bottom 50% to more than 20% in the top 1%, of which 6 percentage points correspond to sophisticated evasion. not detected. Accounting for tax evasion significantly increases the share of tax revenue from the top 1%.
Currently, people who get the Earned Income Tax Credit, who generally earn less than $ 20,000 a year, are much more likely to be audited by the IRS than someone who earns $ 400,000. This is supposedly due to the mistakes people make when claiming the EITC, which more than one tax expert has told me over the years is complicated and difficult to file correctly. Also, he chases someone poor and how does he defend himself?
You’d think getting your fair share of the rich might be a target on Capitol Hill.
Okay, now everyone can stop laughing. Especially those who read the New York Times
The new deal significantly changes the way infrastructure spending will be paid for, after Republicans opposed a pillar of the original framework: increased revenue from an IRS crackdown on tax traps, which was set to provide nearly a fifth part of the funds for the plan. .
Instead, negotiators agreed to reuse more than $ 250 billion of previous Covid relief legislation, including $ 50 billion in expanded unemployment benefits that two dozen Republican governors prematurely canceled this summer, according to a fact sheet reviewed by The New York. Times. That’s more than double the money reused in the original deal.
No mention of the Democratic reaction to this compromise, especially as one of the funding sources, rather than the increased taxes that wealthy people would pay who had sidestepped their share, will be people eligible for the federal unemployment payments that some states have decided to pay. cut off.
But then, aren’t the people without full-time jobs making up the difference rather than the rich, who often have friends in Congress? Not to mention all the rich people in Congress. Last year, according to Open Secrets, more than half of the elected officials in Congress were millionaires. Just over $ 1 million was the median net worth.
It may be difficult to turn against your companions. It certainly doesn’t seem to be when it comes to turning against those who earn little.