Rich Americans Are Stiffing the Taxman to the Tune of $66 Billion

Senate Finance Committee Chair Ron Wyden.Tom Williams/Congressional Quarterly/Zuma

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On Thursday, Senate Finance Committee chair Ron Wyden (D-Ore.) revealed that his committee had IRS data for tax years 2017-2020 showing that more than 1.4 million wealthy Americans had neglected to file a federal return. All told, these shirkers potentially owe the government as much as $66 billion.
More than 10,000 of them, Wyden write in a letter to the IRS commissioner, were repeat offenders. “Perhaps most alarming,” he noted, “was the extraordinary amount of unpaid taxes owed by a small subset of ultra-wealthy non-filers.” They included 8,729 people who potentially owed more than $500,000 each—nearly 1,000 had incomes in excess of $1 million a year. The top 500 non-filers each year—2,000 all told—owed a combined $923 million, Wyden added, yet only two were under active criminal investigation and only 58 had been subjected to liens and levies.

The taxman, clearly, has a long way yet to go.
“I think Americans are rightfully concerned when very wealthy families use loopholes and accounting strategies to avoid paying their fair share,” Wyden told me via his staff. “The people in this letter didn’t even bother with any of that.”
Indeed, America’s oligarchs and their hired guns have become increasingly skilled at tax avoidance in recent decades, and have succeeded in shaping the tax code to their preferences. The deeply unpopular tax cuts Republican leaders shoehorned through Congress in 2017 were the result of an unprecedented lobbying frenzy by corporations and wealthy interests, and it paid off. The nonprofit Americans for Tax Fairness released a new report on Wednesday, based on Forbes data, noting that the wealth of US billionaires has swelled by 77 percent—$2.2 trillion—since the “Trump” tax cuts took effect. 
The default mode of the wealth protection industry (tax lawyers, money managers, estate planners, etc.) has always been to maximize investment returns while stiffing the government—mostly legally, but sometimes illegally. and often deploying strategies that fall into legal gray areas. And then, when the IRS pursues a civil action against a member of the wealthiest 0.001 percent, the legal firepower these billionaires wield in Tax Court (a real thing) can be overwhelming.
Even beyond all of that, a subset of super-rich Americans has wagered, thus far successfully, that they can simply ignore their tax obligations. Back in May 2020, the Treasury Department’s Inspector General for Tax Administration issued a report stating that nearly 880,000 “high income” non-filers owed the Treasury $46 billion for tax years 2014-2016, but that the IRS—whose budget congressional Republicans had systematically gutted—didn’t have the resources to collect. Fifteen percent of the non-filer cases had been closed without examination by IRS staffers, the report said, and another third weren’t even in line to be “worked.” 
In 2021, the IRS finally got a big funding infusion from Congress. It was vehemently opposed by Republicans, who launched a disinformation campaign to frighten the public and who have since tried to abolish the IRS (and income taxes) entirely. The Republicans did succeed, however, as part of a recent deal to raise the federal debt ceiling, in clawing back some of IRS enforcement cash—a move, ironically, that will add to the federal deficit, according to the Congressional Research Service.
But the IRS still has a substantial enforcement budget, and Wyden wants the agency to use it to go after every last millionaire non-filer. “Civil and criminal enforcement, as well as financial penalties like liens and levies could easily be used to collect the taxes and identify these tax cheats,” he told me, adding. “It appears now the IRS has changed their policy, and I hope they take steps to bring the population in the new data into compliance.”