Tuesday, August 16, 2022

The Republicans' Move from Being Merely Anti-Tax to Being Openly Anti-Law Is Just About Complete

by Neil H. Buchanan

One of the many false talking points that has recently emerged among Republicans with national ambitions is that the Inflation Reduction Act (the significantly pared-down, but still extremely good, final iteration of the Build Back Better bill) will involve -- cue the scary music -- hiring 87,000 new Internal Revenue Service agents to harass and jail typical, law-abiding American citizens.

Again, this is false.  It is just as false as the claim that the FBI (in carrying out a search of Donald Trump's country club) was using Gestapo tactics to allow Joe Biden's "regime" to exact vengeance on a once and future political rival.  In some ways, however, the "Fear the IRS" story is false and dishonest in more ways than the usual Trump-Republican lies are false and dishonest.  It is also arguably more interesting and consequential, because this latest step in vilifying the IRS highlights the difference between taking a stand on policy (Republicans' advocacy of reduced taxes, or switching to a more regressive tax system) and making a play for anarchy (losing the policy battle but trying to win by making it impossible to enforce duly enacted laws).

My major goal in this column is to explain why a key element of the Republicans' new Fear-the-IRS talking point is grotesquely dishonest.  As I will explain, there is simply no way that a person could innocently make that argument.  It is, to be clear, an ugly story.

As we shall see, a big part of the fantasy being pushed by Republican governors, senators, and others regarding the IRS's new budget involves manipulation of statistics.  Because so few people understand statistics, even a full-on partisan hack might make statistical errors not from malice but due to confusion.  That is, even if they would be willing to lie with statistics, they might simply not know enough to do so effectively.  And other times, people who are attempting to be honest might simply miss some statistical subtlety.

Consider an example not from tax law but from health care.  Over the last generation, there has been a great deal of hand-wringing about the rising costs of health care in the US, which is truly a scandal.  Conservatives, who are most opposed to doing what is necessary to bring those costs under control -- by switching to single-payer or even a British National Health Service-like government-run system, or short of that by bringing down the costs of medications (another part of the Inflation Reduction Act that Republicans uniformly opposed, standing with the drug companies against Americans and against efforts to control federal spending) -- started to make predictions that the US budget deficit would soon rise without limit and that the national debt would become unsustainable.

To be clear, the US spends far too much on health care, and that does mean that the federal budget includes much more spending on hospitals, medications, and so on than it should and could.  But here is the mistaken move that some not-obviously-hackish people made to explain why the US faced such a dire future of ever-rising health care spending: because health care costs rise as people get older, the increase in life expectancy will inevitably bankrupt our Medicare, Medicaid, and ultimately our economy.

Why is that move mistaken?  It is not obvious on the surface, but it has to do with the fact that "health care costs rise as people get older" masks something more subtle.  The fact is that a huge part of the black hole of health care spending involves too much end-of-life care.  For various reasons, our system is set up in a way that causes what we mistakenly think of as "heroic efforts" to be taken to keep older people alive for a few more months, or sometimes only weeks.

That means that when we observe that older people are more expensive to the health care system than younger people, what we are in truth seeing is that end-of-life care is (for obvious reasons) mostly dedicated to older people.  That, however, does not mean that extending the average life expectancy is going to add years of high-cost health care provision to our system.  It could (and in fact does) mean that we are simply pushing back those higher costs by a few years.  Yes, those extra years are going to be more expensive than when the person was in her twenties or thirties, but it is simply wrong to say: "Well, people who are 79 soak up 25 percent of Medicare costs, so as the number of 79-year-olds rises, we can simply assume that they will all cost as much as current 79-year-olds cost."
 
If 79 is the current average age at which people die, then that high cost number is not going to represent "the cost of caring for older people" but "the cost of keeping dying people alive for a bit longer."  We should certainly rethink the way we approach end-of-life medical care, but my point here is that one can make a statistical leap that is not in fact accurate by failing to notice why costs spike where they do.  Blithely assuming that we can project costs based on that spike is simply unjustified.

How does this relate to my main focus here, which is the Republicans' latest attempt to vilify the IRS?  One of their scare tactics is to tell people that the IRS's additional employees will be auditing regular people.  Given that the increased appropriations for the IRS in the Inflation Reduction Act are explicitly provided to allow the tax cops to increase audits and collections from the wealthiest tax cheats -- who have been getting away scot-free as the Republicans have cut the IRS's budget over the years -- how is it possible to say the exact opposite?  How can they pretend that the IRS's restored budget will be used to terrorize Joe and Jane Average?

The answer is to manipulate statistics.  Apparently, Senator Lindsey Graham has been one of the key fear-mongers about this, and he has pointed out that a large part of the IRS's enforcement efforts are spent on enforcing taxes against people who "makes less than $75,000 per year."  So the argument is that because the IRS currently allocates its enforcement budget toward the lower end, it will continue to do so -- even if the law specifically requires it to do otherwise.  Nothing can ever change.

As the vlogger in the link above pointed out, one reason that the IRS's enforcement decisions are currently skewed in this way is that they have not been given the resources to go after the big-ticket cheats, the audits of which can take years and involve high agency costs.  Even if the ultimate payoff from such enforcement efforts might be quite large, the bureaucratically safer move is to go after large numbers of middle- and lower-income people who cannot afford to put up a fight.

That is an important point, but it misses the ultimately, completely galling explanation for why the IRS's enforcement budget is aimed at non-wealthy people: the Republicans have required the IRS to do so!  Specifically, the Republicans (long before Trump came along) decided that what had been a popular (among both parties) and effective anti-poverty program -- the Earned-Income Tax Credit (EITC) -- was too much of a giveaway to the poors.  Even though the EITC only goes to working people, Republicans defaulted to their assumption that "we're giving lazy people hammocks, not safety nets."  What to do?  Amp up enforcement against the tiny amount of erroneous EITC payments.

Under Republican leadership, the EITC became an almost Ahab-like focus of concern, and they removed prosecutorial discretion from the IRS, which otherwise would have sensibly not allocated many of its resources to trying to find the tiny number of people who were trying to game the EITC.  The Republicans' meanness was such that they penalized even the most innocent mistakes, making people ineligible for years if found to have been in violation of that law.  Law schools and other nonprofits have, in turn, been the last hope for such people, and low-income tax clinics over the last few decades might as well have rewritten their mission statements to say something like this:
"We spend almost all of our time filling out EITC claims for the least tax-savvy people on Earth, because the consequences of even the most minor errors are so high.  The IRS knows that this is crazy, but it is required by law to hound the working poor, so we have to expend all of our limited resources on this one ridiculous thing, rather than helping poor people in the many other ways that we would like to be able to help them."
Note again that the Republican talking point specifies that the IRS's over-enforcement is targeted at "people who make less than $75,000 per year."  They could have said "the working poor," but that would not have scared the suburban voters they are trying to scare with this tactic (the same voters they are lying to about Critical Race Theory, "grooming," and all the rest).  It is true that the IRS's enforcement efforts are focused below pretty much any income level that one might choose, because they are over-focused on the very lowest-income people.  That means that Republicans can sweep their target voters into the mix by choosing some modest-but-not-poor income level and making it appear that the IRS would come after all of them.

This, then, is a variation on the type of statistical quirk that I noted above regarding health care costs.  The eye-popping number has an explanation, and it is not the explanation that people think it is.  And as we look at people who, respectively, are not at the end of their lives or are not the working poor receiving the EITC, then the claims ("longer lives will radically increase health care costs" and "more audits will be focused on regular folks") fall apart.  As I asserted above, this type of error cannot be innocent in the tax context.  Why?  Because that statistical quirk exists precisely because the Republicans created it.

Again, there are other reasons why this Republican talking point is wrong.  As I noted, the new law specifically directs the IRS to use its new resources on high-end audits.  Moreover, as I mentioned in a column last week, even the "new army of 87,000 IRS agents" thing is a lie on multiple levels.  As the fact-checker at The Washington Post pointed out, that number is mostly going to include new hires replacing retiring IRS employees, and the vast majority of them will not in fact be "enforcement agents" at all.
 
This is all of a piece.  The Republicans stoke anger when the IRS cannot answer taxpayers' phone calls, but when the Democrats try to give the IRS the resources to do its job, the Republicans freak out.  Even when the Republicans have power, they have not been willing to make the tax system as regressive as they would like.  Instead, they make it all but impossible for the IRS to enforce the law against rich people, which stokes further resentment, which Republicans then use to feed people's cynicism about everything government-related.
 
The Republicans were in the anti-IRS business long before they were in the anti-FBI business, but it is all about making a mockery of their claims to favor law and order.  The lies all start to blend together, and the country's commitment to equality under law becomes more and more threatened.

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