The Rich Get Tax Breaks, but the Poor Get Audited!

Image credit: Ken Teegardin

The revelation that Trump only paid $750 in income taxes in 2017 shouldn’t shock anyone. The politicians claim the income tax system is “progressive,” which means that the rich are supposed to pay a higher percentage of their income than working people. In reality, this hardly ever happens because the tax law has loopholes that allow wealthy business owners and investors to shelter a lot of their income from the IRS. Politicians from both parties have collaborated for decades in writing tax laws that favor the rich.

It’s an election year, and the Democrats are saying Trump cheated on his taxes by taking deductions larger than the law allows. With what we know about Trump, that seems quite likely. Supposedly the IRS is auditing his tax returns. But if Trump actually gets into trouble from an IRS audit, it will be quite unusual because the IRS acknowledges that it rarely audits the tax returns of the rich.

The IRS says it takes too much of their resources to audit the complicated returns rich people file when they use the loopholes permitted under the tax law. Instead the IRS concentrates its attention on low-income people who are eligible for the “earned income tax credit.” Government statistics show the county with the highest rate of IRS audits is in rural Mississippi where one-third of the population lives below the poverty line!

If the IRS audited the rich as aggressively as it audits low-income working people, its own officials admit that the IRS would collect from the rich as much as $160 billion in taxes owed but unpaid each year. The rich control the political system, so it’s no surprise the tax laws are written to favor them. We hear a lot this year from the authorities about respecting law and order. Judging by what comes out about the tax system, it’s pretty clear the rich don’t apply it to themselves. So why should we?