Is there any institution less popular than Congress? It turns out, yes, there is — the Internal Revenue Service. So it’s not surprising that all week, Congress has been piling on the IRS for its special reviews of so-called “social welfare” groups active in politics.
The agency made a dumb mistake, and people will likely lose their jobs. But the real damage is that it only confirms what too many demagogues already say about government. The fact is, since the Citizens United case allowed unlimited election spending, the number of groups seeking to pump money into elections and asking the IRS to grant them tax-free status has doubled. Crossroads GPS (Romney supporters) and Priorities USA (Obama supporters) were not looking after your welfare by pumping hundreds of millions in secret contributions into the last election.
But that’s just the tip of the iceberg of tax avoidance today. While Congress is putting on its best outrage act, it’s protecting countless tax avoiders. The Marketplace Fairness Act simply requires all online retailers to collect sales tax for the states. Right now, most online sellers do not, giving them a major advantage over local businesses here in the Inland Northwest. Who could be against something that makes the business landscape fair and, in Washington state’s case, restores an estimated $845 million in revenue every two years? The House of Representatives — that’s who. The Senate easily passed the Marketplace Fairness Act last week, but Speaker of the House John Boehner said he “probably” won’t support it. Doing nothing just leaves the thumb on the scales in favor of tax avoiders. There’s an outrage for you.
The list of tax shirkers happily not paying their way is long. American companies, for example, have sent their money on a one-way vacation, stowing their profits elsewhere; $1.9 trillion in American profits are currently parked, untaxed, overseas. Tax havens like the Cayman Islands and nutty loopholes in our tax code cost America about $250 billion a year. Carried interest and other tax tricks result in a third of the wealthiest Americans paying less than 15 percent in taxes, while the upper-income tax rate has been 35 percent. (Remember Romney berating the 47 percent for being freeloaders while paying just 14 percent on his income in 2011?) And some American corporations have finally figured out how to pay zero in taxes
Our relationship to taxes must change — better policies, better attitudes.
Supreme Court Justice Oliver Wendell Holmes Jr. was known as the “Great Dissenter” for taking up unpopular causes. Today it seems there’s nothing less popular than paying for our democracy together. If you look above the entrance to the beleaguered IRS headquarters in D.C., you’ll see Holmes’ eternal words: “Taxes are what we pay for a civilized society.”