Black taxpayers are three times more likely than white taxpayers to face IRS audits, even adjusting for all other factors, and the system has been designed to do that in the wake of Republican cuts to the agency.
Black taxpayers are at least three times as likely to be audited by the Internal Revenue Service as other taxpayers, even after accounting for the differences in the types of returns each group is most likely to file, a team of economists has concluded in one of the most detailed studies yet on race and the nation’s tax system.
The findings do not suggest bias from individual tax enforcement agents, who do not know the race of the people they are auditing. They also do not suggest any valid reason for the I.R.S. to target Black Americans at such high rates; there is no evidence that group engages in more tax evasion than others.
Instead, the findings document discrimination in the computer algorithms the agency uses to determine who is selected for an audit, according to the study by economists from Stanford University, the University of Michigan, the University of Chicago and the Treasury Department.
Some of that discrimination appears to be rooted in decisions that I.R.S. officials made over the past decade as they sought to maintain tax enforcement in the face of budget cuts, by relying on automated systems to select returns for audit.
Those decisions have produced an approach that disproportionately flags tax returns with potential errors in the claiming of certain tax credits, like the earned-income tax credit, which supplements low-income workers’ incomes in an effort to alleviate poverty. Those tax returns are more often selected for audits, regardless of how much in owed taxes the agency might recover.
The result is audit rates of Black Americans that are between three and five times the rate of other taxpayers, even when comparing that group to other taxpayers who also claim the E.I.T.C.
The I.R.S. does not detail how it selects returns for audit. But the researchers were able to isolate several apparent explanations for why Black taxpayers are targeted so much more frequently. One is complexity: It is much harder for the agency to audit returns that include business income, because that process requires expertise from individual auditors. Such returns appear to be audited less often than returns from otherwise similar taxpayers who do not report income from a business.
Black taxpayers are far less likely than others to report business income. And Black taxpayers appear to disproportionately file returns with the sort of potential errors that are easy for I.R.S. systems to identify, like underreporting certain income or claiming tax credits that the taxpayer does not qualify for, the authors find.
In effect, the researchers suggest that the I.R.S. has focused on audits that are easier to conduct and as a result, finds itself disproportionately auditing a historically disadvantaged group rather than other taxpayers, including high net-worth individuals.
“What the I.R.S. chooses to focus on when it conducts audits can either undercut or complement our progressive tax system,” said Daniel Ho, an author of the study who is the faculty director of Stanford’s Regulation, Evaluation and Governance Lab, known as RegLab, where the study originated.
Auditing low-income taxpayers is much, much easier than auditing high-income taxpayers, and the poorest taxpayers are much more likely to be Black.
In other words, decades of systemic Black poverty makes Black folk easier targets for the IRS to pick on. We're the low-hanging fruit and the easiest to beat more money out of.
God forbid the IRS went after, say, Donald fucking Trump or Elon Musk, right?
No wonder Republicans want to eliminate the IRS and drop a 30% sales tax on everyone. They want to provide "subsidies for the poor" but of course red states will simply refuse to have that particular program for anyone, and surprise, it's as regressive as it gets.
The cruelty skips the middleman.
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