Ashley Schapitl (202) 224-4515
Wyden Speaks Against Republican Efforts to Protect Wealthy Tax Cheats
As Prepared for Delivery
Mr. President, it’s time for a reality check here in the United States Senate. The far right has an awful lot to say about the IRS these days. Even Senators — who should know better — are spinning wild fantasies about 87,000 agents who are armed to the teeth and coming to the doors of innocent small business people. All this talk is unscathed by the truth.
Here’s what is true. Every year, wealthy tax cheats and scofflaw corporations skip out on paying what they owe, ripping off the American people for billions and billions of dollars.
They are sophisticated. They are wealthy. And they want to protect the status quo. By attacking the IRS, Republicans are helping high-flying tax cheats get away with breaking the law.
The IRS has had its resources gutted by Republicans in Congress over the last decade. It’s badly outmatched by these wealthy tax cheats who have armies of lawyers and accountants to pry open loopholes and hide income in the shadows.
I’ll share an example. Just a few weeks ago I put out the findings of a yearlong Finance Committee investigation into the largest alleged tax evasion scheme by one individual in American history.
With the right financial wizardry and a complicated network of offshore accounts and partnerships, this individual, Robert Brockman, was able to evade taxes on over $2 billion in income.
To hide his money, Brockman set up offshore entities we dubbed “shell banks.” These were offshore entities dressed up like financial institutions Brockman set up to hide his money from the IRS, betting, correctly, the IRS would never have the resources to uncover his scheme. There may be hundreds of thousands more of these “shell banks” that the IRS has never examined.
The Finance Committee is also in the midst of an investigation into the tax practices of some of the biggest members of Big Pharma. One of the companies whose tax data we examined was AbbVie. In 2020, 75 percent of AbbVie’s sales were made here in the United States, but AbbVie reported only one percent of its income to the U.S. for tax purposes.
Earlier this year we requested financial information from Merck, which makes nearly half its sales in the U.S. but reported only 14 percent of its income here. We also requested information from Bristol Myers Squibb, which reportedly used a thicket of foreign subsidiaries and partnerships to take its effective tax rate from 24.7 percent all the way down to negative 7 percent in a single year.
The IRS struggles to do anything about a lot of these cases — even when they’re reported in the press. Criminal tax evasion cases have fallen nearly by half. The number of highly-trained experts who know how to break down these complex tax evasion cases has fallen by a third. It takes hundreds and hundreds of hours to review the tax filings of corporations and the rich, and the IRS simply does not have the resources to do it.
That’s a big reason why Democrats invested more resources in enforcing the laws on the books. It’s got nothing to do with middle-class taxpayers, whose taxes get paid automatically out of every paycheck. It’s about going after the big guys who are ripping off the little guys with complex tax evasion schemes.
What the Republicans want to do is preserve the status quo, so only the little guys get audited while their billionaire friends like Robert Brockman get off scot-free.
The funding for the IRS is also about providing a basic level of customer service to American taxpayers. At one point during tax filing season this year, the IRS told the Finance Committee that it was able to answer only 11 percent of the service phone calls it was receiving. Taxpayers in America deserve better service from their government, and that means the IRS needs these new resources to provide it.
The far right and the tax cheats, however, want the IRS to continue to struggle, because that makes it easier to attack and vilify.
That’s why they’re spreading these falsehoods about thousands of new IRS agents — absolute nonsense that’s conjured out of nothing. Even worse are the falsehoods about IRS agents and firearms.
Alongside the DEA, FBI and other law enforcement agencies, the IRS often plays a part in going after drug cartels, money launderers and other serious, hardened criminals.
How do my Republican colleagues expect IRS criminal investigations officers to defend themselves during drug busts against violent cartel members? Should they bring a set of sharpened number two pencils?
So colleagues, let’s live in the real world. The IRS funding Democrats passed last month is about making sure the IRS can do its job and meet the expectations of the American people.
It’s time for members of Congress to stop carrying water for wealthy tax cheats who are breaking the law. The IRS needs to be able to crack down on their ripoffs. And the IRS needs to be able to provide adequate and timely service to taxpayers who need help. That’s what the IRS funding does. Everything else coming from the far-right is simply untrue.
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