The Post reports that numerous conservative groups are warning congressional Republicans not to back Biden’s proposal, because it would increase funding to the Internal Revenue Service by tens of billions of dollars.
The Biden proposal — which has been negotiated by a bipartisan group of senators and the White House — would fund increased IRS enforcement, mostly on the wealthy and big corporations. That would bring in new revenue for the infrastructure bill those senators are championing.
Judging by a new interview that Vance has given to Molly Ball of Time magazine, this is something populists like him might support. Vance conspicuously breaks with conservative orthodoxy treating market freedom as sacrosanct and taxation as an infringement to be resisted at all costs:
“This is a mistake of the modern conservative movement, to say, Well, these are private companies; we have to keep our hands off,” he tells me. “I do generally think that cutting people’s taxes is a good thing. On the other hand, when there are companies that have effectively rigged the economy — such that they pay a lower tax rate than my middle-class sister, that’s not fair.”
Let’s be clear: One positive thing about conservative populism is that it embraces the insight — one long championed by progressives — that distributive outcomes partly reflect policy choices that have channeled wealth and income upwards for decades, choices that have masqueraded as the natural operations of “free” markets.
One key area of this has been the structuring of the tax code, which has created all kinds of ways for corporations to bring down their effective tax rates. This is what Vance alludes to here.
But if Vance really wants to do something about this, why, he’s in luck!
Combating elite tax gaming
The proposal to increase IRS enforcement would target exactly this sort of elite tax gaming. Its core idea is that the budgetary starving of such enforcement has made it disproportionately easier for corporations and the wealthy to get away with tax avoidance.
That’s because those elites have the resources to exploit the IRS’s lack of enforcement resources. The result has been a steep drop in auditing of corporations and the rich, with enormous sums of revenue going uncollected, possibly as much as $1 trillion per year.
The idea is to suggest the proposal threatens a jackbooted federal invasion of ordinary Americans’ finances. But even Republicans who support including it in the bipartisan deal say it will have additional oversight built in.
What’s more, Chye-Ching Huang, a tax expert at New York University, points to an irony in the conservative opposition. As Huang tells me, more IRS spending could make it less likely that “honest filers” face “unnecessary audits,” because it would allow for beefed-up staff and technology that better “targets audits to tax cheats.”
And given that the new enforcement spending will likely be targeted at avoidance by the wealthy and corporations, opposing this proposal is tantamount to letting them get away with avoiding paying taxes they already owe, denying the nation revenue to rebuild its infrastructure.
That’s not something conservative populists like Vance should support, particularly since infrastructure spending is also purportedly an area where right-populists are breaking with conservative anti-government-spending orthodoxy.
But the realities of conservative politics are such that the power of totemic symbols like the jackbooted IRS — and the continuing pull of fake IRS “scandals” built up in right-wing media — will probably make this new attack hard for them to resist.
Vance is championing a worldview that purports to indict contemporary global capitalism for empowering and enabling “elites and the ruling class that have plundered this country,” as Vance puts it.
But as Eric Levitz explains, in practice this indictment channels much of its energy into reactionary cultural politics, where the center of gravity of conservative politics now lies.
These, too, are things that conservative populists should support as ways to curb “elite plundering.” Indeed, Vance himself has run an ad vaguely promising higher taxes on multinationals. Will he back the Biden plan?
Almost certainly not. The totemic power of casting Biden as a “globalist” elite — after all, Biden would crack down on multinational tax avoidance via multilateral negotiations with other countries — will prove very strong.
Let’s hope this is wrong. It would be great if conservative populists like Vance resisted those tendencies in his party and supported constructive proposals that would accomplish the populist goals he champions.
We get that it’s hard for GOP primary candidates to support proposals backed by the other party. But if Vance doesn’t support cracking down on elite tax avoidance this way, he should explain how that squares with his populism — and tell us how he would accomplish these goals in a better way. Posturing about “elite plundering” won’t cut it.