Earlier this fall, President Biden and Democrats scaled back a proposal to beef up IRS enforcement to go after wealthy tax cheats. They did so mostly in response to a full-throated campaign by Republicans and plutocratic interests who insisted it would empower the IRS to spy on ordinary Americans’ bank accounts.
But the fact that Democrats backed down amid a concerted GOP attack hasn’t changed a thing. Republicans have continued to repeat the same claim. If anything, they’ve made it more lurid and ridiculous.
This episode neatly captures how a certain type of Republican propaganda really functions — and why there’s often no percentage for Democrats in letting themselves get pushed around by it.
House Republicans are circulating a new polling memo that’s supposed to demonstrate that Biden’s Build Back Better bill will be a massive albatross for Democrats. As Punchbowl News reports, this is at odds with public polls showing many of its provisions are very popular.
But what’s interesting here is not the polling itself but rather what the memo says about how Republicans will frame their coming attacks on the bill if it passes. The part on the IRS proposal really jumps out in that regard:
71% of voters in battleground districts are less likely to vote for a Democrat who votes “to increase IRS audits of taxpayers, by hiring 87,000 new agents to look through the bank accounts of every American earning or spending more than $600 per year in order to make sure they are paying enough taxes, disproportionally affecting small business owners.”
Republicans have already pushed versions of this attack that have been demolished by fact checkers. But this new version, if anything, is even more wildly dishonest.
The proposal to beef up enforcement at the IRS — a key revenue raiser in the Biden plan, which Democrats are close to passing — is designed to target wealthy Americans and corporations that avoid paying taxes they already owe.
Note that the GOP attack obscures this by claiming it’s about getting people to pay “enough” in taxes, dishonestly implying most ordinary Americans would face hikes in what they already owe.
The proposal seeks to net that revenue by expanding funding for more IRS agents, and by requiring banks to report certain types of information to help track potential tax avoidance.
It does the latter by requiring financial institutions to document to the IRS total inflows and outflows for bank accounts above a certain threshold in yearly deposits and withdrawals.
That provision is what Republicans describe as an effort to “look through the bank accounts of every American earning or spending more than $600 per year.”
But as Salvador Rizzo’s definitive piece on the proposal shows, this is nonsense. First, the reporting requirement targets total aggregate inflows and outflows, not individual transactions such as specific deposits or withdrawals. Experts told Rizzo there’s no way fine-grained banking detail would be swept up in this.
Second, Rizzo notes, by definition this reporting requirement is unlikely to target most wage earners, because the IRS already has access to their salary information.
Third, and perhaps most absurd, Democrats actually raised the threshold for accounts subject to those reporting requirements from $600 to $10,000 in response to Republican objections. They also exempted wages and Social Security benefits from the requirement to build in another provision ensuring this would target the wealthy and corporations.
Despite all this, Republicans simply continue repeating precisely the same claim. It would be wildly dishonest even if they described the threshold accurately, but now it’s even more ridiculous.
A few caveats are in order. First, as Jeff Stein reported, Democrats felt forced to scale down the proposal in part because they believe the rollout of it was flawed, giving “Republicans an opening to attack them on the issue.” But even so, the scaling down happened in part precisely because of the campaign of distortions against it.
Second, some Democrats have opposed the proposal, and some experts have criticized it. But a senior Democratic aide tells me most Democrats opposed have privately communicated that they feel GOP attacks have rendered it too politically toxic in a way that may be insurmountable.
That squeamishness is irritating. But it shows how Republican distortions have their desired effect, precisely when Democrats get pushed around by them.
Republicans have spent years trying to starve the IRS of enforcement resources. The result, as IRS Commissioner Charles P. Rettig details, has been a huge drop of tax collection on very high incomes. The GOP demagoguery that ordinary Americans should fear these proposals will disproportionately protect the very wealthy.
‘Death panels’ redux?
We’ve seen this before. During the debate over the Affordable Care Act, Republicans pushed all kinds of lurid nonsense, such as the idea that funding for end-of-life counseling would create federal bureaucratic “death panels.”
Jonathan Cohn, the author of a good history of the ACA, points out that Democrats removed that provision in response, while scaling back or cutting other important provisions to fend off conservative attacks that it would increase the deficit (which it didn’t).
And yet, after all that, Republicans simply kept up the attacks, either recapitulating the old ones or moving on to new ones.
“If you modify legislation to combat a dishonest argument, a lesson from the ACA fight is that you shouldn’t assume that modification will make the argument go away,” Cohn told me.
Unfortunately, we’re again learning that this rule remains as true as it ever was.