King says IRS should go after wealthy who cheat on their taxes

Last month, in a letter to Office of Management and Budget Acting Director Russell Vought, Senator Angus King denounced the targeting of low-income earners Internal Revenue Service and urged Vought to increase the service’s budget to “ensure fair treatment for all Americans.”

“Increased and better targeted enforcement has the potential to recover over $1 trillion in revenue over the next decade, and also will ensure that people of all income levels – including those who earn non-wage income – pay their fair share,” wrote King in the letter. “As audits have fallen by nearly 50 percent, tax dollars collected through audits have declined by about 50 percent, as well. Meanwhile, the IRS audits households claiming the anti-poverty Earned Income Tax Credit (“EITC”) more often than households within any other income band, except for those earning more than $1 million per year.”

EITC overages are responsible for just six percent of the current tax gap. Underreporting of business income accounts, however, is responsible for almost 52 percent of unpaid taxes, according to King, who argues this disparity makes targeting low-income Americans “unproductive.”

“The people of Maine and of the Nation deserve a fair and effective tax enforcement system,” he said “[A]udits of the wealthiest in our Nation are falling fast: in 2011, 12.5 percent of individuals earning more than $1 million per year were audited – a rate that fell to just 3.2 percent last year.”

King is currently cosponsoring the Working Families Tax Relief Act, a bill that aims to provide tax relief for working people and families by expanding the Earned Income Tax Credit (EITC) and Childcare Tax Credit (CTC). If passed, roughly 400,000 Mainers, including 164,000 children, would benefit.

At the state level, a 2019 bill sponsored by state Rep. Ryan Tipping (D-Orono) closed a loophole in the Maine Capital Investment Credit that provided significantly larger benefits to businesses with out-of-state income compared to companies who do all their business in Maine. It was signed into law by Governor Janet Mills last July, and the additional revenue generated by closing the loophole will be used to expand Maine’s own Earned Income Tax Credit this year.

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