Propaganda historians are familiar with the concept of the “Big Lie,” a claim so extreme that many people end up accepting it because they cannot believe that public authorities would invent something so far from reality. It often seems to me that we also need a term to describe a similar phenomenon in political debates that we might call a “big fraud.” I’m talking about policy proposals that are so corrupt and so clearly aimed at helping the undeserving few at the expense of everyone else that many voters are wary of seemingly respectable politicians actually advocating such things.
A case in point is the current demand by House Republicans that Israel’s funding during this time of crisis be tied to budget cuts that would undermine the ability of the Internal Revenue Service (IRS) to crack down on rich people who evade taxes. This should be a huge scandal, but I suspect many voters won’t accept the idea that GOP leaders could do something so grotesquely underhanded.
A little history: In 2001, after 9/11, Republicans in the House of Representatives passed a bill to respond to the emergency… by cutting the corporate tax rate. My sources told me at the time that when political consultants tried to describe the bill to constituencies, they refused to believe they were presenting the law accurately.
A decade later, when Mitt Romney supported Paul Ryan’s budget plan — which called for cutting taxes on upper earners and turning Medicare into an underfunded voucher system — a focus group found that voters were simply unwilling to believe that was Romney’s true position .
The latest Republican proposal is, by any reasonable measure, even worse than these previous initiatives. Seriously, are you holding national security hostage if we don’t make it easier for the rich to get around the law? Who would do that?
However, I suspect the proposal is so egregious that its atrocity might shield it from scrutiny, because voters will be incredulous at any suggestion that this idea is even on the table. However, I think we should talk about the content of the proposal in case anyone is paying attention.
First, the idea that reducing the IRS budget would in any way help fund aid to Israel is completely false. The United States has a huge tax gap; taxes are legally owed but not paid. Most of this tax gap is likely due to wealthy Americans not reporting all of their income, which they can do because the IRS lacks the resources to fully enforce the law.
Accordingly, cutting funding for the IRS would actually increase the deficit and thereby enable greater tax evasion, a conclusion the Congressional Budget Office confirmed Wednesday in its assessment of the House proposal.
However, Republicans often claim that tax cuts do wonders for the economy and even pay for themselves. There is not a shred of evidence to support this assumption. Still, cutting IRS funding is a kind of tax cut. Can’t they then argue similarly? No, for several reasons.
First, even if one (wrongly) believes that low taxes on the rich strongly encourage entrepreneurship or something similar, allowing an entrepreneur to cheat on his taxes probably does not have the same incentive effect as lowering his statutory tax rate. Furthermore, allowing tax evasion does not help all companies equally; This reorients the economy toward often unproductive activities where tax fraud is relatively easy, such as real estate speculation. Did I mention that the Trump Organization was convicted of tax fraud?
And making tax fraud easier by reducing the burden on the tax police is likely to have side effects that go beyond the direct negative impact on law enforcement. The more we become a society that rewards people who dodge their tax obligations, the more likely it is that those who don’t cheat on their taxes will feel like losers over and over again. If Americans begin to believe that “just ordinary people pay taxes,” as Leona Helmsley said, the damage to our society will certainly be both moral and financial.
However, defunding the IRS has long been a Republican priority; What is new is the party’s willingness to take care of this priority and thereby endanger national security.
Where does this priority come from? I don’t claim to have the definitive answer. I would like to point out that there has long been a close connection between right-wing conspiracy theories and financial shenanigans. And since conspiracy theorists have now effectively taken control of the Republican Party, it stands to reason that one of their top political priorities is to deprive the government of the resources it needs to crack down on fraudsters and financial fraud.
In any case, don’t be suspicious of news reports that suggest Republicans are willing to sacrifice important national interests if we don’t make life easier for tax cheats. In fact, that’s exactly what happens.
Paul Krugman He is a Nobel Prize winner in economics. © The New York Times, 2023. Translation from News Clips.
Follow all information Business And Business on Facebook and Xor in our weekly newsletter
The five-day agenda
The most important business quotes of the day, with the keys and context to understand their significance.
RECEIVE IT IN YOUR EMAIL
Subscribe to continue reading
Read without limits
_