When Democrats Protected Private Equity- AKA Tax Cheats

 

Hypocrites of the Year—Summers and Rubin

Last week, no fewer than five former treasury secretaries, Republican and Democrat, published a joint op-ed in The New York Times cheering on President Biden’s effort to raise more revenue by cracking down on tax cheats via increased resources for the IRS. The piece, written by Tim Geithner, Jack Lew, Hank Paulson, Bob Rubin, and Larry Summers, was titled "We Ran the Treasury Department. This Is How to Fix Tax Evasion." The piece pointed out that the government loses an estimated $600 billion a year in illegally evaded taxes that could be collected by a beefed-up IRS. Great point. To read the piece, you’d never know that these scoundrels presided over the stripping of the IRS and its enforcement staff, while they had the power to do the opposite. Larry Summers is famous for writing pieces implying that his views while he held power were the opposite of what they actually were, but this is a new low even for Summers. It’s also incautious, because the numbers are a matter of public record. Under Obama, when Summers was the top economic policymaker, the IRS budget was cut by about 20 percent and its audit staff was cut by a third, to just 9,500 auditors, the lowest number since 1953, when the economy was a lot smaller and the tax code was a lot simpler. The Times recently reported that the private equity industry, fiercely defended by Rubin and Summers, basically pays no taxes because it’s too complex for the IRS. Private equity did not exist in 1953. Even before Trump cut it further, the IRS conducted 675,000 fewer audits in 2017 than in 2010, a decline of 42 percent. During the same period of the Obama presidency, investigations of people who failed to file returns entirely dropped from 2.3 million to just 360,000. (These statistics are from an investigative piece by ProPublica, which is worth reading in its entirety.) Supposedly, it was the Republican Congress, with its special animus for the IRS, that made the Democrats do it. But that alibi doesn’t wash, because the president has to agree to the budget and has no small influence in the bargaining. The same downward trend occurred under Clinton. Obviously, protecting the IRS was a very low priority for Clinton, Obama, and their treasury secretaries. Deregulation was what got them up in the morning. Ever since Eisenhower’s Farewell Address warning about the influence of the military-industrial complex, former leaders occasionally get deathbed conversions and espouse policies that were the opposite of what they pursued while in office. We don’t need these guys to join the IRS bandwagon. It’s left the station. The conversion of Rubin, Summers, et al. to the cause of tax enforcement doesn’t even rise to better-late-than-never. It’s rank hypocrisy, and entirely in character.

~ ROBERT KUTTNER