Aug 30 • 7M

The second-biggest Republican lie

And the truth you should know

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Robert Reich
Robert Reich exposes where power lies in our system — and how it's used and abused.
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Billionaire GOP mega-donor Steve Wynn has some free messaging advice for Republicans, which he proffered in a conference call last Wednesday with Republican National Committee Chair Ronna McDaniel and Newt Gingrich (the audio was obtained by Politico): He urged the GOP to run TV ads telling average working people that Democrats have funded the IRS to hammer them. Wynn even offered a script: “Tell them the IRS is ‘coming after you if you’re a waiter, if you’re a bartender, if you’re anybody with a cash business … they’re coming after you.’”

Unfortunately for Wynn, the funding for the IRS in the Inflation Reduction Act targets the very wealthiest Americans — such as Steve Wynn — whose complicated businesses dealings and small armies of accountants and tax attorneys require lots of IRS resources if they’re to be audited.

Over the past decade, Republican lawmakers cut the IRS budget by roughly 20 percent — with the result that just 2 percent of the richest Americans had their taxes audited in 2019, down from 16 percent in 2010.

Not surprisingly, the richest 1 percent of Americans are estimated to be hiding more than 20 percent of their earnings from the IRS, accounting for more than a third of all unpaid federal taxes. The newly-added IRS funding is projected to raise some $100 billion in net tax revenue over the decade, mostly from the very rich.

Wynn isn’t the first to dream up the bogus story about the IRS going after average working people. Senator Ted Cruz warns of a “shadow army of 87,000 IRS agents,” threatening Americans, and Kari Lake, the Republican candidate for Arizona governor, ties the increase in IRS agents to the FBI’s search of Trump’s Mar-a-Lago and concludes that, “Not a single one of us is safe.” Many other GOP candidates are telling the same lie.

This lie isn’t even consistent with the older GOP lie that the rich pay most income taxes and almost half of Americans pay none (remember Mitt Romney’s 47 percent?), which isn’t true when you include Social Security taxes, state and local income taxes, sales taxes, and property taxes.  

But the billionaire class will do anything to avoid paying taxes. Why do you suppose Wynn and others like him bankroll Republicans in the first place? (Hint: Republicans cut their taxes.)

During that same conference call last Wednesday, Wynn asked RNC chair Ronna McDaniel to recommend dark-money nonprofits to which he and other wealthy contributors can donate without their names being revealed. Some donors, Wynn said, “are self-conscious for reasons that are personal to them, business people and folks like that,” and would rather give to the GOP anonymously. (Wynn should know. His big campaign donations became embarrassingly toxic in 2018 after The Wall Street Journal detailed rape, assault, and harassment allegations against him.)

Recall that the Supreme Court’s shameful 2010 Citizens United v. Federal Election Commission decision allows unlimited political spending by such nonprofits, to which billionaires like Wynn can secretly funnel unlimited donations.

Meanwhile, The New York Times reported last week that electronics mogul Barre Seid gave 100 percent of the shares of his surge protector and data-center equipment manufacturer Tripp Lite to a dark-money nonprofit called the Marble Freedom Trust. The gift is worth a jaw-dropping $1.6 billion.

The Marble Freedom Trust is controlled by Leonard Leo, a former chairman of the Federalist Society, known for his decades-long campaign to fill the federal courts with conservative judges and for his legal challenges to abortion rights, voting rights, and measures to ameliorate climate change. Seid’s $1.6 billion gift is the largest single donation ever made to a nonprofit political group. It would have been secret had an insider not tipped off the Times.

Dark money nonprofits also enable super-wealthy political donors to avoid taxes. Had Seid sold his company outright, he would have had to pay about $400 million in capital gains taxes on the increased value of Tripp Lite’s shares. But because nonprofits like the Marble Freedom Trust are exempt from paying taxes, handing his shares over to the Trust enabled Seid to transfer the entire $1.6 billion to Leo — thereby having average taxpayers effectively subsidize Leo’s political influence-peddling to the tune of $400 million.

What to do? At the very least, Congress should enact the Disclose Act, which would reveal to voters who’s trying to buy their votes. The Act has been blocked in Congress for more than a decade by Republican filibusters.

Which brings me back to Steve Wynn’s advice to the Republican Party to tell working-class Americans that Democrats are unleashing the IRS on them.

In truth, the Republican Party has been going all out to help its major backers avoid paying taxes. Those backers are among the wealthiest people in America — such as Steve Wynn — who have in recent years become far wealthier than ever before. Much of this is in secret. But as a result, most other Americans have to pay more taxes to make up the difference, or not receive the sorts of public benefits (healthcare, unemployment insurance, assistance with childcare and elder care, free college) commonplace in most other advanced nations.

My free messaging advice to the Democrats: Get this truthful story out.

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