Trump’s Plan to Turn the IRS Into a Grifter’s Paradise
Donald Trump is flooding the zone with so many terrible nominations that you may have missed that the president-elect recently picked former Representative Billy Long of Missouri to be the next commissioner of the IRS. Here’s another instance of choosing a fox to guard the chicken coop.Trump shouldn’t be naming anybody IRS commissioner. The current one, Danny Werfel, was appointed in 2022 to a five-year term; like FBI Director Christopher Wray, whom Trump wants to replace with Kash Patel, Werfel is supposed hold his job until 2027. Werfel’s presided over a revitalization of the IRS thanks to the Inflation Reduction Act, which pumped $80 billion into the underfunded agency ($20 billion of which House Republicans later clawed back ). Last summer the agency reported collecting more than $1 billion in past-due taxes from individuals earning $1 million or more. In October Geraldine Brooks documented in The Washington Post the important role that the IRS plays in the war on terror.Don’t expect the good news to keep flowing. When Long was in Congress, he co-sponsored, in three consecutive sessions, a bill to abolish the IRS and replace the income tax, the payroll tax, the estate tax, and the gift tax with a 30 percent sales tax. This is a crackpot proposal that’s been kicking around since 1993, when the Church of Scientology dreamed it up to retaliate against the IRS’s refusal to recognize it as a religion. The Scientologists dropped the idea later that year when the IRS finally caved and said OK, sure, Scientology is a religion. But the House GOP really liked the Scientologists’ plan, and introduced a version of it in nearly every subsequent congressional session. In 2023, Representative Kevin McCarthy won support from the GOP wingnut caucus by promising, among other things, that he’d allow the abolish-the-IRS bill to come to the floor. But he never did, because he knew associating Republicans with this policy would be politically ruinous. Even Grover Norquist, inventor of the Taxpayer Protection Pledge that bound politicians never, ever to raise taxes—and who famously said he wanted to shrink government “down to the size where we can drown it in the bathtub”—urged Republicans to kill the bill. So did The Wall Street Journal’s editorial page.Lest you think this was an isolated misstep on Long’s part, he also co-sponsored, in three consecutive sessions, the Death Tax Repeal Act, another crackpot GOP proposal. This bill eliminated the estate tax and replaced it with, well, nothing. It actually came up for a vote once, in 2015, passing 240–179 in a majority-Republican House, before dying in a majority-Democratic Senate. The Congressional Budget Office estimated that the repeal would have cost the Treasury $269 billion over 10 years. Unable to dismantle the tax system as a member of Congress—Long never even sat on the Ways and Means Committee—Trump’s future nominee set to work, after leaving Congress in January 2023, starving the IRS from within the private sector. According to a written statement issued Wednesday by Senator Ron Wyden, chair of the Senate Finance Committee: “Mr. Long left office and jumped into the scam-plagued industry involving the Employee Retention Tax Credit. These ERTC mills that have popped up over the last few years are essentially fraud on an industrial scale, conning small businesses and ripping off American taxpayers to the tune of billions of dollars.” What is the Employee Retention Tax Credit? A good idea that was executed very badly. The good idea was to enact a temporary tax credit to encourage businesses not to lay off workers during the Covid epidemic. The measure was included in the first Covid stimulus bill, which Trump signed into law in late March 2020. At first, it worked according to plan. But the statutory language in the law defined eligibility very fuzzily. Employers could demonstrate they were eligible through either a decline in revenue or a suspension, wholly or in part, of business operations. The legislation, unfortunately, didn’t define the latter very well. Regulatory agencies typically clarify vague legislative language by issuing regulations, but the Covid emergency didn’t allow time for that. As a result, the IRS ended up taking a lot of businesses’ word for it that this or that government directive suspended business operations. President Joe Biden’s Covid stimulus bill in 2021 worsened the situation by extending coverage to businesses that began operation after February 15, 2020—depending for verification on little more than the applicant’s say-so. And because businesses could apply for the tax credit retroactively, the gold rush didn’t end when the ERTC expired in 2021. An emergency tax break that was supposed to cost the Treasury only $55 billion ended up costing $230 billion.By 2022, administration of the ERTC had spun so completely out of control that it created what Richard Rubin, writing in The Wall Street Journal, called “a coterie of aggressive promoters”
Donald Trump is flooding the zone with so many terrible nominations that you may have missed that the president-elect recently picked former Representative Billy Long of Missouri to be the next commissioner of the IRS. Here’s another instance of choosing a fox to guard the chicken coop.
Trump shouldn’t be naming anybody IRS commissioner. The current one, Danny Werfel, was appointed in 2022 to a five-year term; like FBI Director Christopher Wray, whom Trump wants to replace with Kash Patel, Werfel is supposed hold his job until 2027. Werfel’s presided over a revitalization of the IRS thanks to the Inflation Reduction Act, which pumped $80 billion into the underfunded agency ($20 billion of which House Republicans later clawed back ). Last summer the agency reported collecting more than $1 billion in past-due taxes from individuals earning $1 million or more. In October Geraldine Brooks documented in The Washington Post the important role that the IRS plays in the war on terror.
Don’t expect the good news to keep flowing. When Long was in Congress, he co-sponsored, in three consecutive sessions, a bill to abolish the IRS and replace the income tax, the payroll tax, the estate tax, and the gift tax with a 30 percent sales tax. This is a crackpot proposal that’s been kicking around since 1993, when the Church of Scientology dreamed it up to retaliate against the IRS’s refusal to recognize it as a religion. The Scientologists dropped the idea later that year when the IRS finally caved and said OK, sure, Scientology is a religion.
But the House GOP really liked the Scientologists’ plan, and introduced a version of it in nearly every subsequent congressional session. In 2023, Representative Kevin McCarthy won support from the GOP wingnut caucus by promising, among other things, that he’d allow the abolish-the-IRS bill to come to the floor. But he never did, because he knew associating Republicans with this policy would be politically ruinous. Even Grover Norquist, inventor of the Taxpayer Protection Pledge that bound politicians never, ever to raise taxes—and who famously said he wanted to shrink government “down to the size where we can drown it in the bathtub”—urged Republicans to kill the bill. So did The Wall Street Journal’s editorial page.
Lest you think this was an isolated misstep on Long’s part, he also co-sponsored, in three consecutive sessions, the Death Tax Repeal Act, another crackpot GOP proposal. This bill eliminated the estate tax and replaced it with, well, nothing. It actually came up for a vote once, in 2015, passing 240–179 in a majority-Republican House, before dying in a majority-Democratic Senate. The Congressional Budget Office estimated that the repeal would have cost the Treasury $269 billion over 10 years.
Unable to dismantle the tax system as a member of Congress—Long never even sat on the Ways and Means Committee—Trump’s future nominee set to work, after leaving Congress in January 2023, starving the IRS from within the private sector. According to a written statement issued Wednesday by Senator Ron Wyden, chair of the Senate Finance Committee: “Mr. Long left office and jumped into the scam-plagued industry involving the Employee Retention Tax Credit. These ERTC mills that have popped up over the last few years are essentially fraud on an industrial scale, conning small businesses and ripping off American taxpayers to the tune of billions of dollars.”
What is the Employee Retention Tax Credit? A good idea that was executed very badly. The good idea was to enact a temporary tax credit to encourage businesses not to lay off workers during the Covid epidemic. The measure was included in the first Covid stimulus bill, which Trump signed into law in late March 2020.
At first, it worked according to plan. But the statutory language in the law defined eligibility very fuzzily. Employers could demonstrate they were eligible through either a decline in revenue or a suspension, wholly or in part, of business operations. The legislation, unfortunately, didn’t define the latter very well. Regulatory agencies typically clarify vague legislative language by issuing regulations, but the Covid emergency didn’t allow time for that. As a result, the IRS ended up taking a lot of businesses’ word for it that this or that government directive suspended business operations.
President Joe Biden’s Covid stimulus bill in 2021 worsened the situation by extending coverage to businesses that began operation after February 15, 2020—depending for verification on little more than the applicant’s say-so. And because businesses could apply for the tax credit retroactively, the gold rush didn’t end when the ERTC expired in 2021. An emergency tax break that was supposed to cost the Treasury only $55 billion ended up costing $230 billion.
By 2022, administration of the ERTC had spun so completely out of control that it created what Richard Rubin, writing in The Wall Street Journal, called “a coterie of aggressive promoters” placing TV ads saying, You too may qualify for a tax refund—call our experts today! These are what Wyden is referring to when he talks about “ERTC mills” like Long’s. “DM me to save 40 percent on your taxes,” says Long’s Twitter bio. “We have a new traunch of tax credits just out!”
“Everybody qualifies,” Long crowed in a YouTube video last year. “You think funeral homes didn’t have a lot of business during Covid? I mean, people that have had the best two years of their life ever on income qualify. And a lot of these CPAs are missing out on it.”
Trump wants to extend his 2017 tax cut for another 10 years. Focusing on the individual tax cuts (not the corporate tax cut), the Congressional Budget this week calculated that the net effect of another 10 years of these cuts will be slightly less economic growth because whatever stimulus the tax cuts provide will be outweighed by higher borrowing costs created by adding $4.6 trillion to the budget deficit. To that calculus we now add billions more that the Treasury will lose when Long cuts IRS enforcement, because this is plainly a guy who doesn’t think people should pay taxes. It’s going to be a long four years.
