Conservatives are gleefully crying foul in the mounting scandal over the IRS’s recent admission that it may have improperly singled out for extra scrutiny non-profits linked to the Tea Party or other conservative causes.
Americans for Tax Reform’s Grover Norquist called President Obama “worse than Richard Nixon” and accused the Obama Administration of using the IRS as a hit squad against its enemies: “The Internal Revenue Service now admits what it denied for two years: that it targeted political groups that opposed President Obama’s tax-and-spend policies.”
But in accusing the Administration of “weaponizing” the IRS for political purposes, conservatives hardly have clean hands themselves. In fact, conservatives for years have spent enormous energy using the IRS to target social welfare programs they oppose—in particular the Earned Income Tax Credit (EITC).
For more than a decade, conservatives have worked to undermine the EITC, a refundable tax credit for working poor families that now helps lift more than 9 million people out of poverty every year. The expansion of the EITC was a signature accomplishment of the Clinton administration, and an asset in making welfare reform work, as well as a substantive and political victory for progressives that conservatives have yet to forgive.
Because the EITC’s clear connection to rewarding work—you have to have earnings to claim the credit—has made it difficult for conservatives to attack the EITC as a mere giveaway that promotes “dependency,” conservatives have instead sought to undermine the EITC on the grounds that it promotes fraud. Typical is this letter from Republican Congressmen Dave Camp and Charles Boustany to IRS Commissioner Douglas Shulman, which called the EITC “responsible for the second-highest amount of improper payments of any federal program, behind only Medicaid.”
Over the years, Republican committee chairmen have held numerous hearings specifically on EITC compliance, and in 2002, Congress began requiring the IRS to provide annual reports on the estimated amount of improper payments under the EITC. (Congress does not, however, require separate reports on other groups, such as small business owners, who are actually responsible for the biggest chunk of underreported income and unpaid taxes (the so-called “tax gap”)). At the same time, conservatives have refused to support EITC simplification efforts that could reduce the error rate, which progressives will readily concede is too high, though as a result of complexity, not fraud.
As a result of this sustained assault, being poor is much more likely to get you the attention of the IRS than being conservative.
Poor people claiming the EITC are five times more likely to be audited than middle-class taxpayers not claiming the credit, and they are more than twice as likely to be audited than a tax-exempt non-profit. (According to the 2012 IRS Data Book, the IRS audited just 1% of the 798,903 returns filed by tax-exempt organizations in 2011.) In its reporting, the Data Book in fact categorizes returns based solely on whether the taxpayer files for an EITC or not. Given how many tax breaks and loopholes are in the code, it’s as bizarre a distinction as categorizing returns based on whether a taxpayer is filing for the home mortgage interest tax deduction or not.
None of this is to say that the IRS is the least bit justified in what it was doing. But conservatives can’t entirely claim the high ground when it comes to the role of IRS in pursuing political objectives. And unlike the Tea Party, which can boast millions of dollars in resources and a national megaphone, many of the targets of conservative tax scrutiny – the working poor – are among the least able to defend themselves.