Reader Requests: Why Aren’t We Prosecuting Fraud?

A reader asks: Each year American taxpayers lose billions of dollars to fraud, yet nobody in Washington wants it stopped. Why?

Yes, fraud is a continual challenge with government programs. However, it’s not true that nobody in Washington wants it stopped. The Patient Protection and Affordable Care Act of 2010 (a.k.a. “Obamacare”) improved the government’s ability to detect and crack down on Medicare fraud. As a result, earlier this year, the Obama administration announced the largest anti-fraud takedown in history, totaling $452 million. The Obama administration has also tried to increase the IRS’s budget to crack down on tax fraud, but Republicans in Congress blocked it. The IRS estimates that they can collect an additional $200 in tax revenue for each dollar added to their budget. They know how to combat fraud. They just don’t have the resources to do so.

In response, another reader asks: Do you know why Republicans blocked it?

They want to cut the budgets of all the major regulatory agencies. They’re fanatically opposed to regulation, and they don’t want to collect more tax revenue, even if it means letting cheaters get away with their crimes. They want to “shrink [the government] down to the size where we can drown it in a bathtub,” as one of their leading lobbyists famously said.

Many of them campaigned on eliminating the IRS altogether. “Getting rid of the IRS is something we’d all love,” said Mitt Romney in a 2007 primary debate. They’ve been waging this war since the 1990s, when the Republican Senate leaders compared the IRS to the Nazi secret police.

It’s also worth noting that the rich have the most to gain from lax tax enforcement. They can afford accountants who hide their income in dubious tax shelters, a luxury not available to the poor or middle class. In the Republican mindset, the rich are producers and the rest are moochers, so anything the rich do to avoid paying taxes is their right as the anointed kings of capitalism.