As U.S. billionaires got richer and their wealth defense tactics proliferated, audit rates sharply declined. Funding the IRS' wealth squad would help ensure the nation's richest pay their fair share of taxes.
Whenever there are new or proposed changes to tax law, your eyes may glaze over as they skim the headlines. Meanwhile, the wealth defense industry — and its legions of accountants, financial advisors, and lawyers — is quietly mobilizing.for a revitalized IRS, including a stronger “wealth squad” to take on tax evasion by the extremely wealthy, that is, people with tens of millions of dollars. Soon after, the wealth defense industry announced strategies that wealth advisors should use to prepare.
Emphasizing both the unrealized purpose of the squad and the hope that enforcement will increase, a recentfrom the Government Accountability Office highlights how audit rates have significantly declined over the past decade. This is particularly true for high-income households. Between 2010 and 2019, audit rates of households earning more than $5 million per year declined by 86 percent, falling from a more than 16 percent audit rate to just over 2 percent.
Let’s take, for example, the wealth of the top ten billionaires from Forbes’ list of billionaires in 2010. That year, the list was topped by Mexican billionaire Carlos Slim; Jeff Bezos had yet to break the top 40 and Elon Musk’s Tesla had only just gone public. The total wealth of the world’s ten richest people totaled $342.2 billion.
The start of the pandemic the following year was particularly lucrative, too. As the Institute for Policy Studies reports, U.S. billionaire wealth has soared by more than half —As the rich get richer, they need somewhere to park their billions beyond the traditional financial markets. That’s why the uber-wealthy choose a wide variety of physical assets, like real estate, yachts, and expensive art, as vessels for wealth storage.