Rich are Winners (Of Course) When IRS is Defunded

The Golden Age of Rich People Not Paying Their Taxes

KATIE MARTIN / THE ATLANTIC

In the summer of 2008, William Pfeil made a startling discovery: Hundreds of foreign companies that operated in the U.S. weren’t paying U.S. taxes, and his employer, the Internal Revenue Service, had no idea. Under U.S. law, companies that do business in the Gulf of Mexico owe the American government a piece of what they make drilling for oil there or helping those that do. But the vast majority of the foreign companies weren’t paying anything, and taxpaying American companies were upset, arguing that it unfairly allowed the foreign rivals to underbid for contracts.

Pfeil and the IRS started pursuing the non-U.S. entities. Ultimately, he figures he brought in more than $50 million in previously unpaid taxes over the course of about five years. It was an example of how the tax-collecting agency is supposed to work.

But then Congress began regularly reducing the IRS budget. After 43 years with the agency, Pfeil—who had hoped to reach his 50th anniversary—was angry about the “steady decrease in budget and resources” the agency had seen. He retired in 2013 at 68.

After Pfeil left, he heard that his program was being shut down. “I don’t blame the IRS,” says Pfeil. “I blame the Congress for not giving us the budget to do the job.”

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