To understand this, we first need to distinguish between two terms. Tax avoidance is the legal use of the tax regime to one's advantage, such as using deductions or credits. Tax evasion, however, is the illegal non-payment or underpayment of taxes through deliberate deception.
The increased funding for the IRS is intended to improve enforcement and modernise technology. For the ultra-wealthy, tax strategies often involve complex structures like offshore accounts, shell companies, and intricate trusts. These methods are often legal but difficult for tax authorities to monitor effectively.
More funding allows the IRS to hire specialized auditors and data scientists who can track these complex financial flows. While money alone cannot change what is legal or illegal, it gives the IRS better tools to identify when a legal loophole is being misused for illegal evasion. By increasing the likelihood of audits on high net worth individuals, the agency aims to ensure that everyone follows the existing laws. Ultimately, the goal is to make the tax system more efficient and to ensure that the wealthiest citizens are paying the full amount required by law.
