OPINION:
Remember the provision in last year’s so-called Inflation Reduction Act that added $80 billion in funding to the Internal Revenue Service?
At the time, we were told the $80 billion would be used to improve taxpayer services and update the IRS’ antiquated software.
As Treasury Secretary Janet Yellen wrote in August: “The Inflation Reduction Act includes much-needed funding for the IRS to improve taxpayer service, modernize outdated technological infrastructure, and increase equity in the tax system by enforcing the tax laws against those high-earners, large corporations, and complex partnerships who today do not pay what they owe.”
But that was not true then, and it is still not true now.
In reality, the huge increase in IRS funding under the Inflation Reduction Act (IRA) was meant to ensure the federal government’s appetite for ever more revenue was satiated. After all, the federal government can only borrow so much money. Like it or not, most of the $6.3 trillion the federal government spent last year was extracted from American citizens via federal income taxes.
While congressional Democrats and President Biden stumped for the IRA, they disingenuously and repeatedly claimed that the funding boost would not result in more audits of hardworking Americans. Keep in mind, Mr. Biden pledged he wouldn’t raise taxes on American families earning less than $200,000 per year while campaigning in 2020.
Alas, the Congressional Budget Office nipped that lie in the bud. Per the CBO: “78 percent to 90 percent of the money raised from under-reported income would likely come from those making less than $200,000 a year. Nearly half of the audits would hit Americans making $75,000 per year or less, and only 4 percent to 9 percent would come from those making more than $500,000.”
Of course, we now know that the vast majority of the new funding — $72 billion, to be exact — was earmarked to hire 87,000 new IRS agents so the agency could vastly increase audits in a desperate attempt to increase government revenue.
The good news is, it seems there is a slim chance those 87,000 agents could soon receive pink slips thanks to the newly inaugurated Republican-led House of Representatives.
In late 2022, then-Minority Leader Kevin McCarthy, California Republican, tweeted: “On the very first day, we’ll repeal the 87,000 new IRS agents because we think the government should be there to help you, not to go after you.”
Now that the kerfuffle over who will be named speaker of the House has been settled, the 118th Congress has made it clear that their first order of business will be making good on Mr. McCarthy’s day-one promise by rescinding a giant chunk of the $80 billion allocated to supersizing the IRS tax enforcement division.
On Jan. 9, the House voted and passed the Family and Small Business Taxpayer Protection Act, which rolled back $72 billion of the $80 billion that congressional Democrats approved so the IRS can increase taxpayer surveillance and compliance.
According to one of the bill’s sponsors, Rep. Adrian Smith, Nebraska Republican: “The last thing the American people need right now are more audits from an out-of-control, bloated IRS. The Inflation Reduction Act funding for IRS would lead to the hiring of 87,000 new IRS employees tasked with raising enough revenue to pay for Democrats’ Green New Deal priorities.”
Amen to that. And with the tax-filing season just around the corner, I think most Americans would concur.
• Chris Talgo (ctalgo@heartland.org) is editorial director at The Heartland Institute.
Please read our comment policy before commenting.