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Democrats Fail to Protect Middle Class From IRS Audits

August 17, 2022 — 'Inflation Reduction Act'    — Blog    — Oversight    — Press Releases    — Supercharged IRS   

Democrats voted against guardrails that would have protected lower- and middle- income taxpayers from more audits as a result of supercharging the IRS with 87,000 new agents.

 

Instead, they hope you’ll just “take their word for it” that the IRS won’t target American families who are living paycheck to paycheck. Various news outlets have circulated these claims as facts, but the bill text says otherwise, Reason Magazine’s Matt Welch reports.

 

CLICK HERE to read the full article.

 

Democrats claim they won’t target lower- and middle- income earners with their expansion of the IRS by 87,000 agents…

  • “…top Democrats have been busy escalating their already implausible claims that goosing the IRS enforcement budget by 69 percent over a decade, hiring 87,000 additional new staffers at an agency that currently employs 79,000, and nabbing an estimated extra $124 billion in tax revenue will miraculously not bring any percentage increase in audits performed on Americans earning less than $400,000 a year.”

 

…but the nonpartisan Congressional Budget Office predicts boosted IRS funding will increase audits for all taxpayers…

  • “CBO Director Phillip L. Swagel estimated that boosting IRS funding by $80 billion would increase tax revenues by $200 billion (the number would later rise to $207 billion, before settling at $204 billion), adding that ‘the proposal…would return audit rates to the levels of about 10 years ago; the rate would rise for all taxpayers’ (italics mine), though ‘higher-income taxpayers would face the largest increase.’”

 

READ: CBO: New IRS Audits Will Grab at Least $20B from Lower- and Middle-Income Families

 

…and Democrats voted against Republican amendments preventing lower income earners from being targeted by higher audits.

  • “In the final IRA bill, in fact, $45.7 billion is earmarked for ‘enforcement,’ and $25.3 billion goes to ‘operations support.’ There is no reason to conclude from those dollar amounts that the number of resulting audits will be less than originally projected.”

 

Many “fact checkers” have refused to verify claims by Democrats:

  • “As Liz Wolfe has reported repeatedly in the pages of Reason, none of these assurances live in the text of the Inflation Reduction Act (IRA) itself. One Republican amendment “to prevent the use of additional Internal Revenue Service Funds from being used for audits of taxpayers with taxable incomes below $400,000” was voted down on party lines. You’ll just have to take Democrats’ word for it.
  • “That’s good enough for many news organizations, who have been coughing up “fact-checks” aimed not at the demonstrable veracity of White House promises about significant legislation impacting literally all adult Americans but at the hyperbole of Republican criticism thereof.”

 

Democrats will raise audits on the middle class under the guise of going after the tax gap.

  • “The fact remains that you can’t close the tax gap without greater enforcement on the poor and that enforcement on the poor is considerably less expensive.”
  • “It is true that Yellen has freshly directed the IRS to not increase the audit rate of under-$400,000s. And it’s also true that there’s no structural enforcement mechanism preventing the agency from continuing to go after low-hanging fruit to meet revenue targets.”

 

Only $3.2 billion of the $80 billion total goes towards improving services for taxpayers.

  • “…just $3.2 billion of the $80 billion is earmarked for customer service, producing a mere 9 percent increase over the previous baseline. If the agency is bad at answering phone calls—and it’s bad at answering phone calls—a 9 percent bump seems inadequate to the task.”