Paul L. Caron
Dean




Friday, August 5, 2022

WSJ: The IRS Is About To Go Beast Mode

Wall Street Journal Editorial, The IRS Is About to Go Beast Mode:

IRS Logo 2Progressives want Joe Biden to unleash what they call “beast mode” executive power, and the Schumer-Manchin tax bill supplies the cash to turn the Internal Revenue Service into Wolverine.

The pact between Sen. Joe Manchin and Majority Leader Chuck Schumer includes $80 billion in new funding for the tax man. Democrats claim this “investment” will yield more than $200 billion in revenue. That estimate is highly speculative, but if it’s anywhere close to right IRS auditors will soon be coming after tens of millions of Americans.

The $80 billion is more than six times the current annual IRS budget of $12.6 billion. The money will be ladled out over nine years and comes with few strings attached. The main Democratic command is for the tax agency to bring the hammer down on taxpayers. ...

The main targets will by necessity be the middle- and upper-middle class because that’s where the money is. The Joint Committee on Taxation, Congress’s official tax scorekeeper, says that from 78% to 90% of the money raised from under-reported income would likely come from those making less than $200,000 a year. Only 4% to 9% would come from those making more than $500,000. ...

All of this is likely to be made worse by what seems to be the increasing politicization of the tax agency. Lois Lerner notoriously targeted conservative nonprofits for special scrutiny in 2013. ProPublica, the left-leaning website, obtained and published the confidential tax information of private citizens in 2021—conveniently when Democrats were debating whether to impose a new wealth tax. The IRS has promised to investigate the illegal leak but has so far come up empty. ...

The federal government isn’t starving for revenue. Congress wants more tax revenue because it can’t control its appetite for spending. That’s why it wants a tax agency in beast mode.

Update:  New York Times, The I.R.S. Says New Funding Won’t Mean More Audits for Middle Income Americans:

Charles P. Rettig, the Internal Revenue Service commissioner, told Congress on Thursday that the tax collection agency would not increase audits of households earning less than $400,000 if it was given the additional $80 billion that lawmakers were considering in a proposed climate and tax legislation package.

Providing more funding for the I.R.S. has been a top priority of the Biden administration and has emerged as key way to finance some of the policies that Democrats are proposing without raising individual tax rates. The additional funding is expected to go toward hiring more enforcement agents to crack down on wealthy tax evaders and corporations and to modernize the agency’s antiquated technology.

“These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” Mr. Retting wrote in a letter to lawmakers. “As we have been planning, our investment of these enforcement resources is designed around Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000.”

https://taxprof.typepad.com/taxprof_blog/2022/08/wsj-the-irs-is-about-to-go-beast-mode.html

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