Guest column submitted by U.S. Senator Mike Crapo
The reckless tax-and-spend legislation under consideration in the Senate is riddled with bad policy, from job-killing tax hikes to overspending that will continue to fuel inflation. Among the most frustrating of the irresponsible spending is a proposal to increase funding for the Internal Revenue Service (IRS) by $80 billion, pitched as a provision that will help generate revenue through increased audits and improved tax compliance. This is concerning for many reasons, especially when considering the tax return backlogs, IRS call center wait times and other unacceptable problems Idahoans and other taxpayers have faced.
Supersized IRS funding is marketed as necessary to close the “tax gap,” or the difference between taxes the government feels it is owed versus what is collected. The proposed $80 billion of new IRS funds would mean more audits, investigations and tax enforcement, heavily prioritizing enforcement over taxpayer services. More than half of the funding would go to enforcement, while less than 2.5 percent of the $80 billion is devoted to taxpayer services such as taxpayer advocacy, pre-filing assistance and education, and filing and account services. Idahoans deserve improved customer support at the IRS, not increased burden.
With such a heavy emphasis on increased enforcement, it is hard to claim audits on average Americans will not increase. An analysis by the nonpartisan Joint Committee on Taxation (JCT) recently shed light on the taxpayers who contribute to government calculations of its tax gap that increased enforcement aims to close. JCT data suggest that more than 90 percent of the tax gap is associated with taxpayers with incomes below $200,000 per year, not millionaires, billionaires or the so-called rich. This means small business owners, cash-heavy businesses, and those who cannot afford legal teams and accountants would be easy targets for new IRS agents.
The Administration makes grand claims about how much revenue it anticipates from its new army of auditors. Yet, those speculations do not count in budget accounting. To assume increased funding spurs agencies to do more of what they should already be doing would only invite more big government. So, for good reason, the IRS funding proposal shows up as a cost to taxpayers of $80 billion.
The IRS has repeatedly proven it cannot spend responsibly or complete the most basic of tasks--including protecting Americans’ confidential taxpayer return information. Six months ago, the progressive group ProPublica announced it had the tax returns of thousands of taxpayers stretching back 15 years. This sensitive taxpayer data was either obtained through an unauthorized leak by an IRS employee or a data breach. Either way, the IRS failed to safeguard taxpayer information. The IRS has also previously been caught in politically-motivated discrimination against organizations and taxpayers. The agency needs reform, not more money and more power.
As the top Republican on the Senate Finance Committee, I introduced legislation with House Ways and Means Ranking Member Kevin Brady (R-Texas) to make any proposed increase in IRS funding contingent on important reforms and protections for taxpayers. Without changes and guardrails to protect against enforcement abuses, Congress should not consider giving the IRS one penny of additional funding, much less a whopping $80 billion.
Under the Democrats’ tax-and-spend bill, small businesses and middle class Americans will feel the pain of business tax hikes in the form of lower wages, and reduced retirement and pension values. We will be less competitive against countries like China, thanks to billions of dollars in international taxes that would disproportionately hit U.S.-based businesses. And now, all Americans--especially those making less than $400,000--will be subjected to a massive new army of IRS auditors.
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