CBO says Democrats' tax hike and social spending bill will increase IRS enforcement on middle class
FOX Business Flash top headlines for August 25
Check out what’s clicking on FoxBusiness.com.
The Congressional Budget Office (CBO) said in a letter to Republican lawmakers Thursday that it projects an increase of IRS enforcement on the middle class as a result of Democrats' social spending and taxation law.
The CBO said its projection assumes the IRS will comply with a directive from Treasury Secretary Janet Yellen that the agency not use resources from the law to audit taxpayers making under $400,000 at rates higher than historical levels. That means additional revenue brought in from the middle class under the law will be just a "small fraction" of overall revenue, the CBO told the GOP House members.
But the budget scorekeeper wrote that it projects audits for those taxpayers will still increase some, and other enforcement actions will likely increase too.
"Audit rates at roughly historical amounts, in accordance with the Treasury Secretary’s directive, will boost audit activity and thus revenues relative to the amount in CBO’s July 2021 baseline," the CBO said.
MEDIA STARTING TO REPORT THAT INFLATION REDUCTION ACT WILL HAVE LITTLE IMPACT ON INFLATION
"Activities other than audits—such as collections and automated screening and document matching—are not constrained by the Secretary’s directive, and under the 2022 reconciliation act, the amounts they generate will be greater for taxpayers with all amounts of income, CBO projects."
The letter was a response to an inquiry from House Budget Committee Ranking Member Jason Smith, R-Mo., and House Ways and Means Committee Ranking Member Kevin Brady, R-Texas.
It did not address the possibility a subsequent Treasury secretary could reverse Yellen's directive, which says, "any additional resources…shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels."
The CBO also said it expects that beefed up IRS to improve non-collection taxpayer services.
House Budget Committee Ranking Member Jason Smith, R-Mo., speaks with Fox News Digital at the America First Action Conference in Washington, D.C. (Tyler Olson and Haris Alic/Fox News / Fox News) DEMS DON'T SAY WHEN SPENDING BILL WILL REDUCE INFLATION, MAINTAIN IT WILL CUT ENERGY AND HEALTH CARE COSTS "The independent Congressional Budget Office soundly debunks the White House claim that there are ‘no new IRS agents’ and ‘no additional audits,'" Brady said in a statement. "This is yet more evidence that the Inflation Act is a bad deal for the American people and will lead to more IRS audits and bury families under mountains of paperwork," Smith added. "President Biden and Washington Democrats have unleashed the IRS to hire an army of 87,000 agents to search under the couch cushions of every living room in America for more money, to audit and harass families just trying to get by." House Minority Leader Kevin McCarthy, R-Calif., said CBO letter proves Democrats' assurance that their taxation and spending bill would not increase enforcement against average Americans was "a lie.' Democrats, meanwhile, have pushed back against Republicans attacking the legislation over its increased IRS funding. They argue that it's clear the audits won't hit families making less than $400,000, and improved taxpayer services will help working people. Caty Payette, the communications director for Rep. Tim Ryan, D-Ohio, tweeted this month that Republican attacks on the law are "fearmongering BS." "The IRS Commissioner was very clear on this. He said that — on the record, that this only will — it will only apply to those earning over $400,000," White House Press Secretary Karine Jean-Pierre said when asked about possible middle class audits earlier this month. President Biden is joined by Sen. Joe Manchin, (D-W.Va., Senate Majority Leader Chuck Schumer, D-N.Y., and several others as he signs the “Inflation Reducation Act” into law. (Photo by Demetrius Freeman/The Washington Post via Getty Images / Getty Images) SMALL BUSINESSES WILL GET ‘HAMMERED BY AUDITS’ AS IRS LOOKS TO ADD 87K AGENTS, SEN. MARSHALL WARNS "This is focused on those who are, you know, corporate, wealthy tax cheats that Republicans — congressional Republicans wanted to defend," Jean-Pierre added. "This is not about folks who make less than $400,000." The changes to IRS enforcement, the CBO said, will be a result of an IRS that grows significantly due to massive funding in Democrats' social spending and taxation bill, formally called the "Inflation Reduction Act." "Funding provided by the act is projected to make the IRS’s budget 90 percent larger in 2031 than was projected in the July 2021 baseline that CBO used in its analysis of the 2022 reconciliation act," it said. "With this new funding, the IRS’s budget in 2031 is projected to be about one-tenth larger than it was at its recent peak in 2010, when measured as a share of total output in the economy." Democrats passed their social spending and tax bill earlier this month using a process called budget reconciliation. That allowed them to circumvent the Senate filibuster and advance the bill on a party-line vote. CLICK HERE TO GET THE FOX NEWS APP The legislation was a culmination of more than a year of intra-party negotiations among Democrats. Previous versions of the bill were called "Build Back Better" and some cost more than $3 trillion. But the final version, driven by Sen. Joe Manchin, D-W.Va., included provisions to spend over $400 billion and raise more than $700 billion in tax revenue, largely targeted at corporations and the rich. Republicans, however, pointed to an analysis from the Joint Committee on Taxation that much of the burden from the law will fall on those in lower and middle income brackets. They also said such ambitious taxing and spending legislation is unwise while the U.S. is dealing with a recession and high inflation. Source: Read Full Article
