Here’s why the House GOP made defunding the IRS its first priority
The IRS #TheIRS
The House GOP’s first policy bill out of the gate didn’t address inflation or gas prices or immigration, but instead went after the Internal Revenue Service.
The bill was passed Monday evening on a straight party line vote of 221 to 210 to reverse much of the $80 billion in extra funding set aside for the agency by 2022’s Inflation Reduction Act.
While it has little chance of it being enacted anytime soon with Democrats in control of the Senate and President Biden promising a veto, the prominence of the issue shows just how much the IRS has become a heated target of Republicans. That’s despite experts saying the funds in question would go toward prosaic concerns like helping the agency chase down tax cheats and refresh its outdated technology.
The enhanced funding for the IRS is “part of the broad Biden administration strategy to tax and audit exponentially more Americans,” said Rep. Adrian Smith (R-NE) as debate got underway on Monday. He added that the bill would “stops autopilot funding for an out-of-control government agency that is perhaps most in need of reform.”
Speaker Kevin McCarthy then announced the final results of the vote once it had passed, noting that it had been a GOP promise.
The claim from countless Republicans, from Speaker McCarthy on down, is that the influx of money will lead to a flood of 87,000 new IRS agents who will then turn and harass everyday Americans. Some critics of the agency go even further and claim these new agents will be armed.
But fact-checkers have repeatedly debunked the claims, and the agency itself pushed back in a Yahoo Finance op-ed from then-IRS Commissioner Charles Rettig in August.
The viral claims are “absolutely false,” Rettig wrote at the time, adding his agency “is often perceived as an easy target for mischaracterizations,” but he promised the new money will not lead to increased audit scrutiny on households making under $400,000.
The plan is instead for much of the money to go toward wealthy tax cheats. IRS estimates of the so-called “tax gap” — the difference between what taxes are owed to the government and what is actually paid — is hundreds of billions of dollars a year.
Much of the $80 billion will be focused on taking a bite out of the gap, focusing on wealthy tax payers. The investment is projected to pay for itself and then bring in over $100 billion in increased tax revenue over the coming decade.
By contrast, a new analysis from the Congressional Budget Office released Monday afternoon found that the net effect of the House GOP bill’s to defund the agency would increase the deficit by more than $114.3 billion over the coming decade if enacted.
With the new funding, the IRS could hire an estimated 86,852 new employees, according to a May 2021 report by the Department of Treasury, but many of those would not be agents. Many would work in other areas like information technology.
And nearly all new agents would be unarmed. Very few IRS agents carry weapons as part of their responsibilities. Some of the hires may also be used to replace thousands of existing IRS workers expected to retire in the coming years.
Nonetheless, claims of a flood of new agents have persisted, repeated by figures ranging from the GOP chairwoman to Elon Musk.
The chronically understaffed IRS has until recently been a bipartisan concern, but the increased funding became an issue during the 2022 campaign and played into conservative suspicions of the agency that have been growing for years.
Conservatives have long claimed the IRS targeted the tax-exempt status of political groups during the Obama administration, while a 2017 Treasury report on the controversy found that groups on both sides of the political spectrum had faced scrutiny.
‘The average American cares about defunding 87,000 IRS agents’
This week’s vote comes just as Danny Werfel is set to return this year as IRS Commissioner, leading the agency’s revamp.
The newly elected chairman of the House Ways and Means Committee, Jason Smith (R-MO), said in a statement Monday that Werfel “should plan to spend a lot of time before our committee answering questions about the leaking of sensitive taxpayer information and an agency with a history of targeting conservative Americans.”
In a recent Fox News appearance, Rep. Dan Crenshaw (R-TX) additionally argued that “the average American cares about defunding 87,000 IRS agents.”
On the other side, Democrats repeatedly attacked Republicans for holding a vote on the bill and also for making it their first priority, implying they will use it against Republicans in the coming years.
In a statement calling the move a giveaway to rich tax cheats, Vice President Kamala Harris said House Republicans were trying to undo recent progress under Democrats and hoping to allow “millionaires, billionaires, and corporations to cheat the system.”
This post has been updated.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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