House Republicans voted Monday night to strip the Internal Revenue Service of $72 billion in funds secured by the 2022 Inflation Reduction Act. House Speaker Kevin McCarthy, R-Calif., characterized one of his first legislative moves as a “promise kept.”
“I guess I question why they made the promise in the first place,” said Marc Goldwein, senior vice president and senior policy director at the nonpartisan Committee for a Responsible Federal Budget. “The first action the House is taking would increase the deficit; encourage more tax cheating; increase waste, fraud and abuse; and undermine something that President Trump had pushed for, which was more, better tax enforcement.”
Using Congressional Budget Office data, the committee estimates taking away IRS funding would actually cost the country $114 billion over the next decade. That’s because while the U.S. would save the $72 billion expense, it would lose out on $186 billion in revenue generated by the expanded funding.
“This is one of those rare circumstances that something that the federal government does would actually pay for itself and then some,” Goldwein said. “So that’s why it’s such a no brainer in the first place to fund the IRS because they are so underfunded that giving them more money actually reduces the deficit.”
Goldwein said every president since Ronald Reagan has supported increased IRS funding, an agency he said is “hemorrhaging staff.” A Treasury Department report from 2021 said half of IRS employees are currently eligible to retire and systems at the agency are outdated.
Republicans have argued that the IRS funding would result in 87,000 new agents to “go after” the American people. While the same Treasury report said the funding could support nearly 87,000 full-time employees by 2031, the IRS maintains many of those employees would not be agents. In addition, the Biden administration has given guidance to the Treasury Department and IRS to only increase audit rates on those making more than $400,000.
“Over the last decade, what we’ve seen is that audit rates have gone way down, so far down that a lot of people don’t think they need to be honest on their taxes in the first place,” Goldwein said.
Goldwein told Straight Arrow News bolstering the IRS will bring more people in compliance and more money to bring down the deficit.
“The good news is that the Senate is not going to pass this decision and if they did, the president wouldn’t sign it,” he said. “So the IRS will have that money. The bad news is we’re focusing on rescinding money instead of focusing on actual improvements to the IRS.”
He said Congress should instead be focusing on making sure the IRS spends the money the way it says it will. Sen. Chuck Grassley, R-Iowa, introduced the IRS Funding Accountability Act in November, which would give Congress oversight on the total $80 billion in IRS funds, but the bill never advanced. Grassley’s office told Straight Arrow News that the senator intends to reintroduce the bill again this session.
Story has been updated to reflect response from Sen. Grassley’s office.