President Joe Biden is planning to ask for an additional $80 billion in the “American Families Plan” for the Internal Revenue Service (IRS) to boost their audit capabilities in order to crack down on tax evasion by high-earners and large corporations, according to reports.
Biden is planning to detail his “American Families Plan” this week and is set to propose giving the IRS more funds ($80 billion) in order to increase their auditing capabilities to crack down on tax evasion by high-earners and large corporations, according to a report by the New York Times. The plan is supposed to “be offset in part by a tax enforcement effort that the administration believes will raise an additional $700 billion over a decade.”
Two people familiar with the plan told the Times the $80 billion, along with more authority, will help over the next 10 years to crack down on tax evasion by high-earners and large corporations. In addition, there will be new disclosure requirements for people who own businesses that are not organized as corporations and other wealthy people that could be hiding income from the government.
In addition to the IRS’s beefed-up tax enforcement, the Biden administration will be proposing more taxes on corporations and the rich, according to the report. The Times shows the administration believes revenue from the new taxes could raise more than $780 billion. This, in turn, will help pay for Biden’s “American Families Plan.” The Times added this will be the single largest part of the revenue raiser for the plan.
According to the Wall Street Journal, agency officials have said in the past they are in need of some type of multi-year commitment from Congress in order to hire and train their enforcement staff and to ramp up auditing. This is in order to ensure their initiative does not run out of funding midway through. The money would let the IRS increase its enforcement staff by about 15% a year, according to the Journal.
Reportedly, $30 billion would be to help pay for upgrades in the IRS’s technology to “make sure the IRS could obtain and analyze the bank information,” people familiar with the plan told the Journal.
The plan, which Biden is set to detail on Wednesday in his speech to Congress, is also “expected to be included in the roughly $1.8 trillion antipoverty plan,” according to the Journal.
Rep. Peter DeFazio (D-OR) said on Tuesday, “For too long, working families have footed the tax bill for America’s billionaires and corporations. I’m proud to be working [with Biden] to ensure the IRS has the funding to ensure the wealthiest pay their fair share & to provide basic taxpayer services.”
The Times further reported:
The administration also aims to pay for the plan by raising the top marginal income tax rate for wealthy Americans to 39.6 percent from 37 percent and raising capital gains tax rates for those who earn more than $1 million a year, which would combine to raise hundreds of billions of dollars. Mr. Biden will also seek to raise the tax rate on income that people earning more than $1 million per year receive through stock dividends, according to a person familiar with the proposal.
…
The erosion of resources at the I.R.S. was detailed in a Congressional Budget Office report last year that examined the agency’s work from 2010 to 2018. During that time frame, the I.R.S.’s annual budget declined by 20 percent and its staff declined by 22 percent. Funding for enforcement activities fell by nearly a third.
With less money and staff, the I.R.S. was forced to become more lax at enforcing tax laws. Examinations of individual tax returns fell by 46 percent and audits of corporate tax filings fell by 37 percent, according to the C.B.O.
The Journal reports, the “audit rates for households with actual income under $400,000 would remain similar to what they have been in recent years.”
Charles P. Rettig, Commissioner of the IRS, told a Senate committee:
Previous administrations have long talked about trying to close the so-called tax gap — the amount of money that taxpayers owe, but that is not collected each year. This month, the head of the IRS. That the agency lacked the resources to catch tax cheats, costing the government as much as $1 trillion a year.
John Koskinen, who served as IRS commissioner under both Barack Obama and Donald Trump, told the Times he believes the $80 billion Biden will be proposing is too much. In the past, the Times reported that Koskinen’s idea was not surprising to them, as he also complained about the IRS needing more funds while he was in charge. He told the Times, “I’m not sure you’d be able to efficiently use that much money. … That’s a lot of money.”
COMMENTS
Please let us know if you're having issues with commenting.