Legislation

ANALYSIS: Democrats Just Gave The Feds Enough Resources To Bleed The Middle-Class Dry

Expanding the Internal Revenue Service (IRS) will always hurt the most vulnerable Americans. But the decision by President Joe Biden and the Democratic Party to give the IRS an extra $80 billion will bleed the middle-class dry.

The latest data from the Congressional Research Service (CRS) shows that the massive influx of IRS funding from the Democrats will increase tax audits and transfer billions of dollars from the lowest income earners to the federal government during historic inflation and a recession.

The Inflation Reduction Act (IRA), a misnomer as it does nothing to reduce inflation, massively expands the IRS by adding $78.9 billion to the agency’s budget over ten years. Only $4.75 billion of the new budget will go to modernizing the IRS system, while the CRS estimates show that over half of the agency’s windfall ($45.6 billion) is allocated to strengthening existing tax enforcement.

A 2021 Congressional Budget Office (CBO) report estimated that the IRS expansion package would give the federal government a massive $127 billion in revenue and more than double the number of IRS employees.

An army of agents is expected to provide the federal government with consistent returns on investment (ROIs), according to the CBO. (RELATED: ANALYSIS: Don’t Let Them Fool You. The Democrats Are Fighting Quicksand Despite Recent Wins)

The National Taxpayer Advocate, Erin M. Collins, said in her 2021 annual report to Congress that there is a “basic unfairness” to how the IRS audits poor Americans dealing with complex tax issues.

“The IRS correspondence audit process is structured to expend the least amount of resources to conduct the largest number of examinations –resulting in the lowest level of customer service to taxpayers having the greatest need for assistance,” stated Collins.

As part of its budget planning for the past five years, the IRS released its agents’ ROIs, the CBO reported. The data showed that for every $1 the IRS spent on enforcement, it raised between $5-$9 from the American taxpayer.

The latest CBO estimates that “lower- and middle-income earning Americans are the primary target” for IRS audits, according to GOP members of the U.S. House Ways and Means Committee, who reported the CBO’s analysis.

Tax filers who make under $400,000 a year will provide at least $20 billion of the around $120 billion in revenue expected from the additional IRS audits, the GOP reported. They said that the IRS plans to ramp up audits on tax filers over the next three years.

Former IRS employee turned whistleblower William Henck told Fox Business that the IRS will undoubtedly target the middle-class with the new tax enforcement. (RELATED: Is The FBI Corrupted To Its Core?)

“The idea that they’re going to open things up and go after these big billionaires and large corporations is quite frankly bull***t,” Henck told the outlet. “It’s not going to happen. They’re going to give themselves bonuses and promotions and really nice conferences. The big corporations and the billionaires are probably sitting back laughing right now.”

“There will be considerable incentive to basically to shake down taxpayers, and the advantage the IRS has is they have basically unlimited resources and no accountability, whereas a taxpayer has to weigh the cost of accountants, tax lawyers – fighting something in tax court,” Henck added.

Republican Idaho Sen. Mike Crapo introduced an amendment that prevented the IRS from using the influx of taxpayer funds to turn around and audit struggling Americans. Crapo’s attempt to protect taxpayers’ failed down party lines, with every Democrat in the U.S. Senate voting against the measure.

“The Congressional Budget Office (CBO) confirms that had this amendment passed and lower- and middle-income taxpayers been protected, revenue in [the] Democrats’ bill would have been reduced by at least $20 billion – confirming that at least $20 billion of the $124 billion in new revenue expected by a supercharged IRS will be coming from higher audits on low- and middle-income Americans,” the GOP reported. “This will be in addition to existing audits on these income levels.”

The U.S. Senate Joint Committee on Taxation in July released its analysis of the IRA’s effects on U.S. taxpayers making $500,000 a year or less. The Committee found that the Democrats’ bill weaponized the IRS against the middle class, especially. (RELATED: Biden’s Economy Is Devastating Black Americans)

Middle-class Americans making between $100,000 to $200,000 will shoulder 25% of the new tax revenue burden, while earners making $500,000 to $1 million will only cover 9.2% of the 2023 U.S. tax bill, according to the Joint Committee on Taxation.

A review of the 2021 IRS audit rate per federal income bracket found that audits primarily increased among the poorest Americans, according to Syracuse University’s Transactional Records Access Clearinghouse (TRAC).

TRAC found that among the over 160 million individual income tax returns filed with the IRS, “low-income wage earners with less than $25,000 in total gross receipts being audited at a rate five times higher than for everyone else.”

The Wall Street Journal editorial board warned on Sunday that an audit from the “bigger, badder IRS” would be a “relentless” pursuit of the taxable middle-class.

“The problem is that for every tax cheat the IRS identifies, several more compliant tax filers will be subjected to needless scrutiny,” the WSJ editorial board stated. “Many of the hundreds of thousands of people audited each year are chosen at random, and most taxpayers can’t afford a lawyer to go to Tax Court to contest IRS claims of tax liability. They write the check to end the relentless IRS pursuit, whether or not they think it’s fair.”

“Good luck to readers as the taxman cometh,” they added.


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