NBC's Chuck Todd defends Inflation Reduction Act: 'If you’re upset about extra IRS agents, stop cheating on your taxes'
'Meet the Press' anchor Chuck Todd slammed Republicans for their outrage over IRS funding in the Inflation Reduction Act.
When Congress debated the "American Rescue Plan" in early 2021, Democrats insisted this partisan, $1.9 trillion debt-financed spending spree would not fuel inflation and was needed for an economy already in quick recovery.
As Republicans and many economists predicted, the economy overheated, inflation soared and gas prices doubled. We are now in a period of economic stagnation, with the majority of the country believing we are already in a recession.
Rather than working together on pro-growth and counter-inflationary policies, my Democratic colleagues broke with earlier commitments for unity and chose to double down on a partisan, tried-and-failed tax-and-spend strategy with doses of medical price controls that will crush innovation and drive shortages. The mislabeled "Inflation Reduction Act of 2022," which experts say does nothing to curb inflation, offers higher taxes, more spending, higher prices, and an army of Internal Revenue Service (IRS) agents.
The bill includes a staggering $80 billion infusion of mandatory funding for the IRS. This funding—six times the agency’s current budget—will empower the agency to hire an army of auditors to squeeze $204 billion out of taxpayers of all income levels to fund Democrats’ wishful "green new deal" policies.
HILL REPORT CLAIMS REPUBLICANS ARE MAKING THE IRS A ‘BOOGEYMAN’
Of the $80 billion, $45.6 billion will be for enforcement, to collect Democrats’ desired $204 billion or more of federal revenue. The IRS outlined in earlier documents it would use the funding to hire 86,852 fulltime employees, and specifically referenced "hiring and training agents dedicated to complex enforcement activities." Such hiring would make the IRS larger than the Pentagon, State Department, FBI, and Border Patrol combined.
Advocates argue the enforcement funding will be used to close the tax gap—the difference between taxes owed and taxes paid—and then claim it is only about "wealthy tax cheats." Yet, the data tell a different story. Democrats’ will not achieve their desired tax revenue goals without also targeting the middle class, small businesses and taxpayers earning under $400,000 per year.
As Ranking Member of the Senate Finance Committee, I asked the nonpartisan Joint Committee on Taxation (JCT) to estimate where most underreported income in the "tax gap" lies. The JCT determined 78-90 percent of under- or misreported-income comes from those making below $200,000, while only around 4-9 percent comes from those making $500,000 or more.
Much misreported income comes from less sophisticated small businesses and sole proprietors, many of whom make less than $400,000 per year and simply have trouble complying with an oppressive and overly-complex tax code. Small, cash-heavy businesses and those who cannot afford teams of lawyers and legal fees are the easiest targets for a supersized IRS. With American taxpayers having a steadily high voluntary compliance rate, most recently reported at nearly 86 percent, rhetoric about hordes of American taxpayers being "tax cheats" seems inconsistent with facts.
The Finance Committee examined the IRS’s own data on its success in having courts sustain IRS claims that people across the income spectrum are cheating on their taxes. The IRS success rate is below 47 percent over the past twenty years. Thus, the IRS more often asserts tax deficiencies exist, with the courts disagreeing, which is hardly evidence for a multitude of tax cheats. Rather, it is firm evidence innocent taxpayers are often subjected to unnecessary and inappropriate scrutiny. They will be to an even greater extent with nearly 87,000 new IRS employees whose mission will be to squeeze revenue out of American taxpayers.
Democratic colleagues, the Administration and the IRS are protesting they are not going to increase audits on people making less than $400,000. However, when I offered an amendment to put into binding statute that increased funds could not be used to increase audits on those making less than $400,000, every Democratic senator voted "No." The most they would agree to was to say they did not "intend" such audits. Even this non-binding pledge was later stricken from the bill. Democrats know increased audits for the middle class, small businesses and those making less than $400,000 are inevitable under their legislation.
The Congressional Budget Office (CBO) confirmed this, estimating my amendment would result in at least tens of billions less in enforcement revenue. So, the nonpartisan CBO confirms "at least" tens of billions of the projected revenue coming from increased enforcement will come from those making less than $400,000 per year. Moreover, according to data from the IRS and Joint Committee on Taxation, between 78 and 90 percent of underreported income—the largest component of the tax gap the Democrats’ funding purports to want to close—is associated with taxpayers making less than $200,000 per year. Despite those facts, proponents of the recently passed tax-and-spend bill remain in denial. The promise to not tax anyone earning less than $400,000 will be broken.
Meanwhile, only $3.2 billion—under four percent—of the IRS funding influx will be dedicated to taxpayer services. Given Americans have long dealt with abysmal IRS service, the "pauper’s sum" for fixing IRS’s customer service is indefensible. It lays bare that my Democratic colleagues have less concern about poor IRS service and utmost interest in the IRS squeezing more money from American taxpayers.
Yet, far greater concern for taxpayer service is warranted. In 2021, just over one in ten callers was ever able to reach the IRS by telephone. More than 250 million calls simply went unanswered. Those who managed to get through spent more than 29 minutes on hold. That same year, it took the IRS on average 251 days to respond to taxpayer correspondence—more than triple the already dreadful 74 days average of 2019. Nonetheless, Democrats opted to set aside just a sliver of their IRS funding bloat for taxpayer services.
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While taxpayers are slighted, tax regulators will have a bonanza, with nearly $105 million to swell the coffers of the Treasury Office of Tax Policy for unaccountable bureaucrats in Treasury’s tax-rules-and-regulation-writing machine. Americans already face too much regulatory red tape created by Washington, but Democrats instead chose to supercharge complexity and hassle. Flush with funding, Treasury "technocrats" could, and undoubtedly will, foist everything from higher audit rates to the resurrection of their bank reporting scheme on American taxpayers. Letting the IRS snoop into the bank accounts of all Americans who have more than $10,000 worth of transactions in a year would essentially give the IRS access to virtually all Americans’ bank accounts.
I will be introducing my amendment as a standalone bill to prevent the IRS from using any of the supersized $80 billion of funding for audits on hard-working American taxpayers, individuals and small businesses with taxable incomes below $400,000. The bill puts legislative teeth into an otherwise non-binding (and now-stricken) statement of intent or toothless and unenforceable edict from the Treasury Secretary.
My Democratic colleagues circumvented regular order and slipped through with the narrowest possible margin a partisan bill filled with an unbridled, supersized IRS, unvetted tax policies, and spending policies and price controls that will not work.
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Americans should be very concerned, and brace for more audits, investigations and tax enforcement on taxpayers of all income levels. Taxpayers deserve better.
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