Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

U.S. Treasury disputes finding that new IRS funding would increase middle-class taxes

Economy Aug 19, 2022 06:50PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A sign for the Internal Revenue Service (IRS) building is seen in Washington, U.S. September 28, 2020. REUTERS/Erin Scott/File Photo

By David Lawder

WASHINGTON (Reuters) - As a political messaging war rages over $80 billion in new Internal Revenue Service funding, a U.S. Treasury official is pushing back on an informal estimate that the money could cause Americans earning less than $400,000 to pay as much as $20 billion more in taxes over a decade.

Republicans have seized on the Congressional Budget Office (CBO) estimate, claiming Democratic President Joe Biden's recently enacted, sweeping tax, drugs and climate law would break his pledge not to increase taxes on middle-class Americans.

Republicans are also claiming the funding will unleash an 87,000-strong "army" of new IRS agents on American households, despite the Treasury's plans to focus the bulk of IRS hiring on offsetting a wave of retirements and improving customer service and information technology.

When the bill, formally known as the Inflation Reduction Act, was being debated in the Senate, Republican Senator Mike Crapo introduced an amendment to prohibit any use of funds to audit Americans with taxable incomes below $400,000.

Responding to a request from Crapo, the CBO found that the proposed amendment would reduce revenues by $20 billion over a decade if it was enacted, his office said. A spokesperson for the CBO confirmed the figure.

The amendment was rejected on a party-line vote.

Asked about the claims about middle-class taxes, Natasha Sarin, Treasury Department counselor for tax policy and administration, told Reuters this week that the CBO estimate assumed a threshold of $400,000 in reported taxable income before any audits, which would exclude the middle class.

Sarin said those making $400,000 and up include far wealthier people who have hidden their incomes to lower taxable incomes below $400,000, sometimes even to zero -- the very people the Treasury is seeking to target for audits.

A significant portion of the $20 billion estimated by CBO would be recouped from wealthier people who are under-reporting their income, she said.

"People are trying to look like they are under $400,000 when actually they are well above it," said Sarin, who as a University of Pennsylvania law professor did influential research https://www.nber.org/system/files/working_papers/w26475/w26475.pdf on policing tax evasion with former Treasury Secretary Larry Summers.

The CBO has not issued a final cost estimate for the Inflation Reduction Act, which includes the IRS funds along with massive new spending on clean energy and healthcare.

Sarin said the $80 billion in funding to improve enforcement, information technology and taxpayer services would actually spare more middle-class taxpayers reliant on wage income from being targeted with audits. New, modern computer systems would be better able to use data analytics and other tools to more precisely target wealthier Americans for audits, she said.

U.S. Treasury disputes finding that new IRS funding would increase middle-class taxes
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Ab Yz
Ab Yz Aug 21, 2022 3:45AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Tax the middle class to fund welfare. Good job bidet.
Ron Tippitt
Ron Tippitt Aug 20, 2022 3:16PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Like asking Powel if he's lying to us
ZS Beck
ZS Beck Aug 19, 2022 7:25PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They will look into your A hole for money, to fund unnecessary wasteful spending. The rich always find a way to hide their money. It's always the little guy who's suffering
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email