(Republicaninformer.com)- The IRS got a massive boost to their budget — $80 billion that will be given to the agency over the next 10 years. It was all part of the Inflation Reduction Act, which passed through Congress using budget reconciliation in the Senate.
A majority of this budget will be allocated to tax enforcement at the agency, efforts that will increase by about 69% over that 10-year period.
Now, it’s coming to light that the claims that were made to justify this increased spending were misguided at best.
In April 2021, Chuck Rettig, the commissioner of the IRS, said it was his “personal opinion” that the tax gap, which is the difference between what the IRS believes taxpayers owe and what they actually pay, could increase to as much as $1 trillion every year.
Media outlets around the country jumped on the back of those statements, and published them as the proven truth. The problem was that Rettig didn’t support his claims with any real data, just saying that it was his personal opinion.
After Rettig made that statement, Congress put forth a number of proposals to increase the budget of the IRS to focus on tax enforcement. One proposal from President Joe Biden would’ve given the agency $80 billion in new funding.
Massachusetts Democratic Senator Elizabeth Warren wanted to give them $315 billion, saying that they could use it to raise $1.75 trillion in the next 10 years.
All in all, they were citing the comments made by Rettig, despite the fact that data from the IRS itself showed something completely contrary. The agency estimated that the tax gap was $381 billion.
After the Inflation Reduction Act was passed, the Congressional Budget Office released its official estimates on what the $80 billion in funding for the IRS would result in. They said that it would result in a net return of about $100 billion — which is way short of Biden’s estimation of $700 billion or Warren’s estimation of $1.4 trillion.
Just recently, the IRS released a new report that shows that the tax gap has increased only at the same rate as the GDP growth. And going forward, the agency believes the tax gap will actually end up shrinking when compared to GDP growth.
As Andrew Wilford, a contributor to The Daily Caller, wrote recently:
“Stepped-up enforcement does not yield ‘free money’ as politicians seem to believe. It is found only through increased audits and hassling of honest taxpayers to find places other taxpayers committed tax fraud — or even just made an honest mistake trying to comply with our monstrously complex tax code.
“This happens as often with lower-income taxpayers claiming refundable tax credits as wealthy taxpayers claiming deductions, as Democrats continually discover each time they push for added tax enforcement. The IRS has continually found that auditing low-income taxpayers is the most cost-effective way to increase tax compliance, as audits of refundable credits are easy and prone to find mistakes.”
