House GOP kicks off majority with vote to cut IRS funding

House Republicans began their term in the majority on Monday by passing a bill that would reverse nearly $71 billion that Congress had provided to the IRS, fulfilling a campaign promise even if it is unlikely the legislation is progressing further.

Democrats had bolstered the IRS over the next decade to help offset the cost of key health and environmental priorities they passed last year and to rebuild an agency struggling to deliver basic services to taxpayers and ensure fairness in tax compliance.

The money is on top of what Congress provides to the IRS each year through the appropriations process and immediately became a magnet for GOP campaign ads in the fall, saying the boost would drive to an army of IRS agents harassing American workers.

The bill to cancel the money passed the House on a party vote of 221-210. The Democratic-controlled Senate has vowed to ignore it.

Shortly before the vote, the nonpartisan Congressional Budget Office projected that canceling additional IRS funding would increase deficits over the next decade by more than $114 billion. It created an awkward moment for Republicans, who said solving deficits would be one of their top concerns in the majority.

Still, the CBO’s projection doesn’t seem to dampen Republican support. Rep. Jeff Duncan, RS.C., said the extra IRS funding provided by Democrats last year had one purpose.

“To go after small businesses, working Americans who are trying to raise money for reckless spending, reckless spending that has caused $31 trillion in debt in this country,” Duncan said.

Duncan and other GOP lawmakers regularly say the extra funding will be used to hire 87,000 new agents to target Americans, but that’s misleading. The number is based on a Treasury Department plan showing many IRS employees would be hired over the next decade if it got the money. But these employees will not all be hired at the same time, they will not all be auditors and many will replace some 50,000 employees who are expected to leave or retire in the coming years.

“This debate about the IRS lends itself to some of the most dishonest, demagogic rhetoric I’ve ever seen in Congress,” said Rep. Steny Hoyer, D-Md.

Charles Rettig, the former IRS commissioner, said in a final message to the agency in November that the extra money would help in many areas, not just to strengthen tax enforcement. He said the investments would make “even less likely honest taxpayers to hear from the IRS or receive an audit letter.”

The agency’s additional funding has been politically contentious since 2013, when it was found that the IRS under the Obama administration used improper criteria to review tea groups and other organizations applying for exempt status. tax.

In the years that followed, the IRS was mostly the loser in Congressional funding fights, though a later 2017 report found that conservative and liberal groups were singled out for scrutiny.

In April, Rettig told lawmakers that the agency’s budget had shrunk by more than 15% over the past decade when adjusting for inflation and said the number of full-time employees – 79,000 over the past fiscal year – was close to 1974 levels.

But Rep. Nicole Malliotakis, RN.Y., and other Republicans weren’t buying the argument that the funding would be focused on auditing the wealthy.

“It’s meant to audit and harass small businesses and American families, who they know can’t afford the legal fees to fight this army,” Malliotakis said.

Sen. Ron Wyden, Democratic chairman of the Senate Finance Committee, said a decade of Republican-led budget cuts had drained the IRS.

“The only way for House Republicans to make it more obvious that they’re doing wealthy tax cheats a favor is to come out and say it in exactly those terms,” ​​Wyden said. “This bill is not going anywhere in the Senate.”

And the White House said President Joe Biden would veto the bill if it made it to his desk, saying the top 1% of Americans are hiding about 20% of their income so they don’t have to. pay taxes on it, further shifting the tax burden to the middle class.

“With their first economic legislation from the new Congress, House Republicans are making it clear that their top economic priority is to keep wealthy, multi-billion dollar corporations off their taxes, while making life harder for ordinary, upper-class families. average who pay the taxes they owe,” the White House said.