Republican politicians and candidates are twisting the way a major economic bill passed by the Senate last weekend would reform the IRS and affect taxes on the middle class.
The Inflation Reduction Act, which is awaiting a vote in the House after being passed in the Senate on Sunday, would raise the ranks of the IRS, but it wouldn’t create a gang of armed auditors looking to harass middle-class taxpayers. as some Republicans claim.
While experts say corporate tax hikes could indirectly be a burden on middle-class people, claims they will face higher taxes are not supported by what the legislation says.
A look at some of the claims about the package that came out of a deal negotiated by Senate Leader Chuck Schumer, DN.Y., and Senator Joe Manchin, DW.Va.:
HOUSE MINORITY LEADER KEVIN MCCARTHY, R-CALIF.: “Do you make $75,000 or less? The new army of Democrats, made up of 87,000 IRS agents, is coming to you — with 710,000 new audits for Americans making less than $75k.” – Twitter Tuesday.
SEN. TED CRUZ, R-TEXAS: “The Manchin-Schumer Act Will Create 87,000 New IRS Agents Targeting Ordinary, Everyday Americans.” — Friday tweet.
THE FACTS: That’s misleading. Last year, before the bill came forward, the Treasury Department had proposed a plan to hire about as many IRS employees over the next decade as it could get the money. The IRS will release final figures for its hiring plans in the coming months, according to a Treasury Department official. But those workers won’t all be hired at the same time, they won’t all be auditors, and many will replace workers who are expected to retire or retire, experts and officials say.
The IRS currently has approximately 80,000 employees, including clerks, customer service representatives, enforcers and others. The agency has lost about 50,000 employees over the past five years due to natural attrition, according to the IRS. More than half of IRS employees working in enforcement are currently eligible for retirement, said Natasha Sarin, the Treasury Department’s adviser on tax policy and implementation.
Budget cuts, mostly demanded by Republicans, have also led to a reduction in the number of enforcement personnel, which has fallen by about 30% since 2010, despite the number of files increasing. The IRS-related money in the Inflation Reduction Act is intended to boost efforts against high-end tax evasion, Sarin said.
The nearly $80 billion for the IRS in the bill will also pay for other improvements, such as revamping the agency’s technology, said Janet Holtzblatt, a senior fellow at the Tax Policy Center and former Treasury official.
The Treasury says it will hire experienced accountants and employees who will improve service to taxpayers, and audit rates for those earning less than $400,000 are not expected to rise relative to historical standards.
So that’s a long way from hiring 87,000 “agents” to go after the average people in the United States, as the GOP claims. In any case, the bill does not have a mandate to employ that many people.
REP. TROY NEHLS, R-TEXAS: “Americans asked for lower inflation and the Democrats gave us an armed IRS shadow army to spy on your bank accounts.” – Sunday tweet.
REP. MARJORIE TAYLOR GREEN. R-Ga.: “It’s going to hire 87,000 new IRS agents and it’s going to arm 70,000 of these IRS agents — like in guns, you know, Democrats are always mad about guns.” — at the Conservative Political Action Conference, in an interview with conservative Canadian news magazine The Post Millennial.
THE FACTS: That’s not true. The bill will not create such an army, officials and experts say. Only a few IRS employees who work on criminal investigations carry firearms as part of their job.
A division of the IRS called a criminal investigation serves as the law enforcement arm of the agency. His agents, who work on cases such as seizing illegal cryptocurrencies and assets from Russian oligarchs, carry weapons, Sarin said.
In 2021, according to agency documents, just over 2,000 such special agents were employed by the IRS. The branch gets money from the Inflation Reduction Act, but most of the dollars go to other areas, Sarin says.
The bill does not specifically point to money for a large number of armed IRS employees.
NEVADA SENATE CANDIDATE ADAM LAXALT, Criticizes His Opponent, Democrat Senator Catherine Cortez Masto: “.@CortezMasto just voted to raise taxes for Nevadans making only $30k/year.” – Sunday tweet.
THE FACTS: Nothing in the bill increases taxes on people earning less than $400,000, contrary to what Laxalt claims. There are no individual tax rate increases for everyone in the bill, experts say.
However, it is possible that the bill’s new corporate tax, which includes a tax of at least 15% for large companies, could have indirect economic consequences. A report from the Joint Taxation Committee said some people earning less than $400,000 could see such consequences.
“Economists generally agree that corporate taxes are borne not only by the companies, but also by the shareholders and by the employees,” Holtzblatt said. to workers in the form of lower wages.”
Garrett Watson, senior policy analyst at the Tax Foundation, added, “The distinction between lower after-tax income due to a direct tax increase or indirect incidence can be a distinction without difference for many households.”
Nevertheless, supporters of the bill did not vote for tax increases for people earning $30,000, as Laxalt claimed.
Associated Press writer Karena Phan in Los Angeles contributed to this report.
EDITOR’S NOTE—A look at the veracity of political figures’ claims.
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