Jan 11, 2023 Family and Small Business Taxpayer Protection Act Passed House, Aims to Decrease IRS Funding
House Republicans have taken a bold step towards fulfilling their campaign promise of cutting back on President Biden’s economic agenda by passing a bill that seeks to reduce funding for the IRS. The Inflation Reduction Act (IRA) was passed by Democrats last year, providing about $80 billion in IRS funding with the goal of increasing the IRS’ enforcement capabilities and targeting wealthy tax evaders. The GOP’s bill, known as the Family and Small Business Taxpayer Protection Act, would significantly reduce this funding, specifically reducing the funding for IRS enforcement activities. The vote passed the House 221-210, with every Democrat opposing it.
It’s important to note that the bill has little chance of passing the Democratic-controlled Senate and reaching President Joe Biden’s desk. Democrats see the increased IRS enforcement capabilities as a way to help close the tax gap and increase revenue.
The Republicans argue that the money would be better spent elsewhere. In his first speech as House Speaker, Kevin McCarthy declared, “Our first bill will repeal funding for 87,000 new IRS agents because the government should be here to help you, not go after you.” It’s also worth noting that Republicans throughout the midterm campaign falsely claimed that Democrats were sending “an army of IRS agents” to go after the middle-and lower-class taxpayers with the new agency funding and even suggested the IRS agents would be armed. However, the IRS has stated that it plans to use the funds over the next decade to update its outdated technology systems and to hire and train new IT specialists, and customer service representatives and only a small fraction of new agents in the Criminal Investigation division will be armed. The Treasury Department estimated in a 2021 report that $80 billion would fund just under 87,000 new employees, but not all of them would be new agents. The current number of IRS employees is around 82,000, of which over half are eligible for retirement in the next five years.
In conclusion, the Republicans’ decision to eliminate funding for the IRS is a contentious issue, with both parties having differing opinions on the matter. While Republicans believe that the funds would be better spent elsewhere and that the IRS has a history of targeting conservative Americans, Democrats see the increased funding as a necessary measure to close the tax gap and bring in more revenue. The bill still needs to pass the Senate and be signed by the President to become law. Only time will tell what the ultimate outcome of this legislation will be, but it will be a hot topic in the coming months.