As IRS prepares to double in size, it isn’t the billionaires who should be worried
Jake Leahy
Posted For: MugsMalone
The Inflation Reduction Act of 2022 appears to have a good shot at being signed into law. If Senate Democrats can get Sen. Kyrsten Sinema (D-AZ) to join Sen. Joe Manchin (D-WV), the bill will have the necessary 50 votes to pass through the reconciliation process.
Let’s hope that never happens. The plan would hurt working-class taxpayers and small-business owners across America. The act will introduce a “corporate alternative minimum tax,” which will compel a 15% tax on corporate income. It will increase the taxes imposed on certain high-income earners. Finally, it will step up enforcement mechanisms within the IRS.
The additional funding for the IRS adds up to $80 billion over the next decade — essentially doubling the size of Uncle Sam’s debt collector and putting 87,000 new IRS agents into action. The result will be increased audits on small businesses and middle-class taxpayers across the country. While there are over 600,000 audits annually, which disproportionately affect low-income earners, under the new beefed-up enforcement plan, the IRS will be able to perform 1.2 million additional audits. Surely those million-plus audits won’t just be billionaires!
This massive investment in enforcement infrastructure comes at a time when even getting in contact with the IRS can seem daunting. According to the IRS itself, the agency only answered roughly 10% of all phone calls received during the previous tax year.
Nor is stepped-up enforcement likely to raise the $700 billion projected. Nor is it likely to make billionaires break a sweat. After all, these people have the best accountants and lawyers money can buy, a luxury that lower-wage taxpayers aren’t typically able to afford. High-wage W-2 employees and executives of sophisticated corporate entities usually aren’t afraid of being audited. Why not? Because they have their ducks in a row. It’s small-business owners, sole proprietors, and contractors who are most often subject to IRS audits.
Doubling the IRS’s enforcement efforts will certainly raise some additional money for the federal government. It’ll just do so at the expense of middle-class entrepreneurs. Democrats in Washington may be preparing to celebrate what they believe will be a tax hike on the fortunate few, but Main Streeters will have to watch their backs.
Jake A. Leahy is a consumer choice fellow with Young Voices. He is a law student at the University of Illinois Chicago School of Law, and he serves as a member and vice president of the School District #106 Board of Education in Illinois.
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