House Minority Leader Kevin McCarthy (R-Cali.) said a memo (pdf) distributed to Republican lawmakers on Nov. 18 that the expanded provisions in President Joe Biden’s social spending package would result in an additional 1.2 million IRS audits annually.
Nearly 50 percent of the audits—over 583,000—would affect families earning less than $75,000, and 25 percent—over 313,000—would focus on those earning up to $25,000 per year. According to the memo, which was written by GOP members of the tax-writing House Ways and Means Committee, $80 billion is allotted in mandatory funding toward the IRS, which will help in recruiting 87,000 new agents, who will increase scrutiny on Americans at every income level.
“President Biden wants to double Americans’ chances of getting audited in order to squeeze every single dollar they can from American families and small businesses to fund the most expensive piece of legislation in history,” McCarthy said in a statement, Fox Business reported. “This would be a nightmare state for families living in fear of an army of IRS bureaucrats designed to second-guess and spy on them.”
The total number of IRS audits is expected to double over a period of 10 years, which also means more than 800,000 federal tax liens on taxpayer property such as homes and vehicles. Most of the underreported income in the country comes from under the $200,000 bracket, based on the memo.
“Low- and middle-income families are already struggling due to the inflation caused by Biden’s runaway spending, and Democrats’ spending spree is exactly the opposite of what the American people need right now,” McCarthy said.
Proponents of the tax plan claim that the new measures are necessary for cracking down on the wealthy who avoid paying taxes and closing the gap between what the IRS collects and what Americans owe. The White House expects that an expanded IRS would bring in approximately $400 billion.
Democrats expect the revenue generated from the IRS would help cover the costs for some of the initiatives undertaken in the bill, including that of climate change. Based on the Congressional Budget Office’s final projections, the bill, if passed through Congress, would increase the U.S. deficit by $367 billion. This estimate doesn’t include revenues collected from taxes, which the CBO suggested would be $207 billion over the next 10 years.
Despite the difference of $193 billion in IRS revenue estimates, the White House called the CBO’s report “good news for Democrats,” CBS reports.
“Additional enforcement resources will be focused on pursuing those with the highest incomes; not Americans with income less than $400,000,” a White House fact sheet on Biden’s Build Back Better proposal reads.
The House approved the proposal on Nov. 19. It will now proceed to the Senate, where Democratic Sen. Joe Manchin of West Virginia has said that he won’t support legislation that increases the federal deficit.