The Truth About Biden’s Signature Legislation: Tax Hikes And More IRS Audits On American Families

Biden’s Signature Accomplishment Is A Reckless Taxing And Spending Spree That Raises Taxes On Ordinary Americans And Sends More IRS Agents After American Families


REMINDER: Democrats Raised Taxes On The Middle Class With Their Partisan Spending Boondoggle

“Biden vowed never to raise taxes on any Americans making less than $400,000 annually. Yet according to the Joint Committee on Taxation, the Schumer-Manchin bill does just that. Up to $16.7 billion worth of tax increases, JCT estimates.” (Punchbowl News AM, 8/01/2022)

According to the Joint Committee on Taxation, Democrats’ reckless taxing and spending bill would raise nearly $17 billion in taxes from Americans earning less than $200,000. (U.S. Senate Finance Committee Ranking Member, Press Release, 7/30/2022)

THE WALL STREET JOURNAL EDITORIAL BOARD: “One well-known economic truth is that corporations don’t really pay taxes. They are essentially tax collectors, as the corporate tax rate ultimately falls on some combination of workers, shareholders and customers. Raise the corporate tax rate, and you’re cutting wages and salaries for workers. No surprise, that’s exactly what the Joint Committee on Taxation found in its analysis of the Schumer-Manchin bill’s distributional impact. The JCT finds that average tax rates will increase for nearly every income category in 2023 under the bill. Taxes will rise by $16.7 billion in 2023 on Americans earning less than $200,000 a year. Taxpayers earning between $200,000 and $500,000 will pay $14.1 billion more. This gives the lie to Democratic claims that no one earning under $400,000 will pay more taxes under the bill, a promise Mr. Biden also made in his campaign. The reality is that the Schumer-Manchin bill is a tax increase on nearly every American.” (Editorial, “The Schumer-Manchin Tax Increase on Everyone,” The Wall Street Journal, 7/31/2022)

Democrats Boasted About Slapping Tax Hikes On Manufacturers And The Oil And Gas Industry …

“Manufacturers and other companies making capital investments could pay the bulk of the new corporate minimum tax in Senate Democrats’ fast-moving fiscal legislation, according to an analysis of the plan. The 15% minimum tax would take effect next year and apply to U.S.-based companies that report financial-statement profits averaging at least $1 billion over three years, according to legislation released this week that mirrors a House-passed bill from last year. The proposal, if it becomes law, would raise companies’ tax bills until they hit that minimum rate.” (“Democrats’ Corporate Tax Plan Threatens Higher Bills for Manufacturers,” The Wall Street Journal, 7/30/2022)

  • “But much of the money would likely come from companies that report low tax rates now because their capital investments—in factories and machines, for example—are treated differently in tax and financial accounting…. Nearly half of the revenue would come from manufacturers, the committee said, using a broad definition that might include some pharmaceutical and technology companies. For accounting purposes, deductions for capital investments are spread over the life of the asset. For tax purposes, they are often accelerated, reducing current tax rates. The proposal … would largely erase that difference for affected companies, raising their taxes now and deferring or denying the benefit of accelerated depreciation. An analysis from the Tax Foundation, which favors simpler tax systems with lower rates, found that the coal, automobile and utilities industries would face larger tax bills.” (“Democrats’ Corporate Tax Plan Threatens Higher Bills for Manufacturers,” The Wall Street Journal, 7/30/2022)

“The climate and tax spending deal announced last week by Senate Majority Leader Chuck Schumer and Senator Joe Manchin could cost the oil industry $25 billion in new taxes. The legislation, which may get a Senate vote as soon as next week, would reinstate and increase a long-lapsed tax on crude and imported petroleum products to 16.4 cents per gallon, according to a summary of the plan released Sunday by the Senate’s tax-writing committee. … The Superfund tax, which previously stood at 9.7 cents per barrel until it lapsed at the end of 1995, is paid by refiners and other importers to help fund the clean-up of hazardous waste sites. In addition to increasing the tax, the Senate proposal would index the fee to inflation.” (“Manchin Spending Deal Includes Billions in Taxes on Oil Sector,” Bloomberg, 7/31/2022)

“The 725-page bill released last week would also impose other costs for the oil and gas industry. It places a new first-time fee on methane emissions rising to as much as $1,500 a ton and increases the royalty rate companies pay to the government for oil and gas produced on federal land.” (“Manchin Spending Deal Includes Billions in Taxes on Oil Sector,” Bloomberg, 7/31/2022)

… But American Families Are Paying The Price

AMERICANS FOR TAX REFORM: “Democrats’ reckless tax and spend spree endorsed by Sen. Joe Manchin (D-W.Va.) includes a $12 billion tax on crude oil that will be paid by consumers in the form of higher gas and energy costs…. As if it weren’t bad enough, Democrats have pegged their tax increase to inflation. As inflation increases, so will the level of tax…. This tax hike is a clear violation of President Biden’s pledge not to raise any form of tax on anyone making less than $400,000 per year.” (“Manchin-Schumer Bill Includes $12 Billion Crude Oil Tax,” Americans for Tax Reform Website, 8/01/2022)

AMERICAN GAS ASSOCIATION: “On behalf of the companies and associations that make up the natural gas supply chain and the 180 million Americans and the 5.5 million businesses that rely on natural gas, we would like to express our concerns about including a methane emissions fee or tax in budget reconciliation legislation…. New fees or taxes on energy companies will raise costs for customers, creating a burden that will fall most heavily on lower-income Americans…. [B]ased on similar proposals introduced earlier this Congress, we estimate that the fee could amount to tens of billions of dollars annually. These major new costs most likely will result in higher bills for natural gas customers, including families, small businesses, and power generators…. Any increase in low-income households’ energy costs could prove devastating.” (American Gas Association and 27 Natural gas Supply Chain Associations, Letter to Sens. Schumer and McConnell, Speaker Pelosi, and Rep. McCarthy, 9/07/2021)


It’s Indisputable That Joe Biden’s Reckless Taxing And Spending Spree Is Designed To Hire More IRS Agents And The Crackdown Will Inevitably Fall On Middle And Lower Income Americans

‘The IRS Money, About $80 Billion Over A Decade, Would Roughly Double The Size Of The Agency And Be Aimed At Tougher Enforcement’

“The IRS money, about $80 billion over a decade, would roughly double the size of the agency and be aimed at tougher enforcement …” (“Joe Manchin Reaches Deal With Chuck Schumer on Energy, Healthcare, Tax Package,” The Wall Street Journal, 7/28/2022)

“The Treasury Department projected that the agency would hire about 87,000 new employees over the next decade …” (“Yellen Directs I.R.S. to Embark on $80 Billion Overhaul Plan,” The New York Times, 8/17/2022)

CBO: “CBO estimates that portions of the Administration’s proposal to increase funding for the IRS by $80 billion over the 2022–2031 period would increase revenues by approximately $200 billion over those 10 years.” (“The Effects of Increased Funding for the IRS,” Congressional Budget Office, 9/02/2022)

‘The Main Democratic Command Is For The Tax Agency To Bring The Hammer Down On Taxpayers’

SEN. MIKE CRAPO (R-ID), Senate Finance Committee Ranking Member: “The bill includes a staggering $80 billion infusion of mandatory funding for the IRS.  This funding—six times the agency’s current budget—will empower the agency to hire an army of auditors to squeeze $204 billion out of taxpayers of all income levels to fund Democrats’ wishful ‘green new deal’ policies. Of the $80 billion, $45.6 billion will be for enforcement, to collect Democrats’ desired $204 billion or more of federal revenue. The IRS outlined in earlier documents it would use the funding to hire 86,852 fulltime employees, and specifically referenced ‘hiring and training agents dedicated to complex enforcement activities.’” (Sen. Crapo, Op-Ed, “Democrats Hire Army Of Agents At IRS To Squeeze Honest Taxpayers For Green New Deal,” Fox News, 8/25/2022)

THE WALL STREET JOURNAL EDITORIAL BOARD: “The pact between Sen. Joe Manchin and Majority Leader Chuck Schumer includes $80 billion in new funding for the tax man. Democrats claim this ‘investment’ will yield more than $200 billion in revenue. That estimate is highly speculative, but if it’s anywhere close to right IRS auditors will soon be coming after tens of millions of Americans. The $80 billion is more than six times the current annual IRS budget of $12.6 billion. The money will be ladled out over nine years and comes with few strings attached. The main Democratic command is for the tax agency to bring the hammer down on taxpayers. The bill earmarks $45.6 billion for ‘enforcement,’ including ‘litigation,’ ‘criminal investigations,’ ‘investigative technology,’ ‘digital asset monitoring’ and a new fleet of tax-collector cars. The result will be far more audits, civil suits and criminal referrals.” (Editorial, “The IRS Is About to Go Beast Mode,” The Wall Street Journal, 8/02/2022)

Nonpartisan, Independent Scorekeepers Have Shown That This Tide Of Audits Will Unquestionably Wash Over Middle And Lower Income Taxpayers

CBO: “The proposed increase in spending on the IRS’s enforcement activities would result in higher audit rates than those underlying CBO’s baseline budget projections…. The proposal, by contrast, would return audit rates to the levels of about 10 years ago; the rate would rise for all taxpayers …” (“The Effects of Increased Funding for the IRS,” Congressional Budget Office, 9/02/2022)

SEN. CRAPO: “Advocates argue the enforcement funding will be used to close the tax gap—the difference between taxes owed and taxes paid—and then claim it is only about ‘wealthy tax cheats.’ Yet, the data tell a different story. Democrats’ will not achieve their desired tax revenue goals without also targeting the middle class, small businesses and taxpayers earning under $400,000 per year. As Ranking Member of the Senate Finance Committee, I asked the nonpartisan Joint Committee on Taxation (JCT) to estimate where most underreported income in the ‘tax gap’ lies. The JCT determined 78-90 percent of under- or misreported-income comes from those making below $200,000, while only around 4-9 percent comes from those making $500,000 or more.” (Sen. Crapo, Op-Ed, “Democrats Hire Army Of Agents At IRS To Squeeze Honest Taxpayers For Green New Deal,” Fox News, 8/25/2022)

THE WALL STREET JOURNAL EDITORIAL BOARD: “Democrats spent last week swearing that only high earners would be squeezed under their plan to beef up the Internal Revenue Service. It took only a few days for the Congressional Budget Office to put that narrative to rest. A quick analysis from the budget scorer confirms that the audit expansion will ensnare the middle class. The CBO made the point in an Aug. 12 letter to Sen. Mike Crapo, who had sought to bind Democrats to their promise to limit audits to high earners…. Mr. Crapo proposed an amendment to ensure new audits would exclude taxpayers earning less than $400,000, but Democrats voted it down 51 to 50. Mr. Crapo then asked the CBO to calculate the effect his amendment would have had. The agency found that increased scrutiny on filers earning less than $400,000 would account for $20 billion over 10 years, out of a total of about $204 billion that Democrats hope to collect through a bigger, badder IRS. In other words, the IRS expansion as it’s currently designed could collect billions in revenue from new middle-class audits.” (Editorial, “The Middle Class Won’t Escape the New IRS Audit Wave,” The Wall Street Journal, 8/14/2022)

“GOP lawmakers have sounded the alarm over the proposal, warning that it could have serious ramifications for lower-income workers. That's because the IRS disproportionately targets low-income Americans when it conducts tax audits each year. In fact, households with less than $25,000 in earnings are five times as likely to be audited by the agency than everyone else, according to a recent analysis of tax data from fiscal year 2021 by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University. The reason for that is a rise in what is known as ‘correspondence audits,’ meaning the IRS conducts reviews of tax returns via letters or phone calls rather than more complex face-to-face audits…. According to the Syracuse study, more than half of the correspondence audits initiated by the IRS last year — 54% — involved low-income workers with gross receipts of less than $25,000 who claimed the earned income tax credit, an anti-poverty measure.” (“How Democrats' Beefed-Up IRS Could Hurt Low-Income Americans,” Fox Business, 8/05/2022)

  • “[T]axpayers with a total positive income that ranged from $200,000 to $1 million had one-third the odds of being audited by the IRS compared to the lowest-income wage earners. About 9 million taxpayers reported these high-income levels in 2021, but fewer than 40,000 of their returns were audited, or roughly 4.5 out of every 1,000. That contrasts sharply with lower-income Americans, who faced an audit rate of 13 out of every 1,000.” (“How Democrats' Beefed-Up IRS Could Hurt Low-Income Americans,” Fox Business, 8/05/2022)

Just This Week, The IRS Launched A New Initiative Aimed At Squeezing More Tax Revenue Out Of Tipped Employees

“The Treasury Department and Internal Revenue Service today issued Notice 2023-13, which contains a proposed revenue procedure that would establish the Service Industry Tip Compliance Agreement (SITCA) program … The proposed SITCA program is designed to take advantage of advancements in point-of-sale, time and attendance systems, and electronic payment settlement methods to improve tip reporting compliance.” (IRS Press Release, 2/06/2023)




Related Issues: Democrats' Reckless Taxing And Spending Spree, Energy, Taxes, Middle Class