President Joe Biden is reportedly seeking an $80 billion handout to the Internal Revenue Service (IRS), to help the government agency increase the number of audits it does on high-income earners and seek out revenue that both individuals and corporations are “hiding” from the United States government, according to a new report from the New York Times.
The Biden administration hopes to raise around $700 billion from the tax enforcement effort, which the president hopes will offset the cost of his multi-trillion-dollar infrastructure plan, set to be unveiled this week.
The White House hopes to pair an increased IRS enforcement effort with new “disclosure requirements” designed to force small business owners and wealthy individuals to fork over cash they might have otherwise kept for themselves.
“President Biden, in an effort to pay for his ambitious economic agenda, is expected to propose giving the Internal Revenue Service an extra $80 billion and more authority over the next 10 years to help crack down on tax evasion by high-earners and large corporations, according to two people familiar with the plan,” the NY Times reported Tuesday. “The additional money and enforcement power will accompany new disclosure requirements for people who own businesses that are not organized as corporations and for other wealthy people who could be hiding income from the government.”
The Times points out that the $80 billion grant is more than a 60% boost in funding to the IRS, and it is on top of a “discretionary budget request for the IRS” that “already included an extra $1.2 billion—a 10.4% bump over the previous year,” per Forbes.
In addition, the Biden administration plans to unveil a handful of tax increases, aimed largely at those making more than $1 million per year. Biden already wants higher taxes on individual income, but the plan reportedly includes higher corporate taxes and a doubling of the capital gains tax rate, which could have a major impact on investment.
“The tax changes under discussion include hiking the top income-tax rate from 37% to 39.6% and the rate on long-term capital gains and qualified dividends from 20% to 39.6% (thus taxing investment gains at the same rate as ordinary income) for investors earning more than $1 million per year,” Forbes reported Tuesday. ” Biden has also proposed expanding payroll taxes for higher earners to help shore up the finances of the Social Security program and eliminating the ‘step-up’ in basis on assets in an estate—a tax loophole that means unrealized capital gains held at death are never taxed.”
None of these taxes or grants are final. Although Biden and Senate Democrats are likely to support the tax hikes, in order to pass the measures through reconciliation — a little-used Senate procedure that allows a simple majority to greenlight budget-related bills — the administration will have to convince moderate Democrats and the Senate Democrats’ typical holdouts, like Sen. Joe Manchin (D-WV) that the tradeoff is necessary.
Manchin is reportedly working with Republicans to craft competing legislation aimed at improving physical infrastructure.
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