AP FACT CHECK: GOP skews budget bill’s impact on IRS and taxes
Republican politicians and candidates twist how major economic bill passed over the weekend by the Senate would reform the IRS and affect taxes for the middle class.
The Inflation Reduction Act”, which awaits a vote in the House after its passage in the Senate Sunday would increase the ranks of the IRS, but it would not create a mob of armed auditors seeking to harass middle-class taxpayers, as some Republicans claim.
While experts say corporate tax increases could indirectly hurt middle-class people, claims that they will face higher taxes are not supported by the content of the legislation.
A look at some of the claims about a $740 billion package that emerged from a deal negotiated by Senate Majority Leader Chuck SchumerDN.Y., and Sen. Joe Manchin, DW.Va. :
HOUSE MINORITY LEADER KEVIN MCCARTHY, R-CALIF. “Are you making $75,000 or less? The Democrats’ new army of 87,000 tax officials will come after you — with 710,000 new audits for Americans making less than $75,000,” tweeted Tuesday.
SEN. TED CRUZ, R-TEXAS: “The Manchin-Schumer bill will create 87,000 new IRS agents to target everyday Americans.” — Tweet from Friday.
THE FACTS: This is misleading. Last year, before the bill was released, the Treasury Department proposed a plan to hire about as many IRS employees over the next decade if it got the money. The IRS will release final numbers for its hiring plans in the coming months, according to a Treasury official. But those employees won’t all be hired at once, they won’t all be auditors, and many will replace employees who should quit or retire, experts and officials say.
The IRS currently has approximately 80,000 employees, including clerical workers, customer service representatives, law enforcement officials, and others. The agency has lost about 50,000 employees over the past five years due to attrition, according to the IRS. More than half of IRS employees who work in law enforcement are currently eligible for retirement, said Natasha Sarin, Treasury Department adviser for tax policy and enforcement.
Budget cuts, mostly demanded by Republicans, have also reduced the ranks of enforcement staff, which has fallen about 30% since 2010 despite the fact that the depot population has grown. The IRS-tied money in the Cut Inflation Act is intended to boost efforts against high-end tax evasion, Sarin said.
The nearly $80 billion for the IRS in the bill will also pay for other improvements, such as overhauling the agency’s technology, said Janet Holtzblatt, senior fellow at the Tax Policy Center and former official. of the Treasury.
The Treasury says it will hire experienced auditors and workers who will improve services to taxpayers, and that audit rates for those earning less than $400,000 are not expected to rise from historical standards.
So it’s a far cry from hiring 87,000 “agents” to go after the average US, as the GOP claims. In any case, the bill does not have the mandate to hire that many people.
REPRESENTING. TROY NEHLS, R-TEXAS: “Americans asked for lower inflation and the Democrats gave us a shadow army armed with the IRS to spy on your bank accounts.” — Tweet from Sunday.
REPRESENTING. MARJORIE TAYLOR GREENE. R-Ga. “He’s going to hire 87,000 new IRS agents and he’s going to arm – like guns, you know, Democrats are still unhappy with guns – 70,000 of those IRS agents.” — at the Conservative Political Action Conference, in an interview with the Canadian conservative news magazine The Post Millennial.
THE FACTS: This is false. The bill will not create such an army, officials and experts say. Only certain IRS employees who work on criminal investigations carry firearms as part of their job.
A division of the IRS called Criminal Investigation serves as the agency’s law enforcement arm. Its agents, who work on issues such as the seizure of illicit cryptocurrencies and assets of Russian oligarchs, carry weapons, Sarin said.
There were just over 2,000 such special agents working at the IRS in 2021, according to agency documents. The branch will receive money from the Inflation Reduction Act, but most of the money will go to other areas, according to Sarin.
The bill does not designate money specifically for a large number of armed IRS employees.
NEVADA SENATE CANDIDATE ADAM LAXALT, criticizing his opponent, Democratic Senator Catherine Cortez Masto: “[email protected] just voted to raise taxes for people in Nevada, with incomes as low as $30,000/year. — Tweet from Sunday.
THE FACTS: Nothing in the bill raises taxes for people earning less than $400,000, contrary to Laxalt’s claims. According to experts, there is no increase in individual tax rates for anyone in the bill.
It is possible, however, that the bill’s new corporate taxes, including a 15% minimum tax for large corporations, may have indirect economic impacts. A Joint Committee on Taxation report said some people earning less than $400,000 could see such impacts.
“Economists generally agree that corporate taxes are borne not only by companies, but also by shareholders and workers,” Holtzblatt said. “So that tax that is imposed on the company, part of it could end up being passed on to the workers in the form of lower wages.”
Garrett Watson, senior policy analyst at the Tax Foundation, added: “Distinguishing between the drop in after-tax income due to a direct tax hike or an indirect impact can be a distinction without difference for many households. .”
Nevertheless, supporters of the bill did not vote for tax increases for people earning $30,000, as Laxalt claimed.
Associated Press writer Karena Phan in Los Angeles contributed to this report.
EDITOR’S NOTE — A look at the veracity of politicians’ claims.
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