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A year ago this week, following a prolonged and embarrassing fight over who should serve as speaker, the new House Republican majority focused its attention on its very first bill of the new Congress. GOP members could’ve picked anything, but they went with legislation to cut funding for the Internal Revenue Service.
By any fair measure, it was a dumb bill. At issue was legislation that targeted 87,000 IRS agents who don’t exist, increased the deficit by roughly $114 billion, was designed to help tax cheats, and undermined law enforcement. It nevertheless received unanimous support from the Republican conference.
Roughly 10 months later, after former House Speaker Kevin McCarthy lost his gavel, House Speaker Mike Johnson’s first big piece of legislation also tried to cut the IRS budget. The Louisiana Republican said the move would help make the deficit smaller, despite a Congressional Budget Office report showing that the GOP bill would add tens of billions of dollars to the deficit.
The arithmetic wasn’t complicated: The IRS collects money for the federal government to invest. The more Congress cuts funding for the IRS, the less the IRS will collect for Congress to spend.
Of course, the inverse is true, too. The more Congress invests in the IRS, the more those investments pay dividends in the form of better law enforcement. NBC News reported late last week:
The IRS announced Friday that it has recently collected more than half a billion dollars from millionaire Americans who owed tax debt. The agency credited the passage of the Inflation Reduction Act for its stepped-up ability to pursue “high-income, high-wealth individuals,” as well as complex partnerships and large corporations, who are not paying overdue tax bills.
The Democrats’ Inflation Reduction Act allocated $80 billion over 10 years to help the IRS enforce the law. While it’s true that Republicans successfully lowered that total to $60 billion as part of last year’s debt-ceiling deal, the tax agency had already benefited from the influx of resources,
The IRA, pushed by President Joe Biden and approved in 2022, earmarked $80 billion over 10 years to step up the IRS’ enforcement capabilities. While $20 billion was ultimately clawed back in 2023 as part of the deal to head off a debt-ceiling crisis, the agency indicated it had already made use of its initial allotment.
The result, as we learned on Friday, was the IRS collecting more than $500 million from millionaires who failed to pay what they owe.
Chances are, some on the right are reading this and preparing to argue that I’ve described a bad deal. The Democrats’ Inflation Reduction Act set aside $8 billion per year for the tax agency, which, conservatives will say, is far more than the $500 million the IRS boasted about last week.
The problem with this pushback is that it only tells part of the story. As Kevin Drum explained, “[O]nly 0.8% of the new funding [for the IRS] has been spent, and increased enforcement only got seriously underway three months ago.”
In other words, the tax agency has just started to benefit from the investments, which is already helping make a big difference for taxpayers and law enforcement.
Republicans should be celebrating these developments. Instead, GOP leaders are demanding even more cuts to the IRS as part of a plan to prevent a government shutdown.
Let this be a lesson to tax cheats and proponents of higher deficits: You have friends in the House Republican conference.