When President Biden and 10 bipartisan senators reached an infrastructure deal in June, more IRS enforcement was key to paying for it.
The idea, long pushed by policymakers on both sides of the aisle, was to now staff the IRS with a promise that the investment in spades would be paid back as more tax fraudsters were caught.
But a wave of Republican pushback led to the idea being rejected. The leading Republican negotiating the deal, Ohio Senator Rob Portman, recently confirmed it was from that table.
But in interviews this week, Democrats made it clear that the IRS provision is still very much alive as part of their parallel effort to pass a reconciliation bill.
“This is something the president feels strongly about,” Brian Deese, Biden’s chief economic assistant, said in an interview with Yahoo Finance. This week marks Biden’s first six months in office.
‘We need professionals there’
“You look at economists across the board, and they’d say that not only is this a no-brainer from a policy perspective, but it would generate much-needed revenue,” Deese said.
In a separate interview with Yahoo Finance, Peter DeFazio, chairman of the House Transportation Committee (D., Oreg.) pointed to declining IRS staffing levels over the past decade. The agency’s turnover is too high, he said, adding, “We need professionals there.”
The funding to go after tax fraud will “make those people pay what they should pay under existing law,” DeFazio said.
[Read more: America’s broken tax system]
The annual tax gap — the difference between what Americans should pay and what they actually send to the IRS — between 2011 and 2013 was $441 billion, the IRS found. A paper published this year found that the richest 1% of Americans underreport their income by 21%, using complicated tax evasion schemes that the IRS often fails to detect, even when checking returns.
DeFazio, those are . has own account to close the tax gap, estimates that the average household pays an additional $3,000 annually in taxes to make up for taxpayers who don’t pay everything they owe.
Some Republicans have said they are wary of increasing funding for the IRS because it would give more power to an agency viewed with suspicion in subsequent years. aggressively researched conservative groups about their tax-exempt status.
‘A different tax system than all the others‘
The had been a two-pronged plan to spend $40 billion to strengthen tax enforcement, which would bring in more than $100 billion over the next decade, according to lawmakers negotiating the deal. Democrats seem determined to include that funding in their upcoming reconciliation bill and may even try to move forward to strengthen the IRS.
DeFazio’s accountfor example, would establish minimum levels of control for both high-income individuals and certain businesses, in addition to increasing IRS funding. The bill sets a set of minimum audit fees, including a mandate that 50% of households with gross income over $100 million would be audited, as well as 90% of businesses with gross income over $20 billion. .
Biden previously pushed for even more funding for the IRS – $80 billion over the next decade — as Senate negotiators have not yet announced how much money they hope to include in the reconciliation bill.
However things end, increasing IRS enforcement, experts say, could help Biden pay for much of his agenda. According to one estimate, the US could generate $1 trillion in revenue over the next ten years if action is taken.
“As a country, we need to make sure that our tax system works and that people can trust that people actually pay the taxes they owe. And just because of wealth and privilege, you can’t operate in a different tax system than everyone else,” says Deese.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
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