“If you like your doctor, you can keep your doctor” was the promise made to the American people by former President Barack Obama and echoed by Democrats and their media allies to sell Obamacare. President Obama’s promise became PolitiFact’s’ lie of the year as millions of Americans lost their healthcare plans.
Democrats’ reckless tax and spend spree includes $80 billion in new funding for the IRS to increase enforcement and hire 87,000 new IRS agents. Democrats believe the increased audits will shake loose an extra $200 billion in new revenue to help fund their bill.
On Tuesday, White House Press Secretary Karine Jean-Pierre unequivocally stated that the IRS would perform “no” new audits on anybody making under $400,000 per year.
Biden’s top economic adviser Jared Bernstein followed up on Wednesday, claiming “resources will not add to audits for households under $400,000 and those same households will not see one penny increase in their taxes.”
The truth is that Democrat’s reckless tax and spend spree will more than double Americans’ chance of being audited while targeting low and middle-income individuals.
Distributional estimates from the non-partisan Joint Committee on Taxation (JCT) show that 78 to 90% of money raised from under-reported income would likely come from those making less than $200,000 a year, while only 4 to 9% would come from those making more than $500,000.
JCT’s analysis track’s neatly with the IRS’s own record-keeping that shows nearly half of these audits– over 583,000 – would hit Americans earning less than $75,000 per year. CBS reported earlier this year that low-income households with less than $25,000 in annual earnings are five times as likely to be audited by the IRS compared to everyone else.
Middle and low-income Americans aren’t collateral damage in Democrats’ beefed-up auditing, they’re the ones in the crosshairs.
Complying with an IRS audit will become increasingly difficult under Democrats’ plan. The bill spends 14 times as much money for “enforcement” — such as auditing— than for “taxpayer services” — such as answering the phone. Currently, IRS employees only answer the phone “19 or 20 percent” of the time. This likely is impacted by the fact that 53% of IRS agents work from home full time.
What about small businesses? Well, Treasury Secretary Janet Yellen sent a letter to the IRS reassuring Americans that small business “will not see an increase in the chances that they are audited” and that “enforcement resources will focus on high-end noncompliance.”
Yellen would have you believe that 1.2 million new audits will only be performed on the Fortune 500 companies. But Yellen’s promise is refuted by the fact that the IRS already announced its goal to increase small business audits by 50%. Worse, Yellen contradicts herself in her own letter, stating that additional IRS resources “shall not be used to increase the share of small business or households below the$400,000 threshold that are audited relative to historical levels.”
Yellen apparently believes Americans are unable to perform basic arithmetic. If the share of audits on small businesses holds constant while the IRS doubles the overall number of audits performed, twice the number of small businesses will be audited.
The IRS targets small businesses because they’re the easier prey. Large corporations already have armies of lawyers and accountants that ensure they legally take advantage of the plethora of credits and deductions offered by the tax code. Cash businesses like pizza shop owners and barbershops do not. Those are the businesses the IRS targets.
Incredibly, Democrats lacked the foresight that unleashing the IRS to crackdown on taxpayers and Main Street during a recession and high inflation would be wildly unpopular. Their reliance on an easily disproved lie reveals they’re now aware of how unpopular this provision is. Voters will punish them for it come November.
Mike Palicz is the federal affairs manager at Americans for Tax Reform.
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