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Tags: Financial Markets | Infrastructure | Money | democrats | cbo | irs | taxcheats

Democrats, CBO Differ on Increased IRS Enforcement Effect

IRS tax return
(Dreamstime)

By    |   Thursday, 18 November 2021 02:57 PM

The Congressional Budget Office could be reluctant to accept a Democrat theory that improving IRS enforcement will result in nonaudited people being more honest on their tax returns, it was reported.

The CBO announced it will publish a complete cost estimate for President Joe Biden's "Build Back Better" Act on Thursday afternoon. Biden and other progressives are eager to pass the near $2 trillion social spending and climate legislation.

The Democrats claim that an increase in IRS oversight will result in $400 billion in budget savings, with $240 billion projected to come from increased audits of corporations and the wealthy, Politico reported Thursday.

However, progressives also say $160 billion in savings will result from people choosing not to cheat on their taxes due to the IRS crackdown.

Although the CBO agrees that increased enforcement will discourage some potential tax cheats, the official accounting agency says the effect would be modest.

"There's other analyses that put a lot of weight on the idea of deterrence — that if people know that the IRS is doing more and auditing more that other people then pay more of their taxes," CBO director Phillip Swagel said in a webinar this week presented by the Bipartisan Policy Center and Yahoo Finance.

"The research literature on deterrence, I'd say, is very mixed."

Although deterrence usually has been omitted from governmental projections, the CBO said in September that it should be considered. So, the Treasury revised its own estimate to predict that an $80 billion investment in the IRS would produce $480 billion in revenue —  a net savings of $400 billion.

Politico reported, though, that the CBO was expected to say that Democrats' IRS plan would generate about $150 billion in savings over the next 10 years. That's less than half of what progressives were hoping.

Some Democrats already were saying they would ignore the nonpartisan CBO's report.

"I don't think we should be put off for a second on these suggestions that it would only bring in $125 billion or $150 billion," House Ways and Means Committee Chair Richard Neal, D-Mass., told reporters, Politico said. "An investment in the IRS will return considerable dollars."

IRS enforcement was only one of many items that Republicans say will expand Democrats' socialist agenda.

"The Democrats' tax and spending spree is not paid for. It will make President Biden's energy and inflation crisis worse," said Rep. Cathy McMorris Rodgers, R-Wash., ranking member on the House Committee on Energy and Commerce.

"It's a grand socialist agenda for the federal government to recklessly spend and print trillions of dollars on the backs of American families."

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StreetTalk
The Congressional Budget Office could be reluctant to accept a Democrat theory that improving IRS enforcement will result in nonaudited people being more honest on their tax returns, it was reported.
democrats, cbo, irs, taxcheats, revenue
432
2021-57-18
Thursday, 18 November 2021 02:57 PM
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