Jul 1, 2021 - Politics & Policy

GOP tax attack

Illustration of a hand in a suit reaching for an uncle Sam hat filled with money
Illustration: Sarah Grillo/Axios

Republican senators are rallying against one of the main ways President Biden wants to pay for his infrastructure deal — a $40 billion infusion to help the Internal Revenue Service collect $100 billion more in taxes.

Why it matters: If this partisan sentiment is as widespread as several Axios interviews suggest, it raises doubts about whether the IRS funding proposal can make it into law. That makes the math even fuzzier for how to pay for the $1.2 trillion deal.

What they're saying: Sen. John Barrasso (R-Wyo.), chair of the Senate Republican Conference, told Axios that "spending $40 billion to super-size the IRS is very concerning," and "law-abiding Americans deserve better from their government than an army of bureaucrats snooping through their bank statements."

  • Sen. Ted Cruz (R-Texas): "Throwing billions more taxpayer dollars at the IRS will only hurt Americans struggling to recover after waves of devastating lockdowns. ... Instead of increasing funding for the IRS, we should abolish the damn place."
  • Sen. Marsha Blackburn (R-Tenn.): "A $40-billion increase in funding for the IRS will lead to a huge potential for abuse. Bigger government results in more waste, fraud and abuse."
  • Sen. Lindsey Graham (R-S.C.): "A lot of this can be pie in the sky. ... There's some people on our side who don't like empowering the IRS; I don't mind empowering the IRS if it's a reasonable thing to do. But I mean, how much uncollected taxes can you gather with $40 billion?"

Graham's comments are noteworthy given that he has announced his backing for the deal.

Flashback: Congressional Republicans have worked to starve the IRS by shrinking its budget by roughly 20% from 2010 to 2018.

  • Smaller IRS budgets mean fewer audits — and more room for tax evasion.
  • According to the Washington Post, those cuts led to 30% declines in the number of employees in the IRS enforcement division, "with even steeper drops among the highly specialized workers who handle the most complex cases."
  • The bipartisan infrastructure deal would inject the agency with a substantial boost in funding — increasing its annual budget by more than a third over 10 years.

Between the lines: Republican senators cite a catalogue of grievances with the IRS as reasons why Congress shouldn't be giving it more money.

  • They include aggressive scrutiny of Tea Party groups during the Obama administration, and a recent massive leak to ProPublica of some of the wealthiest Americans' tax returns.

The bottom line: It's a good time to be a tax-dodger in America.

  • The IRS has been stretched to a near breaking point during the pandemic, as lawmakers have added new responsibilities involving stimulus checks, unemployment benefits and the Child Tax Credit.
  • IRS Commissioner Charles Rettig has estimated the agency is collecting at least $1 trillion less in taxes than what the federal government is owed annually.
  • "The IRS absolutely needs more resources across all lanes," he told Congress in April. "We do get outgunned. There's no other way to say it."
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