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Biden wants to go after the wealthy on taxes with a $1.2 billion increase in IRS funding

Biden wants to go after the wealthy on taxes with a $1.2 billion increase in IRS funding

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President Joe Biden’s $1.5 trillion budget proposal on Friday proposes a ramp-up in spending for education, health, climate initiatives, and more. It also included over $1 billion in increased funding for the Internal Revenue Service to hold the wealthy accountable.

According to a White House fact sheet on Biden’s budget proposal, Biden is requesting an additional $1.2 billion, or a 10.4% increase above the 2021 level, to the IRS’ budget to ensure that wealthy people and corporations are complying with existing tax laws. The IRS would also get an additional $417 million in funding for tax enforcement as part of a multiyear tax initiative that would increase tax compliance and tax revenues.

The fact sheet said this increased funding would:

    Increase oversight of high-income and corporate tax returns to ensure compliance; Provide new and improved online tools for taxpayers to easier communicate with the IRS; And improve telephone and in-person customer service, including outreach to underserved communities.

Insider reported in March that the top 1% of US earners are not reporting about a fifth of their income, so expanding the agency as Biden proposed is intended to hold those earners accountable.

In a Senate Finance Committee hearing on Tuesday, IRS Commissioner Charles Rettig addressed the gap between how much is owed in taxes and what’s actually collected, saying it could possibly exceed $1 trillion a year, far higher than the official estimate.

House Ways and Means Committee ranking member Kevin Brady of Texas told reporters Thursday that more targeted, smarter audits could help close the gap in taxes paid and taxes owed.

This budget proposal comes after the Biden administration unveiled a proposal for a series of corporate tax hikes last week, which included raising the corporate tax rate from 21% to 28% and establishing a global minimum tax for multinational corporations.

Biden also included $1.9 billion in additional funding for the IRS in his $1.9 trillion stimulus, to account for budget and staffing cuts brought on to the agency by the pandemic.

While funding levels will ultimately be decided by Congress, this budget proposal outlines Biden’s priorities for his presidency and how he wants to govern.

In a letter to congressional leaders, acting Office Management and Budget Director Shalanda Young said the current economic crisis brings with it “a moment of possibility.”

She wrote: “The upcoming appropriations process is another important opportunity to continue laying a stronger foundation for the future and reversing a legacy of chronic disinvestment in crucial priorities.”

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