News Story

With 87K new IRS agents, middle class can expect more audits

Joint Committee on Taxation says nearly 60% of the new taxes will come from people making $50K or less

The U.S. Senate passed legislation that will increase spending by $740 billion, which includes money for hiring another 87,000 Internal Revenue Service agents, doubling the size of the agency. The House is expected to pass it, and President Joe Biden is expected to sign it.

Who will this affect, and what do officials want out of the new agents?

Biden, the IRS and the Joint Committee on Taxation each give a different answer.

Biden says the IRS will target the rich and the wealthy, saying the increased staffing will not affect those making under $400,000. The Senate, on a party-line vote, rejected an amendment that would have established that policy as a law.

Biden proposed, last year, an idea to bring in another $700 billion in taxes over the next decade, according to an April 2021 story in The Wall Street Journal.

The IRS estimates that the new employees will bring in $124 billion over a decade, not $700 billion, according to The New York Times. The agency, which just armed its agents with 4,500 guns and $5 million in ammunition, also says it will not target those making under $400,000. Nor, it says, will it target small businesses and middle class Americans with more audits.

The U.S. Senate Committee on Finance takes a different view. It cites the Joint Committee on Taxation, which says, “The brunt of any new revenue from hiring an army of IRS auditors will overwhelming hit low and middle-income earners. ...”

The committee, which has an equal number of Democrats and Republicans, also gives an income-based breakdown of where the new funds will come from. Less than 10% of it will come from people making $500,000 per year or more. It also says:

• Between 40% and 57% percent could come from taxpayers making $50,000 or less;

• Between 65% to 78% could come from those making less than $100,000;

• Between 78% to 90% could come from those making less than $200,000.

• Around 4% to 9% could come from those making $500,000 or more.

“Lawmakers owe it to citizens to efficiently administer their taxes,” says James Hohman, director of fiscal policy at the Mackinac Center for Public Policy. “Yet too many people struggle to get simple answers to their tax questions from administrators. I’d be much more interested in having additional IRS agents available to improve their service problems.”

He says that improved customer service is not Biden’s stated objective.

“Instead, the president makes it sound like agents are being added not to help people comply with tax rules, but to harass them under the assumption that they are tax cheats.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.