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institute on taxation and economic policy
Democratic Leaders Accused of Bowing to GOP Attack on IRS Funds
"For the second straight year, President Biden and the Democrats are poised to sacrifice a significant chunk of one of their biggest accomplishments," one critic lamented.
Dec 18, 2024
Economic justice advocates are urging House Democrats to do more to defend Internal Revenue Service funding after leaders of the minority party agreed to Republican draft legislation that would continue a freeze on more than $20 billion in IRS modernization and enforcement funds in order to avert a government shutdown.
The $20.2 billion freeze is part of a continuing resolution that would guarantee funding for the federal government through March 14. Although the Inflation Reduction Act signed into law by President Joe Biden in August 2022 allocated $80 billion in supplemental funding to the IRS, Congress subsequently rescinded $21.6 billion of that and added a rider for the $20.2 billion freeze in an earlier continuing resolution.
The freeze means that the funds are neither permanently rescinded nor available for use. According to the Institute on Taxation and Economic Policy, the effective $20.2 billion funding reduction would increase the federal deficit by $46 billion "due to a drop in the agency's capacity to enforce taxes on wealthy individuals owed under existing federal law."
As Dylan Gyauch-Lewis wrote Wednesday for The American Prospect, "For the second straight year, President Biden and the Democrats are poised to sacrifice a significant chunk of one of their biggest accomplishments: funding for the IRS to go after wealthy tax cheats."
"With the latest maneuver, more than 90% of the money invested to scale up IRS auditing and oversight could be gone before it can even be used," Gyauch-Lewis added. "Yet again, Democrats seem to have been outplayed by Republican leadership."
Conversely, the infusion of IRA funding has boosted IRS recovery of unpaid taxes.
"The IRS has collected $4.7 billion in back taxes from wealthy tax cheats thanks to funding from the Inflation Reduction Act," Groundwork Collaborative executive director Lindsay Owens said in a statement Wednesday. "But since its passage, Republicans have clawed back nearly half of the enforcement budget to make it easier for the ultra-wealthy to get away with not paying their share."
Democrats helped this happen. In order to secure a 2023 debt ceiling deal with then-House Speaker Kevin McCarthy (R-Calif.), Biden agreed to multi-year spending caps in the so-called Fiscal Responsibility Act, as well as the $21.6 billion IRS funding recision. Now it is uncertain whether the outgoing Biden administration or congressional Democrats will fight to defend IRS funding or once again acquiesce to GOP cuts in order to keep the government running.
House & Senate Dems told us they were fighting to add a provision in the CR to fix the frozen funding, but it didn't make the cut. Republicans have made no secret of targeting the expanded IRS funding from the IRA - an effort very likely to continue in 2025 under a GOP trifecta.
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— Cady Stanton (@cadystanton.bsky.social) December 18, 2024 at 5:10 AM
IRS Commissioner Danny Werfel warned during a recent media call that Republicans' proposed cuts to the agency's funding would "be critically damaging to our capacity to do the work we need to do to make sure that large corporations and complex partnerships are paying what they owe."
Owens said "it's clear congressional Republicans are paving the way for the Trump administration to make it open season for tax cheats."
Such fears mounted this month after Republican President-elect Donald Trump tapped former Rep. Billy Long (R-Mo.) to head the IRS. Long sponsored multiple bills to dismantle the IRS and legislation to repeal all estate taxes, which are overwhelmingly paid by the wealthiest Americans. He has also promoted a dubious pandemic-era tax credit that the IRS has called a magnet for fraud.
"Even before the new administration takes office, we are seeing Republicans take steps to hamstring the IRS to ensure the ultra-wealthy can continue to evade their taxes," Anna Aurilio, senior director of campaigns at Economic Security Project Action, said in a statement Wednesday.
"A well-funded IRS is vital to administering a fair tax code. Slashing funding for the agency, which recently collected nearly $5 billion from wealthy tax evaders and crime rings, only hurts the efficiency and efficacy of the government," Aurilio added. "By starving the agency that helps deliver vital tax credits to the American people, Congress will make it more difficult for people to file their taxes and get the credits they qualify for—all while making it easier for the wealthiest individuals and big businesses to avoid paying their fair share."
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GOP Targets Medicaid, SNAP Benefits to 'Pay for Tax Cuts for Their Billionaire Donors'
"The GOP wants to make food and healthcare unaffordable and inaccessible for the most vulnerable people in our country," said Rep. Summer Lee. "Make no mistake on who they're serving."
Nov 18, 2024
Congressional Republicans are reportedly considering new work requirements for recipients of Medicaid and nutrition assistance as well as spending caps for the programs as potential ways to counteract the massive cost of their tax agenda, which would primarily benefit the rich and large corporations.
The Washington Postreported Monday that Republicans, who are poised to take full control of the federal government come January, "have begun preliminary discussions about making significant changes to Medicaid, food stamps, and other federal safety net programs to offset the enormous cost of extending" soon-to-expire elements of the regressive tax law that President-elect Donald Trump signed in year one of his first White House term.
The nonpartisan Congressional Budget Office estimated earlier this year that an extension of the 2017 tax cuts would add $4.6 trillion to the U.S. deficit over the next decade. Republicans have made clear that tax legislation is a top priority in the next Congress, and they're preparing to use a fast-track procedure known as reconciliation to ram a new round of tax cuts through.
According to the Post, members of Trump's transition team have discussed with GOP lawmakers and aides the possibility of adding punitive new work requirements and spending caps to Medicaid and the Supplemental Nutrition Assistance Program (SNAP). Research and real-world experience have consistently shown that work requirements do virtually nothing to boost employment while making it harder for people in need to receive aid.
"To pay for tax cuts for their billionaire donors, the GOP wants to make food and healthcare unaffordable and inaccessible for the most vulnerable people in our country," Rep. Summer Lee (D-Pa.) wrote in response to the Post's reporting. "Make no mistake on who they're serving."
"We already knew the push to cut taxes for the wealthy next year was going to be costly. Now we're learning that deep cuts to critical programs are on the agenda to help pay for them."
Following an election in which grocery costs were a leading concern of many voters, the Post reported that Republican lawmakers are "discussing stripping presidential authority to recalculate benefits" for SNAP, the nation's highly effective hunger-reducing tool that helps millions afford food each year.
"Republicans argue that if they eliminate that authority and hemmed in SNAP benefits—which increase automatically with inflation—that should count as reducing the deficit by tens of billions of dollars, according to some estimates," the Post noted.
As for Medicaid, the newspaper detailed preliminary GOP discussions to halt Biden administration efforts to help people who lost coverage due to the post-pandemic purge, adding a work requirement similar to SNAP's, and conducting more frequent eligibility checks—which could result in more people losing access to the program.
House Budget Committee Chair Rep. Jodey Arrington (R-Texas) openly made the case last week for what he called a "responsible and reasonable work requirement" for Medicaid, the Post observed.
Estimated savings from such changes come nowhere near offsetting the huge projected cost of extending Trump's 2017 tax cuts for individuals and handing additional tax breaks to big corporations. On the campaign trail, Trump proposed reducing the corporate tax rate from 21% to 15%, a change that would give the 100 largest U.S. corporations a combined tax cut of $48 billion a year.
Trump's tax agenda would also disproportionately benefit the wealthiest individuals in the U.S. The Institute on Taxation and Economic Policy (ITEP) released an analysis last month showing that the tax proposals Trump floated during his bid for a second White House term would deliver annual tax cuts to the top 5% and tax hikes for the bottom 95%.
"We already knew the push to cut taxes for the wealthy next year was going to be costly," ITEP wrote on social media Monday. "Now we're learning that deep cuts to critical programs are on the agenda to help pay for them."
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Tax Groups Warn 'Billionaires and Big Corporations Sharpening Their Knives'
"Billionaires and big corporations are sharpening their knives in anticipation of huge tax cuts, already lobbying and donating to get the tax plan that gives them the biggest windfall."
Nov 08, 2024
Economic justice organizations are bracing for a grueling uphill battle as U.S. President-elect Donald Trump and his Republican allies in Congress lay the groundwork to swiftly enact another massive tax cut for the wealthy and large corporations, a move that would worsen inequality and add trillions of dollars to the nation's deficit.
With Trump soon to be in the White House, a Senate majority secured, and control of the House in sight, Republicans are wasting no time preparing for a legislative push to extend soon-to-expire provisions of their deeply regressive 2017 tax law and further cut taxes for rich Americans and large corporations.
In the months leading up to Tuesday's election, GOP lawmakers have been discussing plans to use the fast-track process known as reconciliation to dodge the Senate's 60-vote filibuster and ram through another round of tax cuts. Republicans are set to hold at least 53 Senate seats in the new Congress and are currently just seven seats short of a majority in the lower chamber.
Grover Norquist, a longtime anti-tax crusader and informal economic adviser to Trump, predicted that Republicans are going to try to push through tax legislation "very early."
"The House and Senate guys have been working on this together forever," Norquist toldThe Washington Post on Thursday.
During his 2024 campaign, Trump pledged to cut the statutory corporate tax rate from 21% to 15%, a change that would deliver close to $50 billion in tax breaks annually to the nation's largest companies. The president-elect also floated a number of additional proposals, including eliminating taxes on tips and Social Security benefits.
David Kass, executive director of the progressive advocacy group Americans for Tax Fairness (ATF), said Friday that "the incoming Congress faces a generational tax fight on the renewal of the disastrous Trump tax provisions that benefit the wealthiest Americans and corporations."
"Make no mistake, billionaires spent record amounts of money this election cycle to buy themselves a tax cut worth trillions—and the vast majority of Americans will pay the price," said Kass. "ATF and its coalition will fight for a fair tax code where the wealthy and corporations pay their fair share. We'll hold elected officials accountable if they attempt to redirect trillions from working families to the wealthy and big corporations."
"President Trump and his extreme agenda are the embodiment of inequality, fueling the division between the ultrawealthy and the rest of us."
An analysis published ahead of the election by the Institute for Taxation and Economic Policy (ITEP) found that Trump's economic proposals would cut taxes for the richest 5% of Americans while raising them for the bottom 95%.
In a blog post on Friday, ITEP executive director Amy Hanauer wrote that a tax package that centers proposals Trump floated on the campaign trail "would be disastrous for families, communities, and the country."
"Billionaires and big corporations are sharpening their knives in anticipation of huge tax cuts, already lobbying and donating to get the tax plan that gives them the biggest windfall," Hanauer added. "Those forces have always had tremendous influence in Washington. Now they have more."
Lobbying related to expiring provisions of the 2017 Trump-GOP tax law surged in the run-up to Tuesday's election, with corporate giants such as FedEx, Starbucks, Pfizer, and Toyota pressuring Congress to prevent parts of the law from lapsing.
In addition to further cutting corporate taxes and extending elements of the 2017 law, Trump is also weighing an attempt to cut capital gains taxes without congressional authorization.
"Toward the end of his first administration, senior White House officials and Treasury staff held extensive discussions about bypassing Congress with a unilateral $100 billion tax cut that would primarily benefit the wealthy," the Postreported Thursday. "Numerous Trump advisers have hoped to take another shot at it in his second term."
Abby Maxman, president and CEO of Oxfam America, pledged after Trump's victory earlier this week that "we will work to stop any extension of President Trump's tax cuts for billionaires and the ultrarich."
"President Trump and his extreme agenda are the embodiment of inequality, fueling the division between the ultrawealthy and the rest of us," said Maxman. "His policies create chaos and only serve billionaires and corporations, not working people."
Patriotic Millionaires chair Morris Pearl sounded a similarly defiant note.
"This round went to the oligarchs," Pearl said of the 2024 election. "But rest assured, Patriotic Millionaires will rise to the fight. We've only just begun."
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