- President Biden wants to bump funding for the IRS and increase its power, The New York Times said.
- The aim is to chase down unpaid taxes, of which there could be $1 trillion a year.
- The Times said Biden hoped to reclaim at least $780 billion over 10 years with the plan.
- See more stories on Insider’s business page.
President Joe Biden hopes to boost IRS funding by $80 billion as part of a plan to increase tax revenue from rich people and corporations, The New York Times reported on Tuesday.
The 10-year funding boost would be accompanied by new powers for the IRS to rake in tax dollars it’s owed, The Times said.
The newspaper cited projections that the plan could raise $780 billion over 10 years to narrow the gap between what the US is owed and what it collects.
The head of the IRS has estimated that the tax gap is $1 trillion a year. Reclaiming $780 billion over 10 years would close roughly 8% of that gap.
Officials told The Washington Post that the IRS would use the funding to hire more agents and introduce technology to pursue tax dodgers.
Under the plan, the IRS would increase its tax take by more aggressively auditing people who may be underpaying and by requiring additional information so that it’s harder to conceal taxable income and assets, the reports said.
The plan is separate from Biden’s push to raise tax rates for corporations and wealthy people. Both would help pay for Biden’s infrastructure and childcare programs.
The IRS’s ability to secure taxes from wealthy Americans has been eroded by a decade of budget cuts, Bloomberg reported in late March. The outlet said the IRS had 20,000 fewer staffers than it did in 2010.
The Treasury Inspector General for Tax Administration, an IRS watchdog, said in a report in March that high earners, defined as those with an income of $1.5 million or above, were paying only 39% of the taxes they owed the IRS, on average. It also found that unpaid back taxes of high-income individuals were not being collected.
“High-income taxpayer noncompliance can have a significant corrosive effect on overall tax administration as well as add to the belief that the nation’s tax system favors the wealthy,” the report said.
The Times reported that the extra tax revenue from the IRS plan would help fund the $1.5 trillion American Families Plan, which aims to make childcare more accessible and affordable and to tackle child poverty.
The American Families Plan follows the president’s announcement of a $2 trillion infrastructure plan to rebuild roads and bridges and to address the climate emergency through investment in green energy.
Author: Tom Porter