House GOP's day one agenda for new majority: Slash IRS funding ... again

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The 'Family and Small Business Taxpayer Protection Act' would help wealthy tax cheats evade the law.

House Republicans began the 118th Congress on Tuesday with a narrow majority and a chaotic fight over who would be the new speaker of the House. But they agreed on their first legislative priority: repealing legislation designed to fix the Internal Revenue Service and crack down on wealthy tax cheaters.

In his first weekly schedule in his new position as House majority leader, Rep. Steve Scalise (R-LA) announced Monday that the chamber’s first order of business after electing a speaker and adopting a rules package would be to consider the Family and Small Business Taxpayer Protection Act.

The bill, which was proposed in the last Congress by Rep. Adrian Smith (R-NE) and co-sponsored by 54 of his GOP colleagues, would repeal most of the portion of the 2022 Inflation Reduction Act that increased funding for the IRS.

That law, enacted last August with unanimous Democratic support and total Republican opposition, included an $80 billion investment in the cash-strapped agency over a decade to help replace retiring employees, modernize systems, and beef up enforcement of existing tax laws.

The nonpartisan Congressional Budget Office estimated that the expenditure would not only pay for itself but would also bring in more than $100 billion in additional revenue over 10 years in taxes owed but not previously paid by wealthy individuals and corporations.

Rep. Kevin McCarthy (R-CA), the GOP’s embattled nominee for speaker, told Fox News on Friday that repealing the enforcement and operations support funding for the IRS is his caucus’ top legislative priority after electing a speaker. McCarthy has thus far been unable to win commitments from the majority of the full House he needs to become speaker.

“Then, on the very first day, the first thing we’re going to do is repeal the 87,000 IRS agents. Another reason why the Democrats are mad at me. I think government should be here to help you, not to go after you,” he said, repeating a widely debunked claim that the law will fund the hiring of that many new agents. “We’ve got so much work behind us, and we need to start on the very first day.”

Throughout the 2022 midterm campaigns, Republicans repeated that same false claim and also dishonestly suggested the IRS would be going after honest working families and small businesses.

In reality, IRS Commissioner Charles P. Rettig told the Senate in an Aug. 4 letter:

As we’ve been planning, our investment of these enforcement resources is designed around the Department of the Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000. Other resources will be invested in employees and IT systems that will allow us to better serve all taxpayers, including small businesses and middle-income taxpayers.

While the bill is likely to pass in the Republican House, it is unlikely to become law. Democrats gained one seat in the Senate in November, giving their caucus a 51-49 majority in the chamber.

Published with permission of The American Independent Foundation.