Where It’s Going
The Joint Committee on Taxation estimates that 78% to 90% of the money extracted from underreported income would come from those making less than $200,000 a year. Only 4% to 9% would come from those making more than $500,000 a year.
A Senate Finance Committee analysis shows the new IRS enforcement spending would “predominantly hit taxpayers who have low (or very low) Adjusted Gross Income.” Nearly half of the audits would hit Americans making $75,000 a year or less.
Where It’s Not Going
In 2022 alone the IRS itself made an estimated $25.4 billion in improper payments in only three programs: earned-income tax credits, additional child tax credits and American opportunity tax credits. The GAO estimates that the level of improper payments by the IRS in these programs runs as high as 28% of all payments made. Yet none of the $80 billion in new IRS funding is specifically earmarked to deal with fraud in the welfare programs funded with tax credits and administered by the IRS.
Phil’s a great guy and we love him. His heart is in politics and not economics. This is great political philosophy. Now for the economic reality. The majority of legal on-the-books employees have no Federal tax liability. Yes, the majority of Americans pay no (Income) tax. There is absolutely no important economic force for lower or more reasonable Federal taxation. Why should anyone in the majority rationally care about the size of government when it costs the majority nothing they can see or feel.
Define a small government Californian or New Yorker –someone having gone through a full scale government audit.