- Senate Republicans are balking at bulking up IRS enforcement to finance infrastructure.
- “I am very skeptical that there’s a lot of easy money to be had from so-called tax enforcement,’ one GOP senator said.
- The IRS is already under GOP scrutiny following a leak of wealthy Americans’ personal tax records.
- See more stories on Insider’s business page.
There’s one measure receiving fresh debate in bipartisan negotiations for a $1 trillion infrastructure plan: bulking up the IRS so it collects more money from wealthy tax evaders.
That’s been pushed by moderate Democrats this week as a source of extra revenue that could finance infrastructure spending, but the idea looks like to collide into opposition from Republicans, who have long accused the tax agency of overstepping into the personal lives of Americans. The IRS is already under major GOP scrutiny following a recent ProPublica report that featured a leak of wealthy Americans’ tax records.
They also don’t believe that chasing wealthy tax evaders will actually generate a major amount of money.
“I am very skeptical that there’s a lot of easy money to be had from so-called tax enforcement,” Sen. Pat Toomey of Pennsylvania, ranking Republican on the Senate Banking Committee, told Insider. “We could spend a lot more money, we could have a lot of intrusive rules, and find we don’t have very much difference in revenue.”
IRS chief Charles Rettig told a Congressional panel in May the amount of taxes going uncollected every year could exceed $1 trillion. Several Republicans including Toomey told Insider they’re skeptical the number is that high.
The Biden administration put forward $80 billion in extra IRS funding as part of its spending plans, to correct years of GOP-led budget cuts at the agency – and a related decline in the number of audits. The White House forecasts the funds could raise $700 billion in new revenue, though some experts have challenged their estimate.
The bipartisan group is leaning towards putting $40 billion into the IRS. That could generate $103 billion in total tax revenue, or $63 billion for fresh spending towards overhauling infrastructure, the CBO estimates.
“We think we have a nice balance with where we are, and there are colleagues on my side of the aisle who are nervous about the [$63 billion] net figure because they’re concerned about intrusion,” Sen. Rob Portman, a GOP negotiator, told reporters, per The Wall Street Journal.
Other Republicans suggested that closing the tax gap could be worthwhile, though they were still cautious on how much money it could produce.
“We don’t want people to be harassed, but I think everybody should pay their taxes,” Sen. Roger Wicker of Mississippi told Insider. “I don’t think there’s as much ‘there’ there as people think.”
Other leading Republicans pushed back against the idea. Sen. Shelley Moore Capito of West Virginia disputed the administration’s estimate as too rosy and said it could lead to “ramped-up reporting” and yield ineffective results.
“You have to get a better number,” said Capito, who had been Republicans’ lead negotiator on an infrastructure package before President Joe Biden cut off talks with her weeks ago, citing a failure to agree on how to fund a package.