“The IRS Expansion Act” is what some Republicans are calling the massive tax-and-spend bill passed by the 50 members of the Senate Democratic caucus (with the tiebreaking vote of Vice President Harris) on Sunday. Democrats used their tiny margin in the upper chamber to call the bill the “Inflation Reduction Act,” a name right out of a comedy club.
Sen. James Lankford (R-Okla.) read “The Emperor’s New Clothes” out loud on the Senate floor to try to communicate his disbelief that the Democrats would choose this moment to sell a tax-and-spend measure as a check against inflation.
Here’s another joke moving in GOP circles: “Why did Democrats stay in session until the middle of August in an election year and what did they pass as the signature item for their fall campaigns?” Answer: “87,000 new IRS agents.”
The Post reported last week that “the IRS’s prolific enforcement capabilities — which bring in on average better than $10 in revenue for every $1 spent pursuing audits — are often trained on the most economically vulnerable taxpayers. More than half of the agency’s audits in 2021 were directed at taxpayers with incomes less than $75,000, according to IRS data.” The Post story continued, “More than 4 in 10 of its audits targeted recipients of the earned income tax credit, one of the country’s main anti-poverty measures.”
What will the IRS do with $80 billion in new funds? Or find the 87,000 new workers (who would be phased in over a decade) to do it? Go after richer, high-value targets, at least in theory. The Congressional Budget Office estimated the IRS booster funds will reduce the deficit by about $200 billion. But if the agency’s metric of success remains the same — audits yielding increased payments from taxpayers — such estimates are little more than guesswork. What matters most is that with this provision of the weekend spending spree, Democrats have handed Republicans a gift of an issue. And they did it to pay for their new spending on all their pet projects.
By Monday morning — after a round of Sunday shows that featured Sen. Ben Cardin (D-Md.) explaining that Americans would cheer the waterfall of new audits — some Democratic staffers were retreating on Twitter, noting that much of the cash airlift to the IRS was for improved technology. Even so, it was too late. The bill has been branded. The Democrats are the party of the IRS and of wealthy people claiming federal tax credits for new electric vehicles and solar panels for their second homes. Not one House Republican will vote for it on Friday.
Vulnerable Democratic senators — Maggie Hassan in tax-hating New Hampshire and Catherine Cortez Masto in the cash-economy destination that is Nevada — convinced themselves that voters would not mind this vast regathering of power into the most feared agency in government. But GOP senators saw the messaging opportunity that comes with expanded tax enforcement: President Biden’s legacy is going to be a vastly expanded IRS and soaring inflation.
Democrats reeling backward flailed for a talking point. “The Republicans rejected a price cap on non-Medicare insulin!” quickly replaced “CO2 reductions of 40% over the rest of the decade!” Neither of these claims is of remotely equal consequence or significance to voters who care about their personal bottom lines and for whom dread accompanies every arriving envelope with “IRS” in the return-address space.
Republicans were at first dismayed that Sens. Joe Manchin III (D-W.Va.) and Kyrsten Sinema (D-Ariz.) buckled under the pressure from their party’s left wing. But say “the IRS Expansion Act” a few times and it rolls off the tongue. When the senators went home late on Sunday, the writing was on the wall: Biden, Senate Majority Leader Charles E. Schumer (D-N.Y.) and House Speaker Nancy Pelosi are doubling the size of the IRS, and not one Republican is voting for the measure.
Everything else is noise. And now the campaigns begin.