President Joe Biden and congressional Democrats want to expand the size and power of the IRS. Not only does the Biden administration want to fatten it up with legions of new agents and auditors, many on the Left are considering taxes which would further expand the IRS’s intrusiveness.
How might the IRS look after four years of Democratic control?
If the Left has their way, the IRS will be a larger, more unwelcome presence in the lives of everyday people, and there will be more opportunities for the agency to target households and small businesses. Biden has already proposed a 10.4% increase in funding for the IRS in his fiscal 2022 budget, money that will largely be devoted to increased enforcement. Given it is just the first of several budget proposals that Biden will submit, this increased funding could just be the beginning.
Biden’s Council of Economic Advisers member Jared Bernstein has said that the administration will push for “significant increases in IRS enforcement and auditing,” while Treasury Secretary Janet Yellen has said that the IRS “has a hiring plan” that will require “significant resources.” In addition to directly increasing the IRS budget, Democrats are proposing new taxes that would give the IRS vast new responsibilities. Progressives such as Sen. Elizabeth Warren are pushing a $2.75 trillion wealth tax, which would double the size of the IRS. This tax would be imposed annually on certain taxpayer assets and give IRS agents the responsibility to keep an extensive list of taxpayer assets and value each asset every year.
Because of the complexity behind valuing assets, Warren’s wealth tax would expand the IRS budget by $100 billion over the next decade, with hardly any of those funds going toward taxpayer services. If just half $5 billion went toward hiring, it could result in over 80,000 new IRS agents. Though the wealth tax would initially target “the rich,” it would create a new way to tax and drastically expand a federal bureaucracy which could easily be expanded to more and more people over time. After all, the IRS would have already developed a system to value and tax assets. We should not forget the history of the AMT, which first hit 155 taxpayers when it was imposed but grew to hit millions of people over time.
Another tax being pushed by the Left is a “vehicle miles traveled” tax as a way to finance new infrastructure spending. This tax, which would charge motorists a per-mile driving fee, could require the IRS or another government agency to engage in data capturing to enforce the tax. In Oregon, where mileage fees have been implemented, some options for data capture include a system where drivers record their total mileage in addition to logging their location data or a system where drivers download a “special smartphone app” to report mileage data. The smartphone app is capable of accounting for out-of-state travel and miles driven on private property such as parking lots. If drivers refuse these options, they are charged a monthly fee of $45 or are required to get yearly odometer checks.
Any of these options should be alarming to taxpayers. Can the IRS be trusted with creating a new phone app to calculate VMT liabilities?
As it stands, the IRS struggles to perform its existing responsibilities. As noted in a February Politico report, the odds of the IRS answering a phone call from taxpayers was 11-to-1. The IRS still uses COBOL, a programming language that was considered obsolete decades ago. The agency even struggles to find workers that have expertise with this technology. The IRS also has a long history of misconduct, mismanagement, and abuse. The last time the Democrats were in power, IRS Exempt Organizations Chief Lois Lerner used her authority to target and harass taxpayers based on their political affiliation. In fact, according to a report by the Senate Finance Committee, only one conservative political advocacy organization was granted tax exempt status over a period of more than three years because of IRS political bias.
In past years, the IRS has struggled to do its job and has acted as a political actor targeting taxpayers based on political considerations. To most people, this should prove as clear evidence that the agency is in need of reform. Instead, Democrats want to expand the size and power of this agency through billions in new taxpayer dollars.
Isabelle Morales is Policy Communications Specialist at Americans for Tax Reform.
