IRS Funding Cut: House Republicans Pass Controversial Bill Despite Projected Deficit Increase

New legislation aimed at repealing IRS funding boost faces opposition from Democrats and potential veto from President Biden

On Monday evening, the Republican-controlled House of Representatives passed legislation to repeal the majority of an IRS funding boost that was signed into law last year. The bill, called the "Family and Small Business Taxpayer Protection Act," passed in a 221-210 vote along party lines and directs any "unobligated balances" of funds allocated to the IRS from the Inflation Reduction Act to be rescinded. The Congressional Budget Office estimated that the legislation would eliminate around $71 billion of the total $80 billion allocated for the IRS, but would also reduce tax revenue by approximately $186 billion, leading to a $114 billion increase in deficits over the next decade. The legislation is unlikely to be passed in the Democratic-controlled Senate and the White House has stated that President Biden would veto it if it reaches his desk. The Republican party has argued that the funding boost would result in audit rates rising for all taxpayers, while Democrats have maintained that the funds are meant to increase enforcement against large corporations and high-net-worth individuals, not middle and low-income taxpayers.

It is concerning that the proposed cuts to IRS funding would result in a significant reduction in tax revenue and an increase in deficits. While it is important for the IRS to improve customer service and address any issues with processing returns, it is also crucial for the agency to have the necessary resources to effectively enforce tax laws and ensure that all individuals and businesses are paying their fair share. Additionally, the claim that the funding boost would lead to increased audit rates for all taxpayers, including middle and low-income individuals, is concerning and requires further clarification. It is important for the IRS to prioritize both taxpayer services and enforcement in order to maintain the integrity of the tax system.