House Republicans went after the IRS — long a GOP whipping child — when they decided that emergency aid for Israel should be coupled with cuts elsewhere in the budget.
The aid bill that passed the House on Thursday — unlikely to be approved by the Democratic-controlled Senate — would cut $14 billion from the nation’s tax collector in exchange for providing assistance to Israel. President Joe Biden has said he would veto the bill if it reaches his desk.
The IRS cutback would cost taxpayers billions of dollars, not save money, according to independent budget analysts.
A Congressional Budget Office analysis released this week states that the move would decrease revenues by $26.8 billion over the 2024 to 2033 period, resulting in a net increase in the deficit of $12.5 billion.
That’s because it would take away money that the agency dedicated to auditing the wealthy, which brings in far more than it costs.
“When you reduce those audits, you reduce the amount of money that we can collect and return to the Treasury for other priorities.”
The agency was in line for an $80 billion infusion of funds under the Inflation Reduction Act approved in 2022, but that money has been subject to cutbacks.
In June, legislation to raise the statutory debt limit also rescinded $1.4 billion given to the federal tax collector through the IRA. The debt deal also included a separate agreement to take $20 billion from the IRS over the next two years and divert that money to other nondefense programs, the White House said.
Werfel said the initial loss of $14 billion in the latest bill would amount to an overall $90 billion in lost revenue over the next 10 years, based on an IRS model that calculates a 6 to 1 ratio of money spent to revenue collected.
Maya MacGuineas, president of the private Committee for a Responsible Federal Budget, said paying for the Israel aid by taking money from tax enforcement “is worse than not paying for it at all.”
“Instead of avoiding new borrowing, this plan doubles down on it,” she said.
