Biden's Slimmed Down Social Spending Package Still Includes Mass Investment in IRS Staffing
Funding to electrify the federal vehicle fleet appears to have been dropped from the package.
President Biden on Thursday unveiled a framework for a long sought after climate and social spending bill, which included an unprecedented investment in the Internal Revenue Service to boost its enforcement capabilities.
The White House rolled out the main policies from the president's Build Back Better package, which Democrats have negotiated internally for several months. Initially pegged for $3.5 trillion in new spending, the most recent iteration—which officials said was still being finalized on Thursday—sets a target at roughly half that size. The measure is set to focus primarily on combating climate change, expanding health care access and easing the burden on families paying child care. It remains unclear if all 50 Democratic senators whose support will be required for the bill to pass have endorsed the framework in its current form.
Democrats—who are looking to pass the bill through a process called reconciliation that would not require any Republican votes—also laid out about $2 trillion in offsets through new taxes on corporations and closing loopholes in the tax code that benefit the wealthy. About $400 billion of that total is expected to come from increased IRS enforcement. That estimate is down from the White House’s original proposal, when it said an $80 billion investment at the agency would lead to $700 billion in new revenue over the next decade.
“Regular workers pay the taxes they owe on their wages and salaries—with a 99% compliance rate—while too many wealthy taxpayers hide their income from the IRS so they don’t have to pay,” the White House said in a fact sheet rolling out the framework. “Yet, the IRS does not have the resources it needs to pursue wealthy tax cheats.”
The administration would use the new funding to beef up a “gutted IRS” by hiring enforcement agents specifically trained in “pursuing wealthy evaders,” and modernizing the agency’s technology and customer service investments.
A bipartisan group of senators, working with the White House, originally included the increased IRS funding and hiring as part of its $1 trillion infrastructure plan, but ultimately scrapped it from the measure after Republicans pushed back. Many conservative lawmakers said the proposal would lead to the IRS unfairly targeting certain Americans.
The Biden administration and IRS leadership have called IRS funding critical to offset more than a decade of cuts or relatively flat spending at the agency. IRS has shed 17,000 enforcement workers over the last decade, disproportionately from highly specialized, senior examiners who typically focus on the wealthiest individuals and corporations. IRS Commissioner Charles Rettig has said boosted enforcement would focus on high net-worth individuals, large pass throughs, corporate compliance, employment tax field examinations and non-filers with virtual currency, among others. The hiring surge would also go toward customer service efforts, with the goal of improving the phone answering rate to 75% of calls. During the COVID-19 pandemic, that rate dropped to 7%.
Democrats had originally planned to include $7.4 billion in their reconciliation bill to electrify the federal vehicle fleet, including $2.4 billion for the U.S. Postal Service. Lawmakers had said the investment would be a "significant step" toward fully electrifying the fleet, but the funding does not appear to be included in the framework Biden unveiled Thursday. Biden previously promised to electrify the federal fleet, requesting $46 billion to purchase the vehicles, charging ports and electric heat pumps for buildings. The package the White House is now floating includes $555 billion to address climate change, but does not mention the federal fleet.
As part of that climate investment, the Agriculture Department would be tasked with implementing new grants and loans to help rural communities access clean energy. Elsewhere in the package, the Labor Department would see a funding surge to boost its workforce development programs.