The Inflation Reduction Act would double IRS agents and audits — but the superrich aren’t the real targets

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The Manchin-Schumer “Inflation Reduction Act,” which the Senate could approve later this week, will raise billions by adding $80 billion to the IRS budget and hiring more than 80,000 auditors and agents.

The plan is projected to double the number of Americans audited each year. To quote the Church Lady from “Saturday Night Live”: “Well, isn’t she special?”

Most of the money raised from these audits won’t come from superrich or multibillion-dollar corporations — both accountants and tax attorneys are well-stocked to fight IRS charges.

Small-business owners and upper-middle-income workers will likely be targets. A woman running an accounting firm or a restaurant will not have the resources to fight the government in the tax court.

The proposal comes just a year after the IRS’s latest scandal, in which agents illegally leaked personal tax-return data of millionaires and billionaires to the media.

Conservatives should be especially concerned. Will the Biden administration arm these thousands of new agents against them as is done in the Justice Department and the FBI?

One must not forget that this is exactly what happened in the Obama-era lois lerner case, The agency cherry-picked to additional scrutinize the tax returns of conservative organizations and donors opposing President Barack Obama’s policies.

We all want Americans to pay the taxes they owe. But this scheme is a cruel way to do it.

Senate Majority Leader Chuck Schumer plans to introduce the Inflation Reduction Act into the Senate later this week.
Michael Brochstein/Zuma Press Wire

The bill is also the reverse: It would add new green-energy tax write-offs and other loopholes to the 30,000-page tax code.

All this enforcement activity won’t raise nearly as much money as Congress expected. The backbone of our tax system — as noted by nearly all IRS commissioners — is voluntary compliance from the 150 million American workers and businesses that file returns each year.

Tax compliance depends on many factors. First, do Americans think the tax code is fair? Second, does the tax code make sense? The complexity adds to the tax fraud. And third, are tax rates low enough to reduce the financial incentive to cheat?

If the tax rate is 50%, the incentive to hide income is twice the rate of 25%. Economist Arthur Laffer, in his new book ‘Tax Have Consequences’, has shown that tax collections have increased when tax rates have come down over several periods of history.

Our tax system is a failure in all three respects. This is not fair, as every survey agrees. This is incomprehensible to the average person. And the tax rates on some income are often as high as 40% or even 50%.

Why not do the opposite of the goal of President Joe Biden and Congressional Democrats? Reduce rates for lobbyists and eliminate special-interest carving scores.

The flat-tax plan we’ve long favored (the one on which one of us ran for president) would solve all of these problems: a 17% single rate, and only deductions for you, your spouse, and your children. will be for return a postcard. There isn’t much to audit. No special interest and no favor to the rich to hide their income.

This would reduce the “tax gap” of unpaid taxes because the wealthy would not have access to foreign shelters in the tax code. Flat taxes are an honest and effective way to ‘soak up the rich’ without affecting the economy.

We would dare to say that this plan, so simple to understand and so easy to follow, would be able to halve the number of IRS agents and auditors – not double the number.

Just think about it: a government program that would actually reduce waste and inefficiency rather than add to it. With a tax rate of only 17%, the economy will boom and we will leave China in a cloud of dust.

Steve Forbes is the President and Editor-in-Chief of Forbes and co-author of the new book ‘Inflation’. Stephen Moore is a former economic adviser to Trump and an economist at FreedomWorks. They are both co-founders of the committee that brings prosperity.

Credit: nypost.com /

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