Analysis shows middle-class Americans are bearing the brunt of IRS scrutiny under the Dem-Inflation Act – Fox Business | Vette Leader

Americans earning less than $75,000 a year are set to receive 60% of the additional tax checks expected under the Democrats’ spending package, according to analysis released by House Republicans.

The analysis, which is a conservative estimate based on current audit rates and tax filing data, shows that individuals with annual incomes of $75,000 or less would be subject to 710,863 additional Internal Revenue Service (IRS) audits, while those who earn more than $1 million would be subject to 710,863 additional audits receive 52,295 additional audits under the bill. The law, the Inflation Reduction Act, would roughly double the IRS’s budget to increase enforcement and thus federal tax revenues.

“Value buyers at Walmart and other retailers who are already struggling with higher prices and more expensive fuel to get to the store will face 710,000 additional audits thanks to the Manchin-Biden Democrat Act,” said House Ways fellow Kevin Brady and Means Committee, R-Texas, said in a statement following the study’s release.

“Any US retailer that cares about their hard-hitting customers should fight to prevent this unnecessary nuisance to hard-working Americans,” he added.

INFLATION REDUCTION ACT: WHICH TAX INCREASES ARE PROPOSED?

IRS Commissioner Charles Rettig testifying before the House Ways and Means Oversight Subcommittee on March 17, 2022. (Kevin Dietsch/Getty Images/Getty Images)

Overall, according to the analysis, the IRS would conduct more than 1.2 million additional annual audits of Americans’ tax returns. Another 236,685 of the estimated additional audits would target individuals with annual incomes between $75,000 and $200,000.

To improve tax enforcement, the Inflation Reduction Act would give the IRS more than $79 billion in additional funding over the next decade, nearly doubling the agency’s current budget. The IRS is expected to hire tens of thousands more agents to ramp up enforcement efforts, which are expected to increase revenue by $124 billion.

Responding to criticism of the expected increase in tax audits under the bill, IRS Commissioner Charles Rettig said Thursday that “audit rates” will not increase compared to recent years.

THE US ECONOMY ENTERS A TECHNICAL RECESSION AFTER SECOND QUARTER GROWTH FALLED 0.9%

The legislation does not specifically guarantee that Americans earning less than $400,000 will not experience tax increases under IRS regulation. The bill says it is not “intended” to increase tax rates for taxpayers who are not in the top 1% of incomes.

“There is language in this bill that provides some guidance, but it’s not a guarantee at all,” William McBride, the vice president for federal tax and economic policy at the nonpartisan tax foundation, said in an interview with FOX Business. “It shows that the intent of the increased spending is not to appeal to those earning less than $400,000. But intention is a somewhat vague word.”

Senators Manchin and Schumer

Senator Joe Manchin and Senate Majority Leader Chuck Schumer were the lead architects of the anti-inflation bill passed by the Senate on Sunday. (F. Carter Smith/Bloomberg via Getty Images | Kent Nishimura/Los Angeles Times via Getty Images/Getty Images)

“The fact is, most returns report earnings under $100,000,” he continued. “There’s the money, so to speak.”

McBride added that middle-class Americans cannot afford the same resources as wealthy individuals to avoid scrutiny.

CLICK HERE TO READ MORE ABOUT FOX BUSINESS

“There’s certainly more resources as you go up the income scale, or more expertise, and the IRS knows it,” he told FOX Business.

“They need to increase screening rates for middle-class and low-income people to get the kind of revenue they’re demanding,” McBride said. “People who don’t have the means receive a letter from the IRS threatening them – what are they going to do? It could be a few dollar raise, a few hundred dollars, that the IRS is asking for. Rather than go out there and try to find a lawyer to fight it, they generally pay it.”

The White House referred FOX Business back to Rettig’s statements.

The Associated Press contributed to this report.

Leave a Comment