Biden Seeks $80 Billion to Beef Up I.R.S. Audits of High-Earners
President Biden is expected to propose giving the Internal Revenue Service an extra $80 billion and more authority over the next 10 years to crack down on tax evasion by high-earners and large corporations.
The additional money and enforcement power will accompany new disclosure requirements for people who own businesses that are not organized as corporations and for other wealthy people who could be hiding income from the government.
The Biden administration will portray those efforts — coupled with new taxes it is proposing on corporations and the rich — as a way to level the tax playing field between typical American workers and very high-earners who employ sophisticated efforts to minimize or avoid taxation.
The administration also plans to raise the top marginal income tax rate for wealthy Americans to 39.6 percent from 37 percent and raising capital gains tax rates for those who earn more than $1 million a year. Mr. Biden will also seek to raise the tax rate on income that people earning more than $1 million per year receive through stock dividends, according to a person familiar with the proposal.
Administration officials have privately concluded that an aggressive crackdown on tax avoidance by corporations and the rich could raise at least $700 billion on net over 10 years. The $80 billion in proposed funding would be an increase of two-thirds over the agency’s entire funding levels for the past decade.
The administration is expected to portray the $780 billion it expects to collect through enhanced enforcement as conservative. That figure includes only money directly raised by enhanced tax audits and additional reporting requirements, and not any additional revenue from people or companies choosing to pay more taxes after previously avoiding them.
Previous administrations have long talked about trying to close the so-called tax gap — the amount of money that taxpayers owe but that is not collected each year which has been estimated to be as much as $1 trillion a year. The agency’s funding has failed to keep pace with inflation in recent years, amid budget tightening efforts, and its audits of rich taxpayers have declined.
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