Bite-Me wants to feed the IRS $80 BILLION dollars so they can go after tax scofflaws.
Given the ineptitude of IRS employees (call them with a complex tax question three times at different hours and days and you’ll get three different answers) all of that money will go to hiring more employees to give you more bad answers.
Biden will give the IRS an extra $80 billion and more authority over the next 10 years, The New York Times reported, to help enforce the higher income tax on the rich and capital gains tax he’s proposed to pay for his $1.8 trillion American Families Plan.
The president plans to pay for his ‘human infrastructure’ bill by raising the top marginal income tax rate on wealthy Americans to 39.6 per cent – up from 37 per cent – and raising capital gains tax rates for those who earn more than $1 million a year.
The new enforcement power to the tax collection agency will include new disclosure requirements for people who own businesses that are not organized as corporations and for other high worth individuals who could be hiding income from the government.
Administration officials also believe cracking down on tax avoidance by corporations and the rich could raise at least $700 billion over the next 10 years.
The IRS estimates it only collects 84 per cent of the money its owned in taxes each year, which results in a loss of $406 billion per year. That amount is a combination of $458 billion not paid and $52 billion not collected from those who are delinquent, according to the watchdog group Committee for a Responsible Federal Budget.
Most of that tax gap comes from under reported personal income, underreported pass-through business income, small corporation income, and the self-employment payroll tax.
Brian Deese, the director of the National Economic Council, emphasized about three-tenths of 1 per cent – or about 500,000 people – would be affect by Biden’s tax increases.
‘This change will only apply to three tenths of a percent of taxpayers, which is not the top 1 percent, it’s not even the top one half of 1 percent. We’re talking about three tenths of a percent, that’s about 500,000 households in the country,’ he said Monday at the daily White House press briefing. ‘So, for the other 997 out of 1000 households in the country, or the other 150 million households in the country, this is not a change that will be relevant.’
The hikes would have top earners paying up to 43.4 per cent, when an existing investment surtax is included. For those earning more than $1 million a year in high-tax states like New York and California, their total rate could be above 50 per cent.
California, New York, Minnesota, and Oregon would have the highest top capital gains rates of 56.7 percent, 54.3 percent, 53.3 percent, and 53.3 percent, respectively, according to analysis from the Tax Foundation.
Roughly 75 percent of stock investors wouldn’t be subject to an increase in the capital gains tax rate due to the types of accounts they own, according to UBS.
The announcement is expected to come Wednesday night, when the president makes his first address to Congress, where he will outline his American Families Plan and how he’ll use tax hikes to help pay for the multi-trillion proposal.
His latest plan to help the US economy recover from the coronavirus pandemic focuses on social issues – education, labor programs, universal pre-K, free college tuition for certain income levels, and other programs.
Currently, people earning more than $200,000 pay a capital gains rate of about 23.8%, including the 3.8% net investment tax which helps fund the Affordable Care Act. Under the new plan, wealthy Americans could face an overall federal capital gains tax rate of 43.4% including the Obamacare tax.
‘We need to do something about equalizing the taxation of work and wealth in this country,’ Deese noted. ‘And that’s why the reforms that the president will lay out are focused on this top sliver of people.’
Republicans have criticized the tax hike, charging it will cut down on investment and cause unemployment.
One point of confusion is whether the tax hike would apply to households or individuals. Deese said ‘households,’ noting the tax raise affects the ‘top sliver of households.’
The issue of household versus individuals is of particular interest to high-income households in cities like New York and San Francisco, where the cost of living is higher than the rest of the country. For those earning more than $1 million a year in high-tax states like New York and California, their total rate could be above 50 per cent.
Those areas are also mainly represented by Democrats, who would have to explain the tax hikes to their constituents.
White House press secretary Jen Psaki declined to answer whether individuals or households would be impacted.
‘I am not going to get into more specifics,’ she said, ‘but we’ve been quite careful about not getting head of the president.’
And she stood firm on Biden’s campaign pledge not to raise taxes on those earning more than $400,000 per year and noted: ‘He believes that the burden should be on the backs of corporations and high level income people.’