Americans with less than $75,000 per year are expected to receive 60% of the additional tax audits expected under Democrats' spending package, according to an analysis released by House Republicans.
The analysis shows that individuals with an annual income of $75,000 or less would be subject to 710,863 Internal Revenue Service IRS audits while those with more than $1 million would receive 52,295 more audits under the bill, based on recent audit rates and tax filing data. The Inflation Reduction Act would double the IRS budget's budget to increase enforcement and federal tax revenue.
The Manchin-Biden Democrat bill, House Ways and Means Committee ranking member Kevin Brady, R-Texas, will result in 710,000 additional audits of Walmart and other retailers, which are struggling with higher prices and more expensive fuel to drive to the store.
He said every retailer in the U.S. who cares about their hard-hit customers should be fighting to block this unnecessary harassment of hard-working Americans.
The IRS would conduct more than 1.2 million more annual audits of Americans' tax returns, according to the analysis. Another 236,685 of the estimated additional audits would target individuals with an annual income between $75,000 and $200,000.
In order to boost tax enforcement, the Inflation Reduction Act would provide more than $79 billion in additional funds to the IRS over the next decade, nearly double the agency's current budget. The IRS is expected to hire tens of thousands more agents to improve enforcement efforts that are projected to increase revenue by $124 billion.
IRS Commissioner Charles Rettig said Thursday that audit rates will not increase relative to recent years, despite criticism of the expected increase in tax audits under the bill.
0.9% of the population is in the U.S.
The IRS provision doesn't guarantee that Americans making under $400,000 won't see tax increases under the legislation. The bill states that it isn't intended to increase rates for taxpayers who aren't in the top 1% of earners.
William McBride, the vice president of federal tax and economic policy at the nonpartisan Tax Foundation, told FOX Business there is a language in the bill that provides some guidelines, but it is not a guarantee. The intent of the increased spending is not to target those earning less than $400,000. The word intent is somewhat squishy. Most of the returns report income under $100,000, he continued. McBride said that middle-class Americans aren't able to afford the same resources as wealthy individuals to avoid scrutiny.
As you go up the income scale or more expertise, there are more resources, and the IRS knows it, he told FOX Business.
They will need to increase the audit rates on middle-class and low-income folks to get the kind of revenues they claim from this, McBride said. People who don't have the resources get a letter from the IRS in the mail threatening them what they're going to do? It may be an increase of a few bucks, a few hundred bucks that the IRS is asking. Rather than go out and try to get a lawyer to fight it, they generally pay it.