Yellen pitches $13B budget increase for IRS as White House looks to crack down on tax cheats

Powell reappointment chances ‘look very good’ under Biden: WSJ economics commentator

‘The Wall Street Journal’ chief economics commentator Greg Ip argues Jerome Powell will likely remain as Chair of the Federal Reserve under Biden.

Treasury Secretary Janet Yellen on Thursday asked Congress to approve an additional $13.2 billion in funding for the IRS, which has seen its budget gutted over the past decade.

While testifying before a House panel that plays a vital role in spending, Yellen said that government funding – not accounting for inflation – has been unchanged since 2010. She said that boosting funding for the IRS is a top priority for the Biden administration, which is looking to enhance tax enforcement in order to fund a nearly $4 trillion spending proposal that would rebuild the nation's infrastructure and dramatically expand the government-funded safety net. 

YELLEN SAYS HIGHER TAXES NEEDED IN LONG TERM TO FINANCE US SPENDING

"Many of the country’s wealthiest taxpayers do not pay their full tax bill, and the IRS is not nearly staffed up enough to ensure compliance," Yellen said. She maintained that beefing up the agency's auditing power would not be used to target individuals who are earning less than $400,000. 

Making the case for more IRS funding, Yellen noted that an estimated $7 trillion in tax revenue will go uncollected in the next decade because the agency lacks the necessary resources to crack down on wealthy tax cheats. She also pointed out that the IRS has been responsible for making roughly $800 billion in stimulus payments over the past year and is about to undertake distribution of the expanded child tax credit, which will be paid out to families in monthly installments.

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The IRS has 20,000 fewer staff than it did in 2010, and its budget is roughly 20% less than it was in 2010, when adjusted for inflation, according to the Congressional Budget Office.

Yellen's comments come one day before the White House will release its multitrillion-dollar fiscal year 2022 budget. Biden is expected to propose $6 trillion in new spending for the next fiscal year, according to The New York Times, driven by the $2.3 trillion American Jobs Plan and $1.8 trillion American Families Plan.

Over the course of the past year, Congress approved nearly $6 trillion, or roughly 27.1% of the nation's GDP, in coronavirus relief spending, including $4 trillion passed under former President Donald Trump.

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The government ran a record-shattering $3.1 trillion budget deficit in fiscal year 2020, and has already racked up $1.9 trillion in red ink for the first six months of this fiscal year.

Although Yellen has previously advocated for paying down the nation's debt, she said in March that the U.S. still has more room to borrow. 

"I would say we've changed somewhat since 2017 when I said that," she said at the time. "And it's partly because the interest rate environment has been so very low."

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