The House GOP’s quest to trade $14.3 billion in IRS cuts for $14.3 billion in emergency aid to Israel has an updated price tag, and surprise, surprise: It’s much steeper than it anticipated.
Instead of decreasing the deficit, the multibillion-dollar slash to the IRS proposed by newly minted House Speaker Mike Johnson would actually cost the government more than $26 billion in lost revenue by 2033, according to a Congressional Budget Office report issued Wednesday. The result would add nearly $12.5 billion to the national deficit over the next 10 years, the CBO predicted.
Some officials estimate that the true number could be even higher.
IRS Commissioner Daniel Werfel believes the damages may be more to the tune of $90 billion in lost revenue over the next decade and that the cuts would reduce the government’s ability to audit large corporations and the wealthy, reported The Washington Post.
“All of those funds go to increased scrutiny on tax evasion going on at the highest wealth, and that is millionaires and billionaires and large corporations and large complex corporations,” Werfel told the Post. “When you reduce those audits, you reduce the amount of money that we can collect and return to the Treasury for other priorities.”
Ultimately, Republicans’ plan to “offset” funding for Israel with cuts to the IRS would backfire quite badly.
At stake is an already-approved $80 billion expansion to the IRS that is projected to cut the deficit by more than $100 billion by way of improved tax collections, operations support, free filing for taxpayers, an office of tax policy, and tax court. The Congressional Budget Office has repeatedly warned that cutting IRS funding will encourage tax cheating and increase the deficit, though that didn’t stop Johnson from attempting to chip some money off the arrangement.
“If you put this to the American people, and they weigh the two needs, I think they are going to say standing with Israel and protecting the innocent is in our national interest, and a more immediate need than IRS agents,” Johnson told Fox News on Tuesday.