IRS estimates of unpaid taxes are “unfounded”, says Rep. Kevin Brady

President of the ways and means of the Kevin Brady house

Joshua Roberts | Reuters

Rep Kevin Brady said the IRS shouldn’t receive more financing the application because the estimates of unpaid taxes are “unfounded”.

President Biden has proposed to invest $ 80 billion in new technology is more auditors to increase tax collection by $ 700 billion over 10 years. IRS Commissioner Charles Rettig testified before Congress in April that the “tax gap” – or amount of taxes due which are not paid each year – could go up to $ 1 trillion due to cryptocurrencies, offshoring and underestimation of income. IRS data from 2011 to 2013 estimated the tax gap at $ 441 billion a year.

In an interview on CNBC’s Squawk Box, Brady, the best Republican on the House Ways and Means Committee said Republicans “want to close the tax gap. “But he said the president’s proposal and similar legislation introduced in Congress aimed at strengthening up The IRS application is imperfect.

“This proposal is based on an unfounded issue, or “what is the tax gap?” “he said.” The IRS will admit that their data is seven years old. They are guessing on cryptocurrencies and foreign transactions. What they are saying is give us a ton of money, let’s hire a group of auditors and we think this will create revenue. But we have seen already one of the problems is, it will not create that income. “

Instead, Brady proposed an “in-depth analysis” of the tax gap and what is causing it. “Then together we address the solutions to the problem. “

Democrats in Congress argues that the IRS fund and collect more taxes already are due key to generate revenue and enforce the tax code. Because of the lack of financing, the number of IRS revenue agents fell by more by almost a third over the past decade and revision rates for taxpayers who earn more of $ 1 million a year fell from half between 2010 and 2018, according to the IRS.

Howard Gleckman, senior partner in the Urban-Brookings Tax Policy Center said one reason Data published by the IRS on the tax gap may be obsolete because Congress has reduced Financing from the IRS. “One thing the IRS could do with more funding is publish on more current data on the tax gap that Mr. Brady wants, “he said.

He said that even if the tax gap is half the IRS estimates, which are unlikely given the lower review rates, “mean that Congress? should not give the IRS the resources it needs to be sure that people pay the taxes they owe? ”

Some Republicans have argued in the past that the IRS should collect existing taxes before Democrats discuss raising tax rates. During the Trump administration, Treasury Secretary Steven Mnuchin said that “mending the fiscal gap” was one of his top priorities and pushed for more funding to improve audits on the rich.

In response to the Biden plan, many Republican leaders and tax cut advocates say the IRS is ineffective, overly intrusive e overly political – as shown, they say, by the tax data on rich taxpayers obtained from ProPublica. ProPublica started publishing a series of articles in June showing how billionaires like Jeff Bezos, George Soros and others pay lower tax rates – e in some cases without tax in some years – due to loopholes in the tax system. ProPublica says It is not so know the anonymous source of the tax information of the IRS.

Brady said that too with more funding, the IRS has not proven that it has the ability to close the tax gap.

“The truth that is, the IRS doesn’t have a good record on intelligent and intelligent auditing recovery”said Brady.

One provision in prime versions of the bipartisan infrastructure bill included funding to increase IRS collections by approximately $ 100 billion over 10 years a help to pay for infrastructure projects. The provision was removed from the bill due to opposition from Republican negotiators. It will now likely be included in the broader Democratic reconciliation bill.

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