Biden Agenda Faces Revenue Doubt With IRS Boost Likely Left Out
Biden Agenda Faces Revenue Doubt With IRS Boost Likely Left Out
(Bloomberg) -- A major IRS enforcement boost will likely be omitted from a forthcoming top-line revenue estimate of Democrats’ tax-and-spend package, complicating the question of whether the legislation will be fully “paid for” as President Joe Biden has promised.
The Biden administration estimates a better funded IRS could bring in $400 billion over a decade through more aggressive audits of corporations and the wealthy. But under budget rules set by Congress and the executive branch, the government’s nonpartisan analysts can’t officially count money that will be spent as also increasing revenue when estimating the cost of legislation.
Andrew Grossman, chief tax counsel for the Democratic majority on the House Ways and Means Committee, suggested Tuesday that the Congressional Budget Office will instead limit its analysis of the IRS plan to a footnote in its official report. That’s because revenue expected from that increased funding would not be “scoreable” under rules guiding official government estimates, he said.
Even then, Grossman said, its estimate will likely be well below the White House’s projection.
“I would expect that footnote and that number for tax revenue to be less than what the White House and the Treasury Department have said,” Grossman told state tax collectors at an event in Virginia. “It’s entirely possible that the difference between this bill being paid for and not being paid for is the difference between these two numbers.”
Revenue Raisers
The House bill includes an $80 billion funding boost for the IRS, one of the various revenue raisers tapped to offset new spending on climate change, health care and other social programs. An unofficial CBO estimate released in September projected that the proposal would raise federal revenues by approximately $200 billion over a decade, netting the government $120 billion during that timeframe.
The CBO said at the time that the “change in revenues typically would not be included in a cost estimate for legislation that brought about the change, but it would be reflected in CBO’s baseline budget projections once the legislation was enacted.”
Losing that much expected revenue on paper could mark another political setback for the Biden economic agenda in the House. While a $550 billion infrastructure bill passed earlier this month, a bloc of moderate Democrats said they needed to wait for an official analysis showed that the reconciliation package is fully paid for.
Representative Josh Gottheimer, a New Jersey Democrat among those who want a CBO score before voting, said over the weekend that he expected the official cost analysis “to match up” with White House estimates.
The CBO said Tuesday it will release its analysis of some parts of the reconciliation plan this week, with the rest coming later. House leadership currently hopes to hold a vote on the legislation no later than the week of Nov. 15.
Democrats have already pared back the plan due to a lack of sufficient votes to pass the White House’s original vision, though the price tag could still be anywhere from $1.75 trillion to over $2 trillion. Further attempts to reduce the size of the bill could lead to more pieces dropping out, fueling further wrangling between Democrats over what should stay in.
A provision to allow Medicare to cap the way it pays for prescription drugs could bring hundreds of billions in additional offsets to help bridge the gap between the White House’s revenue estimate and that of the CBO, but Democrats have yet to finalize the policy amid disagreements between influential members of the House and Senate.
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