Plan to beef up IRS dropped from infrastructure bill talks

1

Lawmakers have dropped their push to fund the $1.2 trillion bipartisan infrastructure package in part through expanded enforcement resources for the IRS amid debate over how to pay for the deal.

Sen. Rob Portman, an Ohio Republican and one of the architects of the bipartisan package, told CNN on Sunday the decision came after pushback from the right and what he called an attempt to co-opt the issue by Democrats. Democrats, he said, were planning to use tougher IRS enforcement standards to get the money for their follow-on, $3.5 trillion reconciliation “human infrastructure” package to be pushed on a party-line basis.

“One reason it’s not part of the proposal is that we did have pushback,” Mr. Portman said. “Another reason is that we found out that the Democrats were going to put a proposal into the reconciliation package which was not just similar to the one we had, but with a lot more IRS enforcement.”

Boosting the tax collectors’ ability to narrow the “gap” between what is owed the government and what is paid was initially pitched as a way for the bipartisan package to raise more money without hiking taxes. Lawmakers argued that by investing $40 billion in cracking down on tax scofflaws, they could bring in an additional $100 billion in federal revenue over the next decade.

The proposal, however, quickly proved controversial. Republicans such as Sen. Ted Cruz of Texas raised the specter of the IRS hounding taxpayers or explicitly targeted conservative political groups, as conservatives have long charged happened under the Obama administration.

“Rather than giving tens of billions of dollars to the IRS to harass and persecute American taxpayers, I think we should abolish the IRS and instead adopt a simple flat tax,” Mr. Cruz said.

Apart from GOP opposition, the  IRS provision also faced questions over its efficiency. Some groups and lawmakers estimated the proposal was unlikely to raise the $100 billion figure, given the loopholes in the federal tax code and extensive delay times filers receive in paying back taxes.

Overall, figuring out how to pay for the $1.2 trillion bipartisan deal, which includes more than $550 billion in new spending, is proving difficult for negotiators on the Hill.

Lawmakers, though, only have a few more days to wrap up negotiations. Senate Majority Leader Charles E. Schumer, New York Democrats, said last week he was setting a hard deadline of Wednesday for the deal to be struck.

“All parties involved in the bipartisan infrastructure bill talks must now finalize their agreement so that the Senate can begin considering that legislation,” Mr. Schumer said.

Sign up for Daily Newsletters

View original post