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National review
Like the IRS? Then you’ll love Elizabeth Warren’s new tax bill
On March 1, Senator Elizabeth Warren (D., Mass.), Joined by Representatives Pramila Jayapal (D., Washington) and Brendan Boyle (D., Pa.), Introduced the so-called Ultra-Millionaire Tax Law by 2021. The bill would impose an annual “wealth tax”, starting at 3% and rising to 6%, on the richest 0.5% of all Americans. The merits of the tax itself have been discussed at length. What was not discussed is the new IRS enforcement system the bill would create, which would include a staggering increase in the size of the IRS, a substantial expansion of the already oppressive demands of the IRS in terms of reporting, and many other audits and collection actions. Let’s take a closer look at these elements. IRS Funding The bill proposes to increase IRS funding by $ 100 billion over the next ten years. To put that into perspective, the IRS budget for fiscal 2021 is $ 11.92 billion, up $ 409 million from fiscal 2020. Warren’s bill would almost double the funding for agency for fiscal year 2022 and would leave it nearly ten times higher by 2031. In addition, the bill stipulates that 70 percent of new funds must be used for tax law enforcement, against only 10 percent allocated to “taxpayer services” such as pre-filing assistance and education, filing and accounting services, and taxpayer advocacy services. Again, as a perspective, the IRS budget for fiscal 2021 allocates $ 2.556 billion for taxpayer services and $ 5.213 billion, roughly double, for enforcement activities such as taxpayer services. audits, collections, litigation and criminal investigations. Warren’s bill would give the IRS seven times more money for enforcement than for taxpayer services. This huge imbalance betrays the left-wing mantra that “the government is here to help”. If this were true, more money would be spent on giving people the information they need to comply with the massive four million word tax code than on enforcement after the fact. Yet for decades enforcement spending exceeded education spending – and Warren would compound the imbalance. While it is admittedly naive to believe that law enforcement is unnecessary, the fact is that 98% of every dollar owed to the IRS is paid without any agency intervention. People are sneaking into the ground to comply with our huge tax code. In 2019, more than 67 million Americans asked the IRS for some form of compliance assistance; only 1,800 have been charged with a tax crime. Obviously, the IRS has a lot more to gain by teaching people to comply than by grinding them into powder if they don’t. Expanded Information Reporting Requirements Speaking of being powdered, one of the IRS’s primary compliance tools is the “information report,” which comes from the “feedback” that the IRS uses it to collect data. The W-2 form, which shows wages paid by an employer to an employee, and the 1099 forms, which report interest, dividends, payments from an independent contractor, etc., are two prominent examples of such “statements. of information ”. But there are literally dozens of other forms the IRS uses to collect data so it can verify income reported on tax returns. The magnitude of this data is staggering. In 2019 alone, a total of 3,503,499,195 information returns were filed with the IRS. The U.S. population in 2019 was 328,239,523, which means more than ten information returns were filed with the government for every man, woman and child in America in 2019 – not even counting tax returns. Yet, according to Warren, this is not enough. Under its bill, within twelve months of its enactment, the IRS must create a palette of new regulations designed to force the reporting of “any information regarding the net worth of assets” that the agency deems relevant. The reporting burden may be based on “the ownership, control, management, claim of income or other relationship with assets” subject to tax under the law, including “financial institutions, business entities or other persons ”with any connection whatsoever to those responsible for the tax. In addition, business entities owned by taxable persons must “provide estimates of the value of the [business] the entity itself. And in case you plan to avoid the new requirements, the bill further provides that the IRS is empowered to write new regulations specifically deemed “necessary to prevent taxpayers from avoiding the purpose of disclosure. information ”. Now, a reasonable person might wonder if all of this data might not just overwhelm the IRS, making enforcement of the reporting requirements untenable. Well, the “We’re Here to Help” crowd also thought of this: The law would direct the IRS to “develop a comprehensive effort management plan to leverage the data collected” to improve compliance efforts. , with the stated objective of remedying “non-compliance with such requirements.” Increased Global Enforcement In 2019, 154.1 million personal income tax returns were filed. Warren’s wealth tax only targets the richest 0.5% of tax filers. Do you think the IRS needs a doubling of its budget to handle just 0.5% of US taxpayers? No, my friends, the 2021 ultra-millionaire tax law enforcement component is not just for ultra-millionaires. It’s for you. If Warren’s bill passes, you should expect the IRS to hire legions of new auditors and tax collectors who will indulge American taxpayers over the next ten years. As the tax code becomes larger and more complex, more and more people are making honest mistakes in calculating their taxes. This reality leads to tens of millions of sanctions. In 2019, the IRS assessed over 40 million civil penalties. Nearly $ 33 million has been assessed against individuals, the vast majority of whom are honest taxpayers caught in tax code traps and potholes they didn’t even know existed. Those same people then became the target of a storm of IRS notifications and payment claims, and, if that fails, eventually, tax liens and levies. Ultra millionaires tend not to have this problem; they can afford to pay only their taxes because they are ultra millionaires. But when middle-income Americans fall into tax debt, they become victims of law enforcement precisely because they don’t have the money to settle down. And that’s the most sinister thing about Warren’s Bill: It claims to be a crackdown on wealthier Americans, but in reality, it will likely hit ordinary taxpayers the hardest.
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