U.S. Senator Elizabeth Warren, Democrat of Massachusetts, speaks to reporters before voting on an Election Reform Bill on Capitol Hill June 22, 2021, in Washington, DC.
Olivier Douliery | AFP | Getty Images
Three US senators, led by Massachusetts progressive Elizabeth Warren, on Tuesday called for Democrats’ $ 3.5 trillion global budget plan to include money to help the Internal Revenue Service strengthen its tax enforcement.
In a letter to IRS Commissioner Charles Rettig, who was consulted by CNBC, senators called on the agency to demonstrate how better enforcement could help generate billions for the federal government in taxes owed.
Warren and the co-signers of the letter emphasized the importance of restoring the tax collector’s budget as a way to hold wealthy Americans accountable for flaunting the US tax code. The letter comes as Democrats attempt to include preferred provisions in a budget reconciliation program yet to be defined.
Warren, who was joined by Sen. Bernie Sanders, I-Vt., And Sheldon Whitehouse, DR.I., wrote that revitalizing the IRS budget would allow him to “prey on wealthy tax cheats and to provide faster and better service to the majority of Americans who pay their fair share. “
“For too long, the wealthiest Americans have been able to use a host of accountants, tax strategists, financial advisers, lawyers and lobbyists to avoid paying their fair share of taxes,” the senators added. “The richest 1% of Americans report no more than one-fifth of their income on their tax returns, and they account for over one-third of all federal income taxes unpaid.”
Specifically, Warren, Sanders and Whitehouse urged Rettig to answer a litany of questions designed to show how additional funding from Congress would help the IRS better enforce the tax code.
Warren and other progressive Democrats are enraged at the growing tax gap – the difference between taxes owed to the IRS and taxes actually paid, seen by many as an indicator of tax evasion.
The Treasury Department, which oversees the IRS, estimates that this gap will increase to $ 7 trillion over the next decade. The department did not immediately respond to CNBC’s request for comment.
Assistant Deputy Secretary Mark Mazur told lawmakers in June that the yawning gap was due to a 20% cut to the IRS budget over the past decade.
This reduction has resulted in a series of layoffs and a collapse in audit rates. The IRS said earlier this year that budget cuts forced it to cut 33,378 full-time positions between fiscal 2010 and 2020, including a significant number of taxpayer services and enforcement staff.
“It would not be crazy to believe that the actual tax gap could approach or even exceed $ 1,000 billion a year,” Rettig told the Senate finance committee in April.
Warren told Rettig on Tuesday it was critical that Democrats include additional IRS funding in the $ 3.5 trillion budget resolution the party is trying to push through Congress without Republicans backing.
The trio of Warren, Sanders and Whitehouse lambasted Senate Republicans for reneging on an earlier deal to include $ 40 billion in funding for the IRS as part of the bipartisan infrastructure bill that cleared the chamber on Tuesday .
This infrastructure bill, which was passed by Senate 69-30, will allocate an additional $ 550 billion for transportation, broadband and utilities.
Sen. Rob Portman, a key Republican negotiator, said in July that the GOP abandoned its commitment to funding after learning Democrats were also planning to add a larger IRS enforcement proposal to the spending program. $ 3.5 trillion separate reconciliation.
âIt is now more important than ever to include investments in the IRS and fair tax administration,â Warren concluded Tuesday. Corporate lobbyists who benefit from a weaker IRS “will continue to claim, falsely, that these proposals will somehow harm law-abiding taxpayers, when in reality their concern is that the IRS will have the tools to tackle the complex rich and corporate tax schemes. cheaters. “
The Senate began voting on the spending plan amendments immediately after passing the infrastructure bill.