In a Shyamalanian twist no one – by which I mean everyone – could have predicted, the CBO estimated Wednesday that House Republicans taking an ax to the IRS would both add to the deficit and decrease revenue.
House Republicans’ Israeli aid bill, which includes what some credulous reporters faithfully parroted as “offsets” to the spending in the form of the IRS cuts, would cause the government to lose out on $26.8 billion in revenue and add $12.5 billion to the deficit over the next decade.
The House bill — and new Speaker Mike Johnson’s (R-LA) first legislative test — was all but doomed from the first, as Democrats are strongly opposed to linking aid to Israel with Republicans’ decades-long quest to hobble the IRS. They made the bill’s inevitable death official in the last few hours.
“Israel has suffered the worst terrorist attack in its history,” Senate Majority Leader Chuck Schumer (D-NY) said Wednesday on the Senate floor. “It needs help. But House Republicans are asking a price for helping them by cutting off funding that holds rich tax cheats accountable. That ain’t happening.”
“It’s dead almost before it’s born,” he added.
Schumer’s statement comes on the heels of President Joe Biden’s veto threat, sent out Tuesday night.
“The egregiousness of this particular offset is it adds to the deficit and would help some wealthy individuals and large corporations cheat on their taxes,” the statement said, ending with an underlined sentence: “If the President were presented with this bill, he would veto it.”
This IRS cut, seemingly incongruous in a bill nominally focused on Israeli aid, is just the latest episode in Republicans’ never-ending thirst to defang the tax regulator.
In the late ‘90s and again in the mid-2010s, Republicans ginned up scandals within the agency to justify massive cuts that left the agency hollowed out of personnel and bogged down by outdated technology.
A weakened IRS then struggled to go after the very wealthy and corporations, both of whom have the resources and legal might to make their money hard to find and tax. A 2021 Treasury Department report revealed that the wealthiest one percent of Americans are avoiding paying as much as $163 billion in taxes each year.
This age-old Republican animosity flared up again when the Inflation Reduction Act was moving through Congress last year, as it funneled some much-needed funding to the beleaguered agency. This time, Republicans cloaked their intent to keep paying taxes optional for the rich in a fantastical conspiracy theory.
By their lights, the new funding would enable the hiring of 87,000 new armed IRS agents, who would break down the doors of middle America and shoot to kill. None of that, obviously, is true.
It all drives in the same direction. This time, by linking the IRS cuts to Israeli aid — about as universal a cause as you can find in Congress these days — they tried to give it another shot at life.
Additional complicating factors, including much of the Senate’s desire for Ukraine funding, a lack of humanitarian aid in the bill and Senate Minority Leader Mitch McConnell’s (R-KY) push to loop in money for U.S.-Mexico border security made this legislation unlikely to go anywhere anyway.
But now, Democrats can add Republicans’ newest attempts to enable tax cheats to their arsenal as they seek to win back the House.