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The White House released their new version of the budget for the period beginning September 2023 and ending October 2024. They estimated a total of $6.9 trillion, which is a nominal increase of $1.1 trillion over the previous fiscal year’s budget, set at $5.8 trillion.
One of the big beneficiaries is the IRS, which, if the text is approved by Congress, would receive a rain of dollars in its building. According to the House Ways and Means Committee, in addition to the initial $14.1 billion in its payroll, up 15% over the previous year, the budget would provide another $29.1 billion in “mandatory funding for enforcement and operations.”
Republicans were quick to criticize the new increase to the IRS and one of them was Rep. Jason Smith (MO), chairman of the House Ways and Means Committee. “I have to ask: Is this a joke? After a two-year inflation crisis that has cost American workers more than two months of pay, families need every penny they can get,” he asked Treasury Secretary Janet Yellen at a hearing.
The IRS already received $80 billion under the Inflation Reduction Act
The latest courtesy to the IRS came in mid-2022, with the passage of the Inflation Reduction Act. Prior to the legislation, the IRS had an estimated 78,661 full-time employees, a number that will double over the next ten years. The Act will provide an $80 billion fund to hire an additional 87,000 employees over the next decade.
Such an army of people would make the IRS one of the largest government agencies. For example, it would have more employees than adding up the Pentagon, the State Department, the FBI and Customs and Border Protection.
The money allocated for employee hiring implied a budget increase for the agency of 600% compared to 2021. An analysis by the Congressional Budget Office found that the new hires would generate more than $200 billion in additional revenue for the state over the next decade.
As the Democrats explained at the time, this volume of new employees will be necessary to combat millionaires who hide income. However, a study carried out by the Joint Committee on Taxation (non-partisan), showed that only between 4% and 9% of the money collected will come from those who earn more than $500,000 a year.
Joe Biden’s new budget calls for tax hikes and increased government spending
Regarding the first topic, the budget includes a minimum tax of 25% for those with more than $100 million in wealth. The measure has already been dubbed the “multimillionaire minimum tax.” In addition, the top tax rate would rise from the current 37 % to 39.6 %, thus returning to levels prior to the Jobs and Tax Cut Act of 2017, pushed by the Donald Trump administration.
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The corporate tax would increase from 21% to 28%, halfway to where it was before the aforementioned Trump bill, when it was 35%. The budget would also increase the stock buyback tax fourfold, from 1% to 4%.
In addition, it would increase the investment income tax used to fund Medicare from 3.8% to 5% for individuals earning more than $400,000 a year. According to the White House, this would extend the solvency of the Medicare Hospital Insurance Trust Fund for at least 25 years.
Federal agencies would benefit the most from the new budget, since many of them would see an increase in their coffers for the next fiscal year. For example, appropriations for the Department of Labor would increase by 11%, a number that falls short of the 13.6% for the Department of Education and even short of the Environmental Protection Agency, whose appropriation would increase by 19%. In contrast, the budgets for the Department of Defense and the Department of Veterans Affairs would increase by 3.2% and 2.2%, respectively.
Joaquín Núñez es licenciado en comunicación periodística por la Universidad Católica Argentina. Se especializa en el escenario internacional y en la política nacional norteamericana. Confeso hincha de Racing Club de Avellaneda. Contacto: [email protected] // Joaquín Núñez has a degree in journalistic communication from the Universidad Católica Argentina. He specializes in the international scene and national American politics. Confessed fan of Racing Club of Avellaneda. Contact: [email protected]