Answer: No, it most certainly does not — but that’s the line being touted in defense of the massive IRS expansion in the “Inflation Reduction Act.” The bill spends nearly $80 billion dollars on IRS expansion over the next ten years in an effort to collect the $200 billion-plus Democrats projected to collect to make its reconciliation bill pass budgetary muster in the Senate.
We’ll get to that math in a moment. First, though, let’s take a look at the claim that this merely backfills an expected exodus of retirements, an argument that’s floated around for a couple of weeks. Washington Post fact-checker Glenn Kessler promoted it again this morning on Twitter after positing it last week:
I had fact checked this last week, as had other fact checkers. The bill calls for 87,000 employees over ten years, many of whom will replace the 50,000 retiring in five years. Net increase in IRS staff: 25 percent, still below what it once had been…. https://t.co/i1YbbnBzCv
— Glenn Kessler (@GlennKesslerWP) August 18, 2022
This fact-check is based entirely on a claim from the Treasury Department:
Natasha Sarin, Treasury counselor for tax policy and implementation, told The Fact Checker that over half of the IRS staff — 50,000 — is eligible for retirement in the next five years. Much of the funding for new employees will be focused on mitigating that attrition and adding customer service and information technology specialists in addition to enforcement agents. The agency has also lost about 40 percent of the agency staff who specialize in complex tax audits, bringing it to the level of the agency in World War II, she said.
This ignores a very obvious point: the employees may retire, but the budget funding for those positions remains. There is no indication that Congress had reduced funding to eliminate those positions after the retirement eligibility threshold arrived. In fact, we don’t even know when and if those agents actually plan to retire when first eligible. And even if they did, the existing IRS budget would support replacing every last one of them, especially since new hires would likely cost less in compensation than the experienced personnel they would replace.
If Congress used zero-based budgeting, which requires all agencies to justify all existing spending as well as additions, there might have been some risk of such funding cuts in retirements. Congress most certainly does not use zero-based budgeting, however; they use baseline budgeting, in which appropriators adjust the funding from previous budgets for new spending. Congress hasn’t cut funding for the IRS to save the cash from 50,000 retirements; in fact, as we’ll see below, IRS funding has remained relatively stable over the past decade.
Even using the data from the IRS itself, funding has been remarkably steady for the past ten years. The IRS website plays a little fast and loose with its chart by using a narrow Y-axis range, so I did a quick-and-dirty Excel line chart using the exact same data on outlays in 2021-chained (inflation-adjusted) dollars:
Annual IRS outlays in chained dollars are just under $14 billion for FY2021. The addition of $78.8 billion over ten years averages out to a 50% increase for the IRS to spend, not 25% as Kessler also claims in his fact check.
Furthermore, as our friend Phil Kerpen pointed out on Twitter, the language of the IRA made it clear that the $78.8 billion was in addition to existing IRS funding over the next ten years:
This is a totally nonsensical claim, Glenn. Retirements will be replaced in the base budget. These are all additional funds *on top of* regular appropriations.
The Biden admin's own table shows an INCREASE of 86,852 FTEs.
The alleged gusher of new revenue depends on it! https://t.co/it1Lr4bklm
— Phil Kerpen (@kerpen) August 18, 2022
What about "it's for taxpayer services!"? 4%. 4% is for taxpayer services. pic.twitter.com/XiH8d6kfpI
— Phil Kerpen (@kerpen) August 18, 2022
Well over 50% of the windfall from the “Inflation Reduction Act” will go directly to enforcement. Why? Again, because that’s exactly what Democrats intended. Their reconciliation plan all along was to greatly increase IRS enforcement to capture more revenue, monies that then would be spent on their climate-change agenda. This isn’t a secret — Democrats made that plan explicit since taking control of the White House and Senate last year.
Even then, though, the math doesn’t add up if all this bill does is just replace retirees. Jonathan Turley wondered why the IRS is going to hire 86,000+ full time employees to chase $204 billion in tax fraud when Treasury only has 500 employees pursuing $160 billion in COVID-relief fraud:
Years ago, I debated one of the top advisers to Sen. Elizabeth Warren on her tax proposals, including a wealth tax. In the middle of the debate, the professor revealed that Warren and the Democrats wanted to radically increase the IRS to pursue wealthy Americans for more tax revenue through extensive audits. He spoke of adding billions in new money and thousands of new agents. It was another sweeping claim that the wealthy were not paying enough and that there was a virtually limitless amount of money to pay for new programs.They have now made good on that pledge with an $80 billion increase in the IRS budget — an increase that also must pay for itself in addition to covering the cost of new programs.
Many have noted that the numbers do not add up. While Treasury Secretary Janet Yellen sent a letter ordering that the new agents should not be used to audit people making less than 400k, it is hard to see where the required $204 billion will come from. Some estimates suggest that an increase of 30 times in such audits would still fall short of the $35.3 billion sought in 2031.
However, there is as much as $160 billion in alleged fraud of Covid checks. The government simply sent out billions with little review or confirmation during the pandemic. Now, the New York Times reports that a relatively small number of investigators is overwhelmed by the numbers and unlikely to pursue most of this money: “There are currently 500 people working on pandemic-fraud cases across the offices of 21 inspectors general, plus investigators from the F.B.I., the Secret Service, the Postal Inspection Service and the Internal Revenue Service.”
The problem is that pursuing such fraud is also an indictment of Congress and the executive agencies, which tossed aside controls in the rush to get money out the door during the pandemic. Moreover, much of the fraud is not being committed by the “wealthy” class — the favorite target of leaders like Warren. It is more difficult to prosecute these individuals and attempt to recoup property.
This plan has been openly bruited about for years. Democrats used inflation as a cover to pass their long-held desire to greatly expand the IRS and its impact on American taxpayers. This is not a replacement — it’s an investment in funding for progressives’ pet projects. And if it doesn’t generate enough cash to fund those, the targets of this enforcement will expand into lower income tax brackets. Bet on it.