Going fwd, the Trump Admin plans to dramatically cut the number of audits Biden planned. Today House Republicans take a step toward that by proposing a destructive $1.4B enforcement cut. Congress should not signal that tax cheats can proceed w limited oversight.
Going fwd, the Trump Admin plans to dramatically cut the number of audits Biden planned. Today House Republicans take a step toward that by proposing a destructive $1.4B enforcement cut. Congress should not signal that tax cheats can proceed w limited oversight.
Fewer sophisticated auditors means that fewer wealthy people will be audited. See below how audits of wealthy people plummeted since 2010 when Republicans began their latest round of gutting the IRS.
Fewer sophisticated auditors means that fewer wealthy people will be audited. See below how audits of wealthy people plummeted since 2010 when Republicans began their latest round of gutting the IRS.
Currently, *the IRS has fewer auditors than it has had since the 1950s* – not a typo! – because Republicans have previously gutted the enforcement budget.
House Republicans proposed another reckless cut in the IRS budget. The proposed 9% cut would take the IRS budget to 44% below its 2010 level. This gutting of the IRS is a betrayal of honest taxpayers. It should be rejected out of hand
Most troubling: Looking at the poorest 40% of kids of tax filers, 3 in 4 get $0 from the proposal (prelim estimate). This is challenging given that low-inc fams have been hit hard by the Trump tariffs and tend to already face the most pressing affordability challenges.
For example, a married couple with 2 kids & income at $50k gets $780, while a couple without kids & income at $50k gets $1,780. A married couple with no kids & income at $92k gets over $6,000.
Problem 2: The proposal gives more to many ppl w/out kids than to families w/ kids, even though raising kids is expensive. While it uses the MIT Living Wage Calculator, which shows basic $ needed for different fam sizes, the proposal itself doesn’t make adjustments for # of kids.
Problem 1: People w/ larger affordability challenges get less (or nothing): a single worker making $20k, far below their $46k cost of living income target, only gets $390. A person w/ inc at the $46k target gets $3,340. (It’s good that ppl with high incomes don’t benefit.)
The Van Hollen-Beyer et al tax cut bill was released today so just re-upping our prior thread and adding a few tweets with numbers now that more details are available:
For example: a single adult making just above the poverty line ($17,250) would receive an EITC of $630, up from $175 under current law.
These are adults not raising kids at home who work for low pay and who currently receive a tiny or no EITC & pay a lot in payroll taxes. Sen. Booker proposes to restore the modest expansion that was enacted during the pandemic.
EITC: The Booker proposal recognizes – as all policymakers should – that it makes no sense for the federal government to tax 6 million working adults who aren’t raising kids at home into or deeper into poverty.
Sen. Booker’s proposal fixes this glaring gap by providing children in families with lower incomes the same Child Tax Credit as children in higher-income families. He also proposes an increase in the maximum CTC.
CTC expansion: One of the most disappointing aspects of OBBBA is that Rs expanded the CTC but structured it so that 19M kids get less than the full $2,200 credit, even though 169 House Rs voted in 2024 for a CTC expansion that would have reached most of these kids.
In better news, the proposal includes two key provisions that help people with the greatest affordability challenges and have high bang for the buck: a Child Tax Credit expansion and an EITC expansion.
The sheer cost of the standard deduction proposal could leave little progressive revenue for other priorities.
The problem: there are many compelling claims on these progressive revenues, including policies that address critical affordability problems-eg reversing Medicaid & food assistance cuts, restoring PTC enhancements so ppl can afford ACA coverage, investing in housing & child care.
After Trump’s latest round of costly tax cuts for the rich, Booker proposes needed correctives:
– an increase in the corp tax rate & other corporate tax improvements
– higher taxes on stock buybacks
– higher top tax rates
– stricter limits on exec compensation deductions
The proposal does have a solid set of offsets.
A few examples – assume all married couples with no kids:
- Household w/30k in earnings does not benefit.
- Household w/$50k in earnings gains $1,780.
- Household w/$300k in income gains $10,272.
So increasing the standard deduction further doesn’t help many low/moderate income families much (& many not at all). And if not phased out, it gives big tax cuts to higher income people.
As a result, today more people’s incomes are already below the current law standard deduction & many more high-income people take the standard deduction today than before the TCJA – 8 or 9 out of 10 compared to about 2 out of 3 previously.
Why doesn’t it help low-inc ppl more? The TCJA and OBBBA already more than doubled the standard deduction and expanded the CTC, paid for by eliminating the personal exemption. In an otherwise regressive law, these were efficient reforms.
Every $1,000 increase is worth $100 to people in the 10% bracket, but >3X that ($320) to people in 32% bracket.
Despite its high cost, the standard deduction expansion would provide little or nothing to many low-income people and much more to higher-income people who face far fewer challenges affording basic needs and don’t need another tax cut.
The centerpiece provision more than doubles the standard deduction (from $32,200 to $75,000 for married couples). It’s by far the largest component of the proposal & will likely cost several trillion $ over ten years.
Sen. Booker’s centerpiece proposal is a very costly expansion of the standard deduction that flows high up the income scale, but also includes critical provisions for supporting low-income families w/ kids and people working for very low pay, as well as sound offsets. x.com/DavidABergst...
The proposal’s goal is a good one: how do policymakers make it easier for families to pay the rent, put food on the table, afford child care, & see a doctor? A vigorous debate that goes beyond tax cuts will help us find workable solutions.