A bill sponsored by Senate Majority Leader Chuck Schumer (D-NY) and Joe Manchin (D-WV) would free up the Internal Revenue Service (IRS) on middle-class Americans while keeping tax loopholes open for billionaires and their multinational corporations.
The plan agreed to by Schumer and Manchin would massively increase IRS audits and criminal investigations to the tune of tens of billions of dollars — almost all of which would go after middle-class Americans squeezed by inflation.
The Wall Street Journal Editorial Board Details shape:
The bill provides $45.6 billion for “enforcement,” including “litigation,” “criminal investigations,” “Investigative technology”, “digital asset tracking” and a new fleet of car tax collectors. TThe result will be many more audits, civil lawsuits and criminal prosecutions. [Emphasis added]
The main targets will necessarily be the middle and upper middle class because that’s where the money is. The Joint Committee on Taxation, Congress’s official tax rater, says so from 78% to 90% of the money raised from reported income will likely come from those making less than $200,000 a year. Only 4% to 9% would come from those making more than $500,000. [Emphasis added]
The IRS knows the super-rich employ lawyers and accountants who make litigation time-consuming and dangerous. He also knows Democrats will howl if the agency pursues fraud in the Earned Income Tax Credit program, despite what the IRS has estimated is $18 billion in improper payments each year. [Emphasis added]
At the same time, tax provisions that hugely benefit billionaires and their multinational corporations would remain untouched.
The Schumer-Manchin plan includes billions in green energy tax credits that would be collected by billionaires to reduce their companies’ annual tax burdens. Jeff Bezos’ Amazon infamously uses this strategy pay close to zero on business income taxes.
John Carney of Breitbart News writes:
Amazon’s tax bills were part of the inspiration for a minimum tax. The company did not face any federal corporate income tax liability in 2017 and 2018. In recent years, it has had an effective tax rate that is just a fraction of the 21 percent rate put in place by the Trump administration’s tax reforms. According to calculations by Matthew Gardner of the Institute on Taxation and Economic Policy, over the past four years Amazon’s effective total tax rate has been just 5.1%.. [Emphasis added]
While the alternative minimum tax would prevent companies from using capital investment deductions or stock-based compensation, it still allows them to use tax credits, Daniel Bunn of the Tax Foundation told us. In fact, the bill includes hundreds of billions of dollars worth of new tax credits aimed at promoting the adoption of green technology. And Amazon is playing on beast mode when it comes to using tax credits to lower its tax bill. [Emphasis added]
Jeff Bezos’ retail giant said in its annual report that the tax credits reduced the taxes it would otherwise have owed by $1.1 billion. The company said most of those tax credits are federal research and development credits, though it doesn’t provide much detail in its annual reports. The Manchin-Schumer tax bill won’t touch that. Amazon will lose the write-off benefit for stock-based compensation, but the company will likely offset at least part of this by using green technology tax credits. The end result could be no change in Amazon’s tax rate. [Emphasis added]
President Joe Biden and House Democrats tried to pass a similar tax plan last year as part of the administration’s “Get Better” agenda that failed to catch on in Congress.
This plan would target an additional nearly 600,000 working and middle-class Americans who earn less than $75,000 a year with IRS audits. Of those new IRS audits, more than 313,000 would have targeted the poorest Americans who earn $25,000 or less a year.
Similar to the Schumer-Manchin bill, Biden’s plan would provide a $625 billion tax cut for the wealthiest Americans living in blue states — paid for by working and middle-class Americans.
John Binder is a reporter for Breitbart News. Email him at email@example.com. Follow him on Twitter here.