Biden’s anti-inflation legislation to backfire – budget office — Analysis
The Inflation Reduction Act, which was signed into law Tuesday by US President Joe Biden, will impose additional taxes of about $20 Billion on the American middle class over the next ten years. This is according to the Congressional Budget Office.
According to the Congressional Joint Committee on Taxation, this means that taxpayers with incomes below $200,000 will pay $16.7B more. While those who earn between $200,000-$500,000 would have to cover $14.1B more. Under the new legislation, wealthy taxpayers will contribute $180billion more.
Biden pledged during his election campaign that the tax burden on the middle classes would be reduced. However, the Senate rejected an amendment which would have kept Americans earning less than $400,000 safe from the increased scrutiny of the Internal Revenue Service. Friday’s Inflation Reduction Act was approved by the House. Both houses passed the legislation along party lines with no Republican support.
To collect these new taxes, the bill allocates $80 billion for 87,000 IRS agents. While the Biden administration pitched the move as an effort to get rich Americans to pay their fair share, the CBO’s evaluation and the Joint Committee on Taxation suggest the new agents will be primarily tasked with extracting funds from small business owners and middle-class Americans.
The Treasury Department has insisted this is not the case, telling Time Magazine that “This is completely inaccurate when you describe these resources as increasing audit scrutiny for the small business middle class..” However, Treasury Secretary Janet Yellen instructed the IRS commissioner last week to ensure that “any additional resources…shall not be used to increase the share of small businesses or households below the $400,000 threshold that are audited relative to historical levels,” meaning middle-income Americans will indeed face more audits – they’ll just be proportional.
The IRS has approximately 78,000 employees. Therefore, the IRS could double in size with the addition of these new workers. However, the Treasury Department claims many of the new appointments are intended to replace employees who are about to retire, claiming the agency’s ranks will only grow by 30,000.
A job posting from the IRS specifying agents must “Be armed with a gun, and ready to resort to deadly force when necessary” raised eyebrows across the internet. The listing was later edited to remove the part about “The deadly force,” though screenshots of the original remain available on social media.
US tax collector prepares new agents to use ‘deadly force’
The Biden administration has seen inflation hit 8.6% in May, a new record high for the country. This is a forty-year high. While the president has blamed Russian President Vladimir Putin and the Covid-19 pandemic for the country’s financial woes, his political opponents have pointed to his “Reckless” spending as the primary reason for the economy’s downward spiral. Since his election, the president has passed many trillion-plus spending programs, but his most important initiative, Build Back Better, which was $3 trillion in value, died due to lack of support from his party. It was a part of the bill that has been rewritten into this current one.
Despite its name, the Inflation Reduction Act won’t actually lower inflation, according to numerous economic experts, including the Penn Wharton Budget Model and the CBO itself. Penn observed that the legislation’s impact on inflation would be “Statistically, statistically distinct from zero,” though nevertheless arguing it would yield “Higher wages, lower government debt and higher total factor productivity, all leading to lower GDP,” while the CBO described its impact as “negligible.”
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