WASHINGTON – President Joe Biden, looking to pay for his ambitious economic agenda and shift more of the nation's tax burden to the wealthy, will propose giving the Internal Revenue Service an extra $80 billion and more authority over the next 10 years to help crack down on tax evasion by high-earners and large corporations.
The additional money and enforcement power will accompany new disclosure requirements for people who own businesses that are not organized as corporations — like many law firms and real estate partnerships — and for other high-earners who could be hiding income from the government. Biden's goal is to raise hundreds of billions of dollars to pay for child care, education and other programs while making it harder for high-earning Americans to evade or avoid taxes.
If the president is successful, individuals who earn more than $400,000 a year would face a higher likelihood of a tax audit, regardless of how much income they report on their tax forms, a person familiar with the plan said.
Empowering the IRS is one of several proposals that Biden will present when he addresses a joint session of Congress on Wednesday. His administration will portray that effort — coupled with new taxes it is proposing on corporations and the rich — as a way to level the tax playing field between typical American workers and very high-earners who employ sophisticated efforts to minimize or avoid taxation.
The $80 billion, parceled out over 10 years, would be a nearly 70% increase over the agency's entire funding levels for the past decade. The administration estimates that that financial lift could net an additional $700 billion in tax revenue over the next decade. Biden plans to use money raised by the effort to help pay for the cost of his "American Families Plan," which he will detail to lawmakers Wednesday.
That plan, which follows his $2.3 trillion infrastructure package, is expected to cost at least $1.5 trillion and will include universal prekindergarten, a federal paid leave program, efforts to make child care more affordable, free community college for all and tax credits meant to fight poverty.
Many economists and tax experts welcomed the proposal, which they said would help reverse years of declining enforcement actions against companies and the rich at the agency.
