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The first economic plan the new GOP House proposed would raise the deficit by $100 billion

Kevin McCarthyHouse Speaker Kevin McCarthy holds the speaker’s gavel high after winning election as speaker of the House early Saturday morning.

Win McNamee/Getty Images

  • Now that Republicans control the House, they’re ready to start cutting spending.
  • Their first target: $80 billion in IRS funding from the Democrats’ Inflation Reduction Act.
  • But a nonpartisan CBO analysis found cutting that spending would actually increase the deficit.

The GOP, newly in control of the House, has one big objective in mind: Cutting spending.

They already have a clear target — the $80 billion in funding allocated to the IRS in the Inflation Reduction Act, the last major policy package passed by Democrats before losing the House. A bill to revoke that funding has already landed on the House floor.

—Steve Scalise (@SteveScalise) January 8, 2023

There’s just one problem: Cutting out that IRS funding would actually weigh on the national debt. According to an analysis from the nonpartisan Congressional Budget Office, the GOP bill to rescind IRS funding would reduce revenue by about $186 billion over the next decade — while cutting just $71 billion in spending.

All told, that would add a net $114 billion to the deficit.

The IRS funding was meant to relieve an overburdened agency and beef up enforcement on some of the wealthiest Americans. Of the $80 billion, $45.6 billion is directed towards tax enforcement, specifically targeting areas that have been challenging for the IRS, like global high-net-worth filers. The tax gap, which measures the chasm between taxes owed and actually paid, is likely over $1 trillion. At the same time, according to a 2021 study from IRS researchers and economists, the top 1% of Americans don’t report 21% of their income — and under-reporting is nearly twice as large for the top 0.1%.

The Congressional Budget Office previously found that the enforcement funding would bring in $204 billion over the next 10 years. The funding will also go towards improving taxpayer services, an issue that’s been plaguing the agency as it struggled through aging technology and rooms full of paper to get taxpayers their refund checks.

“Even under good economic and fiscal conditions, it would make little sense to reduce revenue by allowing more individuals and businesses to avoid paying taxes they rightfully owe,” the nonpartisan Committee for a Responsible Federal Budget wrote. “With inflation high, interest rates rising, and debt approaching record levels, rescinding IRS enforcement funds would be a big mistake.”

The White House also took aim at the proposal, with Biden already promising to veto such a bill in the unlikely event it passes both the GOP-controlled House and the Democrat-held Senate. White House deputy press secretary Andrew Bates took to Twitter to lambast the GOP House’s first CBO score.

“The verdict: Their tax welfare for rich tax cheats and big corporations who break the law at your expense would increase the deficit by $114 billion,” Bates wrote. “But don’t worry, it will also make inflation worse.”

Read the original article on Business Insider