President Joe Biden is requesting an increase for the Internal Revenue Service’s (IRS) budget of $80 billion to boost enforcement.
Biden’s measure would crackdown on tax evasion, mostly by high-earners, which economists believe could bring in $700 billion in lost revenue. The president explained the key details of his IRS proposal during an address to a joint session of Congress Wednesday.
In addition to the IRS budget increase, Biden’s proposals will also raise the top marginal tax rate from 37% to 39.6% and increase the capital gains tax for people with investments larger than $1 million from 20% to 39.6%. The Affordable Care Act surtax on capital gains would still remain in effect, making the full taxation on investments over $1 million 43.4%.
Another key tax change is the expected rise in corporate income tax from 21% to 28%. This singular change is anticipated to bring in more than $2 trillion over the next 15 years.
By increasing the IRS’s budget and resources, Biden is making it more difficult for high-earners to avoid paying their taxes. Over the past two decades, the IRS’s budget has been repeatedly slashed, leaving the service understaffed and under-performing. The service’s reduced enforcement has also led to record levels of noncompliance especially among high-earners.
