During her presidential campaign, Sen. Elizabeth Warren suggested that Washington could snap up $2.3 trillion over a decade purely through better enforcement. Though many found that implausible, former Treasury Secretary Larry Summers and then–University of Pennsylvania law professor Natasha Sarin argued in a paper that the government could realistically collect about $1 trillion. Sarin recently joined the Biden administration as an official in the Treasury Department. And as the New York Times reports , the Biden proposal will include some of the suggestions she and Summers made, including funneling money in technology improvements to automatically detect discrepancies on returns and better catch tax dodgers, while also vastly increasing audits of the rich. It would also create new requirements that banks report information on their clients’ business incomes—a slightly boring-seeming idea that could profoundly improve the IRS’s collections. The reason is that the extent to which Americans file their returns honestly more or less depends on whether a third party is also supplying their information to the IRS. Taxpayers rarely misreport their wages and salaries because their employers send their W-2s to the government. Certain kinds of self-employed workers and business owners—such as landlords, farmers, and sole proprietors — constantly underreport their income, however, because they face little or no third-party reporting. They can basically fudge their taxes without worrying about getting ratted out. While Biden’s plan to fund his ambitious welfare state agenda by making business owners pay the taxes they already owe seems like a safe political bet, it’s already taking heat from anti-tax advocates and at least one prominent moderate. Former IRS Commissioner John Koskinen, who served under Obama and Trump, told the Times he isn’t sure that the IRS will be able to effectively use all of the money, and suggested $25 billion would be a more realistic figure. (Fred Goldberg, a veteran of the George H.W. Bush years, on the other hand, called the plan “transformative.”) The Congressional Budget Office could also pose a challenge. Capitol Hill’s official scorekeeper has previously suggested that increasing the IRS budget would raise relatively little revenue—it estimates that a $40 billion bump for the agency would decrease the deficit by just $63 billion over a decade. Part of the reason is likely that the CBO has based its forecasts on a smaller, more modest change in the IRS’s operations than the fundamental overhaul that Summers and Sarin proposed and that Biden has now embraced.https://slate.com/business/2021/04/irs-joe-biden-audit-taxes-rich-people.html
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