AT IRS Tradeoff DA - Michigan 7 2023 STARTER

AFF VS IRS DA
Debt Ceiling Thumper
IRS is low now. Debt ceiling cuts.
Burns 5-31-2023, economics reporter @ The Hill (Tobias, “Debt ceiling deal throws a wrench into IRS overhaul,” The Hill, https://thehill.com/business/4026683-debt-ceiling-deal-throws-a-wrench-into-irs-overhaul/)//BB
The bipartisan deal to raise the debt ceiling would claw back billions of dollars meant to enable a large-scale refurbishment of the IRS, which has withered over the last decade due to budget cuts, outdated technology and loss of staff. No less than a quarter of the $80 billion in new funding awarded to the IRS in Democrats’ Inflation Reduction Act (IRA) would be taken back from the agency in a deal struck by the White House and House Republicans over the weekend. The White House has emphasized that all the new initiatives at the IRS — laid out in an ambitious operating plan released in April — are still full-steam ahead and that the agency will be able to make good on the Treasury Department’s promise to go after rich tax cheats. Even so, the debt ceiling deal puts extra stress on the regular appropriations bills for the IRS and rattles the foundation of its long-term restructuring. “Look at the strategic operating plan — so much of it has been laid out in terms of steady investments,” Janet Holtzblatt, a former Senate Budget Committee analyst and former deputy director of the Individual Taxation Division in the US Treasury Office of Tax Analysis, said in an interview with The Hill. “My worry is that this gives an incentive to spend money more quickly.” What happens to IRS money now? The $20 billion excision from the IRA’s $80 billion boost is not an explicit budgetary provision in the text of the House bill itself. Rather, it is an oral agreement between the White House and House Republicans about money that will be taken away from the IRS and spent elsewhere in appropriations bills in 2024 and 2025. Of that excision, $10 billion will be “repurposed” throughout the course of the fiscal 2024 appropriations process, along with another $10 billion in 2025 to be allocated toward more resources for nondefense priorities, White House officials said Sunday. That leaves a total effective funding boost of about $60 billion for the IRS. If appropriations negotiations preserve the $8 billion investment in taxpayer services and systems modernization that Republicans approved of in their own debt ceiling bill passed earlier this month, that total boost could fall as low as $52 billion. That means that roughly $29 billion could now be spent on additional enforcement and auditing over the next 10 years as opposed to the $45 billion originally allocated. The $25 billion boost to operations could fall as low as $16.25 billion under this scenario. The White House said the IRS will pull forward some of its IRA funding to keep the agency on track to deliver its updates. But experts in U.S. tax administration say the funding modifications could still pull the rug out from under these initiatives. The IRS is piloting new enforcement techniques using data and analytics tools that have yet to be assessed. The debt ceiling deal removes funding for years in which some of the pilots — including the test of a free online filing system for regular taxpayers — are already planned. For fiscal 2025, the IRS is working on “new tailored treatments developed and piloted based on data and analytics” to help fix “issues and omissions” on tax returns, according to the agency’s new operating plan. Why the ‘tax gap’ could widen The funding cut could also limit new hires of seasoned accountants and auditors, who are perhaps the most crucial component of the agency’s increased enforcement capacity.
Debt ceiling cuts undermine core IRS functions, including modernization efforts
Whiten 6-1-2023, communications director @ ITEP (Jon, “Debt-Limit Deal’s Provision to Let Tax Cheats Off the Hook Will Increase the Deficit,” Just Taxes Blog, https://itep.org/debt-limit-deal-irs-funding-cut-increase-deficit/)//BB
The House just approved the deal struck by President Biden and House Speaker McCarthy to suspend the nation’s debt limit through 2025 in exchange for a range of cuts sought by Congressional Republicans. While the deal is not as draconian as the debt bill that passed the House earlier this spring, it includes no new revenues even though tax cuts of the past few decades have been the primary driver of deficit growth. And one provision of the deal – to claw back important funding to crack down on wealthy tax cheats – would actually increase the deficit while continuing the rig the system in favor of the most well-off. The deal contains a $21.4 billion cut to IRS funding for tax enforcement. This includes an immediate $1.4 billion cut, and a side deal to cut, over the next two years, a quarter of the $80 billion in new funding the IRS received last year as part of the Inflation Reduction Act. This new funding – particularly the part for tax enforcement, which is the prime target of House Republicans – is critical to allowing the IRS to do one of its most important jobs: crack down on tax cheating by the extremely wealthy and by big corporations. The IRS has had a hard time doing this lately because its enforcement budget was cut by about a fourth between 2010 and 2021. This led to 40 percent fewer revenue agents – the auditors uniquely qualified to examine the returns of high-income individuals and corporations. The number of revenue agents is the lowest it’s been since 1953. At the same time, rich business owners have exploited the IRS’ lack of resources by aggressively creating enormously complex “pass-through” business structures with hundreds or even thousands of sub-businesses, shell companies, and trust accounts. Dissecting these structures takes resources that the IRS has been denied. The number of partnerships with assets above $5 million – just one type of pass-through business structure – grew by 75 percent between 2010 and 2020. And by the end of the decade, the audit rate of these businesses was less than half a percent. As a result, the gap between taxes owed and paid keeps growing, driven largely by the inscrutable labyrinth of business entities that well-paid accountants and attorneys can create for their clients. The most recent estimated gross tax gap, for 2014 through 2016, was $496 billion. The White House says the cuts in the proposed deal shouldn’t change the agency’s plans for the next few years, since the original $80 billion was to be spent over a 10-year period. At best, however, that leaves the agency short of funds in the future. If you’ve worked around budgets for long enough you know a simple truth: a cut is a cut. And this is, indeed, a cut of significant proportions. Ironically, for Republican leaders who have spent months clamoring about the deficit, these cuts to the IRS will increase the deficit by reducing the revenue the agency is able to collect from those who owe. (Perhaps it’s less ironic and more on-brand, given that these same Republican leaders want to quickly pivot to pushing through more big tax cuts that will disproportionately reward wealthy families and corporations.) The IRS cuts will increase the deficit by $19 billion over the next decade because it will depress revenue collections by $40.4 billion, according to Congressional Budget Office estimates provided to Senate Budget Committee Chairman Sheldon Whitehouse. Could this debt deal have been worse for tax enforcement? Absolutely, given that House Republicans’ first legislative move of this Congress was to repeal a much bigger chunk of the new IRS funding. But that doesn’t change the fact that cutting these critical funds to enforce our tax laws erodes the fairness and integrity of our entire tax system while reducing the revenue lawmakers have available to invest in the American people.
Don’t trust the Biden administration saying “it’s all good”
1NR Hussein 6-1-2023 (Fatima, “Debt limit bill gives Republicans IRS cuts, but Democrats say they expect little near-term impact,” AP News, https://apnews.com/article/irs-debt-ceiling-budget-x-date-yellen-fe538fd8371cdf647400a27e6d56a9fb)//BB
Now, with some of that money clawed back, there is a question about what programs may take a back seat. Treasury officials say their plan to develop an online free file tax return system, which is in its pilot development stage, for instance, will not be impacted by the cuts. But some analysts are skeptical about the Biden administration’s assurances. Steve Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center, said “the loss of the funds has to be a setback” for the agency. “With less money and resources, everything will slow down. It just may take a while longer” to develop certain promised programs, he said. “I don’t know if this will come out of service, enforcement, technology or otherwise.”
Tax Complexity Thumper
Tax complexity dooms IRS inevitably. It’s not about resources.
Crook 22, Bloomberg Opinion columnist and member of the editorial board (“The IRS doesn't need more money. America needs a simpler tax code,” Pittsburgh Post-Gazette, https://www.post-gazette.com/opinion/Op-Ed/2022/08/29/inflation-reduction-act-us-tax-code-compliance-complicated-burden-clive-crook/stories/202208260003)//BB
For decades, whenever Congress has “reformed” the tax code, it has just layered on new complications. The U.S. now has a system that might have been designed to fail, incentivize avoidance, perpetuate a colossal tax gap, and drive taxpayers and IRS officials alike out of their minds. The biggest problem with the IRS is not that it’s been badly managed (though perhaps it has been) or under-resourced (which it undoubtedly has been), but that hyperactive legislators have given it an impossible task. $80 billion won’t come close to putting that right.
Complexity means all funding will be wasted
Crook 22, Bloomberg Opinion columnist and member of the editorial board (“The IRS doesn't need more money. America needs a simpler tax code,” Pittsburgh Post-Gazette, https://www.post-gazette.com/opinion/Op-Ed/2022/08/29/inflation-reduction-act-us-tax-code-compliance-complicated-burden-clive-crook/stories/202208260003)//BB
One of the most conspicuous parts of the tax-and-spending package known as the Inflation Reduction Act is vastly expanded funding — an additional $80 billion over 10 years — for the Internal Revenue Service. If the IRS lacks the means to do its job well, could that be because its job is far more demanding than it ought to be? Yes: The IRS struggles to administer the system because U.S. taxes are insanely complicated. In this respect, the purportedly bold innovation on funding for the agency is partly a tribute to the status quo. The enormous increase in spending is combined with another new batch of complexities. Highlights include incentives for climate-related investments and assorted other good things, and a minimum corporate tax that requires eligible companies to calculate what they owe not one way but two, then pay the larger sum. Changes like these serve legitimate purposes, but they are partly self-defeating. With one hand you incentivize decisions that serve the public interest; with the other, you cancel them out by closing “loopholes.” On top of which, every further complication is an opportunity for tax avoidance, an added compliance burden on taxpayers and the IRS alike, and a transfer of income from producers of socially valuable goods and services to accountants and lawyers eager for their share of the resulting deadweight loss.
New funding is insufficient to solve this problem. Only a total tax overhaul would ensure IRS effectiveness
Crook 22, Bloomberg Opinion columnist and member of the editorial board (“The IRS doesn't need more money. America needs a simpler tax code,” Pittsburgh Post-Gazette, https://www.post-gazette.com/opinion/Op-Ed/2022/08/29/inflation-reduction-act-us-tax-code-compliance-complicated-burden-clive-crook/stories/202208260003)//BB
The U.S. tax code hasn’t been comprehensively simplified since 1986. Over the subsequent years, Congress has indulged its unlimited appetite for making it unintelligible. Back in 2010, a panel chaired by Paul Volcker reported that taxpayers and businesses spend 7.6 billion hours and “significant out-of-pocket expenses” to do their taxes each year, a cost equivalent to at least $140 billion. That was 12 times the IRS budget or 10 cents per dollar of income tax paid. What a mess. And what a shame that the new IRS budget isn’t part of a plan to fix it. In a narrow sense, the extra spending does make sense. My colleague Tyler Cowen argues that the IRS is badly run and should be told to smarten up before it gets more money — a fair point, given the agency’s failure to modernize its systems and make better use of its existing resources. But the squeeze on its budget (a cut of about a fifth in real terms since 2010) and the relentless rise in its workload (lately aggravated by the pandemic) would test any undertaking, especially one that was stressed to begin with.
--xt: Thumpers --- AT New Funding Solves
The main neg push will be “new funding” solves --- it doesn’t!
For 21, former Chief of the IRS Criminal Investigation unit (Don, “The IRS is underfunded, but it needs more than cash to stop tax cheats,” Washington Post, https://www.washingtonpost.com/outlook/2021/05/06/irs-tax-evasion-funding/)//BB
Unfortunately, simply restoring funding levels is by no means the easy fix. A federal agency deprived of funding for a year or two can tighten its belt and sustain operational efficiency. But a decade of funding cuts meant that the IRS, unable to hire new talent, missed out on almost an entire generation of skilled employees. As tens of thousands of employees resigned or retired, the agency lost a vast amount of institutional knowledge — a resource that will take time and training to restore. (Most technical IRS positions require two or more years of on-the-job instruction before an employee becomes self-sufficient.) A dedicated and consistent funding stream would enable officials to steadily ramp up their enforcement practices. This investment would also signal to potential tax evaders that they can no longer count on short staffing to keep eyes off their fraudulent returns. The additional funding for the IRS would be a long-overdue game-changer for the agency, but if it is just a temporary infusion of cash, it is likely to fail in its goals. As the adage goes, “You get what you pay for.” For too long, the American public has picked up the tab for underfunding IRS enforcement.
IRA funding won’t be used to modernize
Pitter 22, Massachusetts Society of CPA’s ( Amy, “Misguided IRS Funding on Enforcement Is Destroying Its Service,” Bloomberg Tax, https://news.bloombergtax.com/tax-insights-and-commentary/misguided-irs-funding-on-enforcement-is-destroying-its-service)//BB
More than half of the Inflation Reduction Act’s $80 billion in new IRS funding would go toward enforcement activities rather than toward technology enhancements. Amy Pitter of the Massachusetts Society of CPAs shares why there should be a heavier focus on technology, customer service, and payment processing. No matter your politics, I think we can all agree that the IRS is underfunded, understaffed, and has ridiculously outdated technology that prevents it from doing even its most basic functions competently or effectively. While I am happy that the Inflation Reduction Act will include significant funding for the IRS, I remain frustrated by the hyper focus on enforcement activities. More than half of the $80 billion in new funding would go to those activities rather than to technology enhancements, customer service or processing of returns, payments, and other documents.
--xt: Thumpers --- AT New Hires
Hiring takes years
Hendricks 21, Galen Hendricks is a research associate at the Center for American Progress. Seth Hanlon is a senior fellow at the Center (Galen, “Better Tax Enforcement Can Advance Fairness and Raise More Than $1 Trillion of Revenue,” Center for American Progress, https://www.americanprogress.org/article/better-tax-enforcement-can-advance-fairness-raise-1-trillion-revenue/)//BB
Building the IRS workforce of the future will take several years as well. It takes four to five years to train new hires to become revenue officers capable of detecting fraud in complex cases.35 The IRS fell well behind the curve because of a hiring freeze in effect from 2011 through 2018 and therefore will need to bolster its ranks.36 The agency needs reliable multiyear funding to rebuild itself. “Mandatory, consistent, adequate, multiyear funding allows us to plan appropriately,” Commissioner Rettig told Congress in his testimony.37 The Biden administration’s FY 2022 appropriations request is a good start, but given that annual appropriations have consistently fallen well short of what the IRS requires, Congress this year must seize the opportunity to provide mandatory, multiyear funding to supplement annual appropriations.38
A-O---Aff Solves IRS Credibility
Progressive taxes restore IRS credibility
Bomare and Reck 22, *Ph.D. Candidate @ Paris School of Economics, **Assistant Professor of Economics @ LSE (Jeanne and Daniel, “Fighting tax evasion by the wealthy can raise revenue and restore the integrity of the U.S. tax system,” Equitable Growth, https://equitablegrowth.org/fighting-tax-evasion-by-the-wealthy-can-raise-revenue-and-restore-the-integrity-of-the-u-s-tax-system/)//BB
Our new paper, “Different From You and Me: Tax Enforcement and Sophisticated Tax Evasion by the Wealthy,” reviews recent research showing that tax evasion and legally dubious forms of tax avoidance by wealthy individuals and large corporations represent an important and pressing challenge for the IRS, which needs more funding, not less, to tackle this problem. The research shows that the wealthy are adept at using sophisticated tactics to reduce their tax bills, but we argue that the IRS has tools at its disposal to combat this problem. Investing in tax enforcement targeting the high-wealth population could make taxes in the United States more progressive, raise revenues to fund vital public programs, and restore public confidence in the U.S. tax system.
Enhanced tax progressivity is widely popular and encourages social cohesion and law-following
FTC 13 (Financial Transparency Coalition, “What Is Tax Fairness? And Why Does Tax Fairness Matter?,” https://financialtransparency.org/what-is-tax-fairness-and-why-does-tax-fairness-matter/)//BB
There are lots of different ways to see it. According to the Americans for Tax Fairness tax fairness means making corporations and wealthy individuals “pay their fair share.” For those at CATO, tax fairness is an Alternative Minimum Tax (or flat tax). Ultimately, though, tax fairness is a normative–and subjective–concept. It’s helpful, then, to consider what society as a whole considers fair. People’s opinions about this question matters, not only in a theoretical sense, but also because we want to maximize society’s happiness overall. To accomplish this, we need a tax system that aligns with society’s preferences. While people do not have homogeneous preferences on tax fairness, economists have found that people generally prefer greater societal equity established through the tax code. Senator Tom Coburn, a Republican from Oklahoma, has articulated tax fairness this way: “An individual’s or corporation’s tax rate shouldn’t be dependent on their ability to hire a tax lobbyist. It’s especially wrong to ask families who are struggling to make ends meet to subsidize special breaks for corporations.” Are taxes in the United States “fair”? The top income tax bracket in America is now about 30 to 50 percent below what it was under Eisenhower, Nixon and Ford—when the country was a great deal more equal. The top marginal income tax rate is a little below 35%–compared to 70% befo

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