By Daniel J. Pilla, National Review
On March 1, Senator Elizabeth Warren (D., Mass.), joined by Representatives Pramila Jayapal (D., Wash.) and Brendan Boyle (D., Pa.), introduced the so-called Ultra-Millionaire Tax Act of 2021. The bill would impose an annual “wealth tax,” starting at 3 percent and reaching as high as 6 percent, on the richest .5 percent of all Americans.
The merits of the tax itself have been discussed at length. What has not been discussed is the new IRS-enforcement scheme that the bill would create, which would include a staggering increase in the size of the IRS, a substantial expansion of the IRS’s already-oppressive information-reporting requirements, and many more audits and collection actions.
Let’s examine these elements more carefully.
The bill proposes to increase the IRS’s funding by $100 billion over the next ten years. To put this in perspective, the IRS’s FY 2021 budget is $11.92 billion, up by $409 million from FY 2020. Warren’s bill would nearly double the agency’s funding for FY 2022, and leave it nearly ten times bigger by 2031.
What’s more, the bill stipulates that 70 percent of the new money must be used for tax-law enforcement, compared to just 10 percent allocated for “taxpayer services” such as pre-filing assistance and education, filing and account services, and taxpayer-advocacy services. Again, for perspective, the IRS’s FY 2021 budget allocates $2.556 billion for taxpayer services and $5.213 billion, or just about twice as much, for enforcement activities such as audits, collections, litigation, and criminal investigations. Warren’s bill would give the IRS seven times more money for enforcement than for taxpayer services.
This huge imbalance betrays the leftist mantra that “government is here to help you.” If that were true, more money would be spent on giving people the information they need to comply with the massive four-million-word tax code than on after-the-fact enforcement. Yet for decades, spending on enforcement has outpaced spending on education — and Warren would make the imbalance much worse.
Expanded Information-Reporting Requirements
Speaking of being ground into powder, one of the IRS’s chief compliance tools is “information reporting,” which comes from the “information returns” the IRS uses to collect data. Form W-2, which reports wages paid by an employer to an employee, and 1099 forms, which report interest, dividends, independent-contractor payments, etc., are two prominent examples of such “information returns.” But there are literally dozens of other forms that the IRS uses to collect data so that it can verify the income reported on tax returns.
The scale of that data is staggering. In 2019 alone, a total of 3,503,499,195 information returns were filed with the IRS. The U.S. population in 2019 was 328,239,523, meaning that more than ten information returns were filed with the government for every man, woman, and child in America in 2019 — not even counting income-tax returns.
Yet according to Warren, it’s not enough.
Under her bill, within twelve months of enactment, the IRS must create a palette of new regulations designed to force the reporting of “any information concerning the net value of assets” that the agency deems relevant. The reporting burden may be based on “ownership, control, management, claim to income from, or other relationship to assets” subject to taxation under the law, including “financial institutions, business entities or other persons” with any connection whatsoever to persons liable for the tax.
Read more at National Review.