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IRS Unveils Plan to Crack Down on the Rich

By Michael Rainey
Thursday, May 2, 2024

Happy Thursday. The first home run in National League history was swatted on this day in 1876 by the great Charles Roscoe Barnes, playing for the Chicago White Stockings. The blast in a victory against the Cincinnati Reds was “the finest hit of the game,” going “straight down the left field to the carriages for a clean home run,” said the Chicago Tribune. Many more home runs in professional baseball were to follow.

Here’s what’s popping in the fiscal arena.

IRS Unveils Plan to Crack Down on Wealthy Taxpayers

The IRS wants to increase its audit rate for taxpayers earning more than $10 million by about 50%, according to an updated operating plan released Thursday.

Relying on additional funding provided by the Inflation Reduction Act of 2022, the tax agency said it plans to raise the audit rate on high earners, which was 11% in 2019, to 16.5% by 2026.

In addition, the IRS plans to triple the audit rate on businesses with assets worth more than $250 million, raising it to 22.6% by 2026. And it will increase the audit rate for business partnerships with assets exceeding $10 million by a factor of 10, raising it to 1%.

At the same time, the tax agency said that it has no plans to increase audits on individuals earning less than $400,000 a year.

Speaking to reporters Thursday, IRS Commissioner Danny Werfel emphasized the point. “As I’ve said over and over again, there is no new wave of audits coming for middle- and low-income [taxpayers], coming for mom-and-pops,” he said. “That is not in our plans in any way, shape or form.”

Ramping back up: The IRS saw its funding reduced over the last decade and a half, and as CNN’s Katie Lobosco reports, staffing levels in compliance fell by about 30% between 2010 and 2021. Thanks to the funds provided by the Inflation Reduction Act, the tax agency has added 11,000 positions since 2022, including auditors and customer service representatives. Werfel said Thursday that the operating plan calls for adding another 14,000 positions by 2029.

But that expansion hinges on the additional funding, which has been opposed by the GOP. As part of the agreement to avoid a partial government shutdown earlier this year, Democrats agreed to Republican demands for cuts to the IRS funds, reducing the original $80 billion over 10 years to $60 billion.

Werfel warned that further cuts would threaten the tax agency’s effort to crack down on wealthy tax cheats and improve services for all Americans. “We need to continue working to make more improvements in taxpayer service, modernize technology and ensure those with complex returns, including certain high-income individuals, large corporations and complex partnerships, pay the taxes they owe,” he said.

New Baltimore Bridge to Cost More Than $1.7 Billion

Maryland officials said Thursday that building a replacement for the Francis Scott Key Bridge will cost between $1.7 billion and $1.9 billion.

Maryland Transportation Secretary Paul Wiedefeld told The Washington Post that the bridge, which was destroyed after being hit by a container ship in March, will be redesigned to reduce the risk of failure, with the goal of opening by the fall of 2028. The new bridge will be a type of bridge known as a cable-stayed span, in which cables run directly from vertical towers to the road surface. The towers of the bridge will be set further apart compared to the old bridge, to reduce the chance of collision with passing ships.

Who will end up footing the bill for the project remains an open question. President Biden and Democrats in Congress have vowed to cover the full cost, while potentially recovering some money from insurers.

Number of the Day: 41%

Americans still think inflation is a major problem, according to new polling data from Gallup. Asked about the most serious financial problem facing their families, 41% of respondents in the new poll cited inflation, marking the third year in a row that rising prices have topped the list.

In what could be bad news for President Joe Biden in his bid to win reelection, the share of people saying their biggest financial worry is inflation has been rising, despite the softening of inflation over the last year. In 2022, 32% of respondents in Gallup’s annual economy and personal finance poll cited inflation as their top concern, with the number rising to 35% in 2023. This year’s results mark another high.

In addition to being a top financial problem, inflation remains a leading domestic problem, broadly defined. Inflation “trails only immigration, the government and the economy in general when Americans are asked to name the most important problem facing the country,” Gallup analysts wrote.

The Gallup poll of 1,001 adults ran from April 1 to April 22, with a margin of error of four percentage points.

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Biden Announces $3 Billion for Lead Pipe Replacement

President Joe Biden said Thursday that his administration is spending an additional $3 billion to replace lead pipes throughout the country.

Money for the projects comes from the $1 trillion infrastructure law Biden signed into law in 2021. The legislation provided $15 billion for lead pipe replacement, and today’s announcement means that $8.8 billion has now been assigned to specific projects.

At a White House briefing Wednesday, Environmental Protection Agency Administrator Michael Regan said the administration’s goal is to eliminate lead pipes entirely. “This is a matter of public health, a matter of environmental justice, and a matter of basic human rights.”

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