Add another obstacle to the growing list President Joe Biden faces in his negotiations over his massive spending plans: mounting opposition to one of the ways to pay for his proposal — growing the IRS.
Conservative groups have launched a campaign of TV ads, social media messages and emails to supporters criticizing the proposal to hire nearly 87,000 new IRS workers over the next decade to collect money from tax cheats.
They accuse the Biden administration of pushing for the IRS expansion as a way to raise taxes, increase dues paid to left-leaning unions, and increase oversight on political organizations, as happened with the rise of Tea Party groups during the Obama presidency.
The campaign further dampens already remote prospects for bipartisan negotiations. Biden and fellow Democrats have held out hope that the $80 billion proposal to crack down on tax evasion by high-earners and large corporations could be an area of agreement between the two parties, even if the GOP is skeptical about the amount it could raise.
Many Republicans have already expressed opposition to the other ways Biden wants to raise money, including taxes on corporate and wealthy Americans, to pay for his roughly $4 trillion worth of plans to repair roads and bridges and offer free community college and paid family leave, among other proposals.
And some Republicans, who have long worked to shrink the IRS, hope opposition to the IRS proposal — which the administration says will raise $700 billion over a decade — could help defeat Biden’s costly spending plans altogether.
“As we polled multiple districts on multiple different messages the one that polled best for us was the notion of opposition to $80 billion dollars in hiring more tax collectors,” said Marc Short, former chief of staff to Vice President Mike Pence and founder of the new group Coalition to Protect American Workers. “So that’s why I say I still think this is an Achilles heel for the overall plan.”
Short’s group, which formed to oppose Biden’s proposed tax increases, started airing a six-figure cable and local TV ad in House districts in Pennsylvania and Georgia. The group plans to expand their efforts to 20 House districts and six states.
“If Joe Biden gets his way, they are coming: IRS agents,” the narrator in the ad says. “Biden’s massive tax increase plan includes a staggering $80 billion to help recruit an army of IRS agents.”
The ad, however, isn’t running under the coalition’s name. In fact, its disclaimer says it’s paid for by Building America’s Future — the umbrella entity for a number of organizations that has been in existence for several years. That happens to be the same name of a 13-year-old advocacy group founded by former Pennsylvania Gov. Ed Rendell, former California Gov. Arnold Schwarzenegger and former New York City Mayor Michael Bloomberg.
Rendell said Friday that his Building America’s Future, which supports Biden’s plans including the IRS proposal to crack down on tax cheats, is sending a cease and desist letter to demand Short’s group drop the name from the ad. “Clearly they are worried about our effectiveness to stop the Biden tax increase,” Short said.
A Data for Progress poll from three weeks ago found that 60 percent, including 40 percent of Republicans, support increased IRS enforcement, while 29 percent opposed it. Biden touted the proposal when he met with the four congressional leaders at the White House on May 12.
“They’re only coming after those who are in the top two percent of wage earners in the country and large businesses that don’t pay their taxes. So the average American family … has nothing to fear from these additional IRS agents,” Rendell said. “It’s something that the ordinary citizen, if they knew the facts about, would be in favor of.”
The IRS said uncollected taxes in 2019 amounted to about $554 billion. But Chuck Rettig, the IRS commissioner who was appointed by President Donald Trump, said recently the figure could be as high as $1 trillion annually.
“A massive, bipartisan, majority of the American people support making the richest Americans and biggest corporations pay the taxes they owe — without increasing the rate of audits on any people or small business owners earning less than $400,000 a year — so we can use that money to invest in the middle class,” White House spokesperson Mike Gwin said. “A few special interest-funded ads won’t change that fact or a single mind.”
Republicans have been resistant to the size and scope of Biden’s pair of plans: the American Jobs Plan, a sweeping $2.3 trillion package designed to fix the nation’s crumbling roads and bridges, create jobs and tackle climate change; and the American Families Plan, a $1.8 trillion plan to fund Democratic priorities, including billions of dollars on child care, prekindergarten, paid family leave and tuition-free community college.
Some Democrats want to proceed with what they can pass without Republican support but Biden aides and allies say the president will negotiate until at least Memorial Day, with hopes of signing bills into law this summer. The White House on Friday reduced the size of its jobs plan to $1.7 trillion, largely by shifting spending elsewhere, but Republicans balked at the counteroffer.
The plan to go after uncollected taxes owed by large corporations, partnerships and wealthy individuals who make more than $400,000 a year would specifically pay for the American Families Plan. Congress would have to approve some of the changes.
Some Republicans senators, including Shelley Moore Capito of West Virginia, who is leading infrastructure negotiations with the White House, and Susan Collins of Maine, have expressed support for the IRS proposal. But others, including Mike Crapo of Idaho, question whether it will lead to a huge return on its investment.
Short’s group isn’t the only one in the conservative ecosystem attempting to dissuade Republican lawmakers from entertaining the proposal. The anti-tax group Americans for Tax Reform blasted out an email saying hiring additional tax enforcers would lead to an increase in union dues paid to the National Treasury Employees Union, which represents IRS employees. “The $80 billion Biden IRS bailout is just another way to funnel taxpayer money to progressive candidates and causes,” it says.
Heritage Action for America, meanwhile, highlighted the issue in its report to Capitol Hill. “The best way to ensure compliance with the law would be to simplify the tax code, make compliance less complex, and reduce incentives for avoidance by reducing the tax burden. However, the President’s plan would further complicate the tax code and make compliance more costly,” it wrote.
“Philosophically they don’t want the federal government being shored up by augmented revenue,” said Rep. Gerry Connolly (D-Va.), chair of the House Subcommittee on Government Operations. “They want smaller government. They want less government. They want no government. They want a dysfunctional IRS.”
Some other Republicans lawmakers worry that a massively expanded IRS would lead to the undermining of a Trump-era rule that prevented the agency from targeting certain tax-exempt groups based on their political beliefs. In 2013, the Obama IRS apologized for giving extra scrutiny to roughly 75 conservative groups that used words like “tea party” or “patriot” in tax documents.
Last week, a dozen conservative groups pledged their support for a bill introduced by Senate Republican Leader Mitch McConnell and Sen. Mike Braun of Indiana to prevent the IRS from being used as a political weapon against conservative nonprofit groups.
“If you look at our institution and our movement we have had a pretty bad experience with the IRS so we very much worry about a weaponized IRS in this world now,” said Adam Brandon, president of FreedomWorks, a conservative group that has been sending emails to its network on IRS proposals. “There is just this general worry in the post-Trump era that the bureaucracies are going to exact their revenge.”