Janet Yellen: ‘A Strong IRS Is Critical To The Economic Success Of This Country’

Janet Yellen: ‘A Strong IRS Is Critical To The Economic Success Of This Country’

Treasury Secretary Janet Yellen lauded the Biden administration’s efforts to provide the Internal Revenue Service (IRS) with an $80 billion raise.

The Inflation Reduction Act provides funds to hire 87,000 new IRS employees over the next decade — more than doubling the agency’s size. During a Thursday speech at the New Carrollton Federal Building in Maryland, Yellen remarked that “adequately funding the IRS is core to our success.”

“It raises the revenue for us to make important investments in our economic strength,” she said. “It makes sure that all Americans are playing by the same rules. It avoids misallocation of resources in the economy at large. And it does so by deterring taxpayers from shifting their activities toward more opaque sources or engaging in tax evasion.”

Yellen repeated her promise that the new funding will not be directed to increase audits for Americans households earning less than $400,000 per year “relative to historical levels.” However, she failed to clarify that “historical levels” of audits were far higher as recently as one decade ago. According to a report from the Government Accountability Office, audit rates for Americans earning between $25,000 and $200,000 fell 76% between 2010 and 2019, while those earning less than $25,000 saw audit rates fall by 61%.

“In all, a strong IRS is critical to the economic success of this country — and I am heartened that we are finally reflecting that in our funding decisions,” Yellen added.

A report from the Congressional Budget Office based on an earlier proposal to hire 87,000 new agents found that audit rates “would rise for all taxpayers,” even as higher-income taxpayers “face the largest increase.” According to Republican members of the House Ways and Means Committee, the new agents would be capable of carrying out 1.2 million more individual audits per year, with nearly half impacting Americans earning less than $75,000.

Noting that the average American takes 13 hours to file a tax return, Yellen said that many of the new resources will exist to decrease wait times and facilitate access to IRS services. Beyond increasing the number of staff available to answer phones, Yellen emphasized in-person help centers. “By next year, every single center will be fully staffed,” she said. “As a result, we will triple the number of Americans served at these centers.”

Yellen also discussed the need to make “sure that everyone pays their fair share” — observing that wealthy Americans were estimated to have underpaid their taxes by $160 billion in 2019. Accessing the funds would allow for higher levels of investment in government programs.

The economic agenda of President Joe Biden has indeed hinged upon the creation of new federal initiatives and a higher degree of government intervention into the economy. A handbook recently published by the White House emphasized the administration’s legislative victories and claimed that they are responsible for a purported economic recovery.

“President Biden’s agenda has contributed to the strongest and most equitable economic and labor market recovery in modern history, and catalyzed a resurgence in public investment that will help ensure a strong, innovative, clean energy future that is made in America,” the report said. “Together with generational investments in infrastructure, clean energy, and advanced manufacturing, the Biden economic agenda has coupled historic job creation with a long-term strategy to ensure that good jobs of today and tomorrow are created in America.”

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