White House Threatens to Veto Republican Bill That Cuts Billions From IRS

The White House said Monday it would veto a GOP-backed bill that passed in the House that would cut $72 billion from the Internal Revenue Services to hire thousands of staff and agents.

“Far from protecting middle-class families or small businesses, H.R. 23 protects wealthy tax cheats at the expense of honest, middle-class taxpayers,” the White House said in a statement after the bill was passed.

“With their first economic legislation of the new Congress, House Republicans are making clear that their top economic priority is to allow the rich and multi-billion dollar corporations to skip out on their taxes, while making life harder for ordinary, middle-class families that pay the taxes they owe,” the White House said. “That’s their agenda; not lowering costs or cutting taxes for hardworking Americans—as President Biden has consistently advocated.”

But Republicans say that funding to the IRS, passed last year under the Inflation Reduction Act, should be cut because the agency would unfairly target Americans and small business owners with audits. House Speaker Kevin McCarthy (R-Calif.), after the bill’s passage, said that the move is designed to “repeal the Democrats’ army of 87,000 IRS agents.”

While the Biden administration has threatened to veto the bill on Tuesday, it’s unlikely that it would clear the Democrat-controlled Senate.

“If the President were presented with H.R. 23—or any other bill that enables the wealthiest Americans and largest corporations to cheat on their taxes, while honest and hard-working Americans are left to pay the tab—he would veto it,” the White House added Wednesday in a statement.

But Republicans argued the funds would be used to hire thousands of IRS agents to go after the middle-class and smaller businesses.

“Republicans are blocking the Biden Administration from unleashing 87,000 new IRS agents to go after families and small businesses and their unprecedented increase in IRS audits,” Republicans on the House Ways and Means House Committee stated on Monday, adding that the bill “rescinds all new IRS funding for squeezing middle-class families and small businesses, while enhancing the services Americans expect to receive from their government.”

After McCarthy was elected as House speaker last week, he announced Republicans would address other issues in the new Congress such as the “rise of the Chinese Communist Party” and the soaring national debt. “As for the Chinese Communist Party, we will create a bipartisan select committee on China to investigate how to bring back the hundreds of thousands of jobs that went to China, and then we will win this economic competition,” he said.

Yellen Response

Last year, Treasury Secretary Janet Yellen told the IRS that once the Inflation Reduction Act became law additional IRS resources should not be used to increase audit rates on taxpayers making under $400,000 a year.

Yellen told then-IRS Commissioner Charles Rettig in a letter released by the Treasury Department that any new IRS personnel “shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels.” The IRS is a bureau of the Treasury Department.

Yellen said, “contrary to the misinformation from opponents of this legislation, small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited.”

Mimi Nguyen-Ly and Reuters contributed to this report.