Incalculable cost to make IRS America the number one welfare agency
President Biden and others in Washington recently argued that their gigantic $ 3.5 trillion spending plan had “no cost” since it was “fully paid.” This is simply not the case. But even if these fancy claims were true, they would still ignore the large hidden costs of their massive benefit expansion proposals for Americans in the hope of quickly getting their annual tax refund checks back.
Efficient tax administration is a core function of government, but this year, U.S. taxpayers have had to wait longer than ever for their Internal Revenue Service (IRS) refunds. Returns that previously took three weeks to process now take at least four months.
At the same time, inflation at levels not seen in decades continues to reduce the value of these expected repayments. About 8.5 million personal and business income tax returns had not been processed as of early September. With an average value of $ 2,827 per refund, that’s a lot of money withheld from US taxpayers.
So what is causing these huge delays? It’s an unintended but inevitable consequence of Biden and the Democrats’ sweeping plan to turn the IRS into America’s number one welfare agency.
As a result of partisan legislation signed by Biden in March, starting July 15, the IRS sent billions of dollars in new checks to tens of millions of U.S. households each month. An estimated 39 million households, including 65 million children, have started receiving these monthly checks. How big is this change? These checks are now being distributed to more people than the number of people who currently collect Social Security checks under programs created by Franklin Delano Roosevelt in the 1930s. And instead of growing over decades, this massive wave of new checks started pouring in within four months of the legislation authorizing them.
Under the expanded, now monthly Child Tax Credit (CTC), parents get up to $ 300 per child per month, regardless of whether they work or how they plan to spend the money. It is the first federal cash assistance program with no work requirement since welfare reform in the 1990s – and the first fully administered by the IRS.
The expanded CTC has fundamental flaws. He is abandoning the successful welfare reforms of the past 25 years. Instead, it discourages inactive beneficiaries from looking for work and even ends previous child tax credit incentives for low-income working parents to earn more.
But the problems don’t end there. Unlike other federal and state social service providers, the IRS never sees the people it serves, helps them find jobs, or ensures they get support for parenting and other issues. underlying issues such as substance abuse or mental health issues.
As the current delays affecting taxpayers clearly show, the IRS has not been able to effectively balance its enormous new check-writing tasks with its primary responsibility to effectively administer federal taxes. The IRS was already understaffed before the launch of the Monthly Child Tax Credit, and more than 4,000 treatment positions remain vacant. The payment of stimulus checks and deposit changes caused by the pandemic made the situation even more difficult. But these glaring problems haven’t stopped Democrats from demanding far more of our country’s tax collectors than they were supposed to.
The top priorities for the IRS should be to collect the right amount of taxes and reimburse those that are overpaid. Tax refunds of nearly $ 3,000 can have a significant impact on the financial well-being of struggling families and small businesses. And unlike the new benefit checks invented by politicians, it’s taxpayers’ money and they deserve to get it back fast.
But Biden’s plan threatens to deny millions more Americans their repayments for months on end, all because of an erroneous focus on constantly sending new checks to tens of millions of parents – many of whom don’t. not even owe federal income tax in the first place. .
It is not fair. While it remains to be seen how the Democrats propose to curb their gigantic $ 3.5 trillion spending frenzy, extending their current child tax credit policy would only compound this hidden cost – but well. real – for millions of taxpayers.
Matt Weidinger is the Rowe Fellow in Poverty Studies at the American Enterprise Institute. He is a former deputy director of personnel for the House Ways and Means committee.