The GOP-controlled House has voted to slash the budget for the Internal Revenue Service's tax enforcement division by $1.2 billion, a 25 percent cut that would mean fewer audits of taxpayers and make it more likely that people who cheat on their taxes will get away with it.
The House approved the cuts by voice vote after little debate Monday night as it took up a $21 billion spending bill that sets the IRS budget.
The cuts reflect GOP outrage over the agency's scrutiny of tea party groups seeking tax-exempt status and frustration over the agency's failure to produce thousands of emails by Lois Lerner, the official formerly in charge of the IRS division that processes applications for tax-exempt status.
"The use of a government agency to harass, target, intimidate and threaten lawful, honest citizens was the worst form of authoritarianism," said Rep. Paul Gosar, R-Ariz., author of an amendment to cut the IRS tax enforcement budget by $353 million. Rep. Bill Huizenga, R-Mich., followed up with an amendment to cut $788 million more. The underlying bill already contained a $72 million cut from last year's $5 billion enforcement budget, bringing the total cut to $1.2 billion.
The Democratic floor leader on the funding bill, Rep. Jose Serrano of New York, opposed the amendments but opted against demanding a roll call vote.
"The answer is not to cut the IRS to bare bones, because our next problem is that the deficit will continue to grow because we won't be able to do the proper collecting of tax dollars in this country," Serrano said.
Budget cuts already are hurting the agency's ability to police tax returns, IRS Commissioner John Koskinen has said.
Taxpayers' chances of getting audited are lower than they have been in years. And this year, the IRS will have fewer agents auditing returns than at any time since at least the 1980s.
One's chances of getting audited vary greatly, based on income. The more you make, the more likely you are to get a letter from the IRS.
Only 0.9 percent of people making less than $200,000 were audited last year, according to IRS statistics. That's the lowest rate since the IRS began publishing the statistic in 2006.
By contrast, 10.9 percent of people making $1 million or more were audited. That's the lowest rate since 2010.
The White House had already issued a veto threat on the legislation, saying it shortchanges the IRS, impedes implementation of the new health care law and undercuts the new regulations on Wall Street that passed in 2010.
House debate on the IRS and Treasury Department funding bill was to resume Tuesday. A companion Senate measure has stalled in the Appropriations Committee, hung up in part over a looming amendment by GOP leader Mitch McConnell of Kentucky aimed at blocking the Environmental Protection Agency from issuing new regulations limiting greenhouse gas emissions from existing power plants. McConnell appears likely to prevail in the committee, which is stocked with pro-energy Democrats who are up for re-election.
A fight over those EPA rules extended to the House Appropriations Committee, which approved by a mostly party-line vote a separate measure funding the Interior Department and the EPA on Tuesday. A Democratic bid to preserve the EPA rules failed by a 29-18 vote. Rep. Debbie Wasserman Schultz, D-Fla., labeled the measure "an ideological dumping ground of short-sighted environmental policies."
Democrats protested language in the measure that would block the U.S. Fish and Wildlife Service from enforcing new rules that sharply limit sales of products made with ivory, even if it was legally imported before the 1990 ban for African elephants or the 1975 ban on ivory from Asian elephants. The rules are aimed at cracking down on the flourishing trade in illegal ivory but a wide array of people, including owners of musical instruments, antiques and guns made with ivory, are up in arms because they are in many instances no longer able to trade in such items, stripping them of their value.
Democrats prepared an amendment to protect the new rules, citing ivory's role in financing terrorist organizations but withdrew it after Republicans promised to work to balance the needs of legal ivory users with the desire to fight illegal trade in it.
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Livio S. Nespoli has been a broker, registered investment advisor, and financial publisher since 1985.