The House GOP’s proposed $14.3 billion Israel aid package, which would cut the same amount from the IRS, would add billions over the next 10 years by reducing what the IRS would take in through taxes.
The nonpartisan Congressional Budget Office (CBO) said Wednesday that the bill would reduce federal revenue by more than $26 billion over the next decade.
House GOP leaders have proposed steep cuts to bring down the national debt since they took control of the chamber in January.
Republicans argued the IRS cuts would offset the supplemental funding package they rolled out on Monday. They’re unlikely to change course even after the new estimate given their efforts to slash IRS funding.
Signed into law by President Biden last year, the Inflation Reduction Act (IRA) included $80 billion for the IRS to modernize the agency and bolster its tax enforcement. That number is now closer to $60 billion after debt ceiling negotiations this past summer.
While the revenue-to-cost ratio of the IRS is generally two-to-one, Republicans opposed the additional funding and warned there would be more audits on small businesses and the middle class.
The White House and Democrats have insisted it won’t and that the funding is intended to help the IRS answer phones and go after tax cheats.
House Republicans also hope the proposal will force Democrats to take a tough vote on aid to Israel amid its war with Hamas.
Before the Israel aid bill was made public, Speaker Mike Johnson (R-La.) hailed the IRS cuts as paying for the cost of the aid to Israel.
“Here’s the important thing that distinguishes House Republicans from the other team: We’re going to find pay-fors in the budget, we’re not just printing money to send it overseas, we’re going to find the cuts elsewhere to do that,” Johnson said.
But some budget experts warn the new proposal could undercut the party’s calls to tackle the national debt, which has climbed to more than $33 trillion.
“Instead of being an offset, it would actually make matters worse,” Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center at the Urban Institute, said of the proposed IRS cuts.
The Hill’s Aris Foley has more here.
