Understanding Biden's Tax Policy and the IRS Audit Inspections

Bidens' tax policy has been a subject of scrutiny and criticism, particularly in relation to the statement that no one making under $400,000 would see their federal taxes go up a single penny. However, a thorough examination of this claim reveals that the complexities of tax policy and the IRS’s operations have been misinterpreted by critics. This article aims to clarify the misunderstandings and provide a comprehensive explanation of how tax audits and rate increases should be viewed in the context of Biden's policies.

Biden's Pledge and the Reality of IRSAudits

Biden made a campaign promise to ensure that individuals earning under $400,000 would not experience any increase in their tax rates. This pledge was made with the intent to alleviate fears among the middle and lower-income earners. The Treasury Inspector General for Tax Administration's (TIGTA) recent report claimed that under Biden's new IRS guidelines, it is not certain that nobody making under $400,000 would be audited due to the hiring of new IRS agents. However, it's important to understand that this does not necessarily mean an increase in taxes.

The TIGTA's report highlighted that the new IRS agents would focus on auditing wealthier taxpayers, recognizing that wealthier individuals are more likely to engage in tax evasion due to their access to resources and legal advisors. While it is true that some audits may occur on individuals making under $400,000, the primary objective is to ensure that wealthier tax evaders are targeted. This focus is in line with previous IRS strategies, which have historically prioritized lower-income earners due to their inability to afford prolonged legal battles.

Clarifying the Criticisms

Many critics have dismissed Biden’s claims by labeling it as a lie or a political maneuver, but this characterization is overly simplistic and misses the nuances of tax policy. For instance, Grover Norquist's claim that the $400,000 threshold was a mischaracterization is accurate. Biden’s original pledge was based on a $200,000 threshold, and the $400,000 was proposed to cover two individuals, a family unit. This discrepancy highlights the need for clarity in communication and understanding the full context of the pledge.

The Current State of Tax Policy

Further complicating the narrative around tax policy is the reality that the tax cuts for the wealthy under Trump's administration are expiring. This means that while there are no immediate rate increases for individuals earning under $400,000, the tax cuts for the rich have caused a shift that complicates the overall tax landscape. The IRS's focus on wealthier taxpayers is a result of a broader strategy to address tax evasion and ensure a more equitable distribution of tax burdens.

Conclusion

In conclusion, the claim that individuals earning under $400,000 will not face any tax increases under Biden’s policy is accurate. However, the focus of the IRS on wealthier taxpayers is justified due to the higher likelihood of tax evasion in these segments. It is crucial to understand that the TIGTA's report does not imply a mass increase in taxes but rather a targeted approach to auditing wealthier individuals to prevent tax evasion. This targeted approach is designed to ensure fairness within the tax system and aligns with historical IRS practices.

Further Reading and Key Points

Preliminary IRS Audits: The new IRS agents focus on individuals making over $400,000 to minimize tax evasion and guarantee greater tax compliance. Tax Pledge Clarification: Biden's original pledge was based on a $200,000 threshold, and the $400,000 was for two individuals. Tax Cuts for the Rich: Expiring tax cuts under Trump have shifted the tax landscape, necessitating a more nuanced approach to IRS audits.

By delving into these key points, readers can gain a deeper understanding of the complexities involved in tax policy and the IRS's operations, thereby addressing common misunderstandings and misinformation.