Debt deal sacrifices $140 bln return on investment
The author is a Reuters Breakingviews columnist. The opinions expressed are their own. Refiles to fix story code.
WASHINGTON, May 30 (Reuters Breakingviews) -The U.S. government could soon shrink one of its most promising investments. The budget deal agreed to by President Joe Biden and top congressional Republican Kevin McCarthy would move $20 billion away from the Internal Revenue Service over the next two years. The change shores up cash for other agencies, but projections suggest the IRS funding would’ve made a significant step toward closing the government’s $925 billion budget gap.
Biden approved $80 billion of new cash for the IRS in 2021, arguing the funding would strengthen enforcement and increase revenue collected by Uncle Sam. The non-partisan Congressional Budget Office backs that assertion. The CBO estimated in 2021 that for every $1 increase to IRS funding the government would recoup $6.40 to $7.10. The $20 billion being diverted from the agency could therefore raise as much as $142 billion through 2031.
White House officials have said the deal shouldn’t weaken tax collection. That’s unhelpful. The shift erodes one of the most obvious solutions to the government’s deficit problem: Improving enforcement is akin to, or even better than, raising taxes. With the deficit set to double over the next decade, America’s tax collector could use the help. (By Ben Winck)
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