Tipsheet

Cause and Effect: New Democrat-Passed Policies Will Cause Fresh Tax Headaches For Working Americans

Guy Benson
Guy Benson  |  April 20, 2023 10:25 AM

This is a straightforward case of political cause and effect, and many of the people ensnared by the new Democrat-created policy need to know how and and why it happened.  Dating back to his time as a candidate, Joe Biden has been repeating a pledge that no one earning less than $400,000 per year will see any tax increases under his proposals and policies.  The point of this pledge is to make it seem as though the only people who'd be negatively impacted, or forced to bear any politically unpalatable burden, would be the very wealthy and corporations.  These promises weren't true from the outset, as we explained in detail at the time, and both Biden and Congressional Democrats have been happy to throw that vow in the trash, in furtherance of enacting their desired massive tax-and-spend agenda.  Here's yet another real-life example of that pledge being violated, certainly in spirit, if not explicitly.  CBS News covered it last week:

While the apps are easy to use, starting next year, filing taxes for millions of people could become trickier. A new IRS rule will require anyone who earned over $600 on payment apps in 2023 to file a 1099-K form. The previous threshold was $20,000 on over 200 transactions. Confusion over the changes led the IRS this past December to delay its implementation...some small businesses, such as that of Maryland furniture maker Dennis Turbeville, are concerned that the extra paperwork from this change could lead to mistakes and prompt costly penalties. "Small businesses don't have the resources to understand how to do things properly," Turbeville said. "A $2,500 penalty for a business that's doing $2 million a year, not a big deal. For somebody like me, that's a big deal."

Note well that it won't be a bunch of fat cats who will find themselves in the crosshairs over various payment app transactions.  Big businesses and the "millionaires and billionaires" who Democrats chant about endlessly have the resources to ensure compliance.  It's small businesses and average people who will be burdened by this reporting change -- which absolutely will be tantamount to a tax increase for many.  The IRS insists that payments among friends "shouldn't" be subject to taxes, but experts cited in the story warn that Americans should work to "classify their transactions to family and friends as personal, not goods or services" just in case.  Have fun fighting the IRS if and when these sorts of details get challenged.  Overall, it's a worthwhile subject for CBS to have covered, but the report doesn't let viewers in on some critical context.  The network's online story about the issue also neglects to mention these same facts.  The missing truth is that these disruptive changes didn't materialize out of thin air.  This wasn't some form divine intervention that magically changed the reporting requirements -- such that many, many more working Americans will find themselves impacted.  The changes come as a direct result of the so-called American Rescue Plan, Democrats' wasteful, and highly inflationary so-called COVID relief bill, which they rammed through with zero GOP votes, over the inflation-fueled objections of some liberal economists.  None of that was even hinted at by CBS.  Other news reports, however, make the connection explicit:

The $600 reporting threshold [down from $20,000] was a product of the $1.9 trillion American Rescue Plan, which was signed into law in 2021. The measure was intended to lower the tax gap between what people owe in taxes versus what they end up paying. A 2021 report by the Joint Committee on Taxation estimated that the measure would bring in $8.4 billion in tax revenue from 2021-2031.

It was a revenue play.  This is, unambiguously, a Democratic policy that will hurt working people.  And that's not all.  The IRS will have a lot more manpower and resources to enforce the new rules, thanks to yet another Democrat-only policy.  Last year, thanks to a special deal cut between Chuck Schumer and Joe Manchin, Democrats passed the insultingly-named "Inflation Reduction Act" with no Republican support (the West Virginian is now pronouncing himself shocked that his signature agreement is doing the opposite of what he claimed it would, will cost far more than he told us it would, and has ended up betraying him on key elements promised by Schumer).  At the time, Bernie Sanders helpfully exploded the claim behind the legislative moniker, more honestly celebrating its huge spending increases on 'green' priorities.  Among its many provisions was an approximate doubling of the size of the Internal Revenue Service.  The scope of the mammoth expansions of both the IRS workforce and budget was shocking even to IRS cheerleaders like its Obama-era leader.  

Democrats, as usual, said the agency's boosted capacity to crack down on Americans wouldn't affect the non-rich, but when Republicans offered an amendment that would have given those assurances actual teeth within the legislative text, Senate Democrats unanimously killed it.  The fact is, the data demonstrates that working class and low income Americans are much more likely to be targeted by IRS audits than the affluent bogeymen Democrats talk about incessantly.  The reality helps explain why Democrats refused to codify their tax-related promises into actual law when given the chance:

Poor people faced a significantly higher chance in 2022 of being audited by President Joe Biden's IRS than both rich and middle-class earners, according to a Syracuse University study...In fact, no group faced as much scrutiny from the IRS as those who made below $25,000, the university's data-gathering center found. Among families that benefited from the earned income tax credit, a rebate on income and payroll taxes made available to the nation's poorest families, 1.27 percent were audited. The IRS in 2022 audited just 0.19 percent of the vast majority of taxpayers, meaning the poorest families were at least 550 percent more likely to have the IRS knock on their door than the average filer. These families were also more likely to receive a regular audit by the IRS than families that reported over $1 million in income, of which just over 1 percent faced regular audits. In total, the IRS audited a total 626,204 taxpayers out of more than 164 million in the 2022 fiscal year. The bulk of those audits were of filers in the lowest income group.

If Democrats are to face any meaningful electoral consequences for their dishonesty, Republicans will need to effectively highlight what's happened here.  There's a direct line to be drawn, but some in the media clearly have no interest in making voters aware that their fellow Democrats are responsible for these policy shifts -- whereas if it were a Republican policy potentially hurting even a sliver of 'vulnerable' Americans (or however it would be framed), that would be in the headline and the lede.  Front and center.  It would be, in fact, the whole point of the reports.  It would certainly not be absent altogether.  Democrats are often protected by their ideological allies in the 'journalism' business.  It's incumbent on Republicans to not just whine about it, but to aggressively press their case.  This seems like an important opportunity to do so.  I'll leave you with this, based on a rather curious incident involving the IRS:

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Sen. Johnson and I discussed this issue (in addition to the border crisis and Hunter Biden) on my radio show last evening: