Bill Overview
Title: To rescind certain balances made available to the Internal Revenue Service and amend the Internal Revenue Code of 1986 to permanently increase the standard deduction.
Description: This bill rescinds amounts made available to the Internal Revenue Service for enforcement and other activities under the Inflation Reduction Act of 2022. It also permanently increases the standard deduction for individual taxpayers.
Sponsors: Rep. Banks, Jim [R-IN-3]
Target Audience
Population: individual taxpayers
Estimated Size: 200000000
- The bill affects individual taxpayers by permanently increasing the standard deduction.
- In 2021, there were approximately 151 million individual tax returns filed in the United States, which gives an estimate of individual taxpayers.
- Increasing the standard deduction could lead to reduced taxable income for millions of taxpayers, impacting their yearly tax calculations and potential refunds.
- The rescindment of funds from the IRS affects not only the agency but also the efficiency of tax collection, which could indirectly impact all taxpayers involved in processes with the IRS.
- Most working-age adults and retirees in America file taxes or are claimed as dependents on such returns, representing a broad demographic.
Reasoning
- The policy impacts all US taxpayers, particularly those who would benefit from an increased standard deduction. This includes working-age adults and retirees. I have simulated a range of profiles: those directly impacted by the IRS changes, those benefiting significantly from the increased deduction, and those with minimal impact.
- Considering the policy's budget constraint, the focus can be on those actively filing taxes and benefiting from the increased standard deduction. Individuals with significantly variable or complex income such as business owners may see different impacts than standard W-2 earners.
- To replicate the variety in the population, profiles ranging from high-income earners to retirees and low-income individuals will be covered. Not all groups are equally impacted; low-income individuals may see the most tangible benefits from increased deductions, while high-income earners' relative impact might be lower but still present.
Simulated Interviews
Software Engineer (Los Angeles, CA)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- The increased standard deduction will lower my taxable income, which is great. It means more savings for the family.
- I am concerned about the IRS funding cut as it might slow down tax processing times.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Freelance Graphic Designer (Houston, TX)
Age: 32 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- As a self-employed individual, lowering taxable income through a higher standard deduction helps but IRS cuts could mean more audits.
- Any savings count, especially when you're your own boss.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Retired Teacher (Phoenix, AZ)
Age: 68 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- The increase in the standard deduction will give me a little extra money to manage everyday expenses.
- I worry about losing IRS resources that could help me with tax issues that arise with age.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Nonprofit Worker (Boston, MA)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- With student loans and rent, it's great to get any financial relief from taxes.
- Concerned about what reduced IRS oversight could mean for nonprofits. There's much gray area in deductions for donations and grants.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Retired (Miami, FL)
Age: 74 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- Increased standard deduction may not significantly impact me due to my higher income bracket.
- I worry about the IRS’s reduced capacity to address complex tax concerns if needed.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Small Business Owner (Chicago, IL)
Age: 40 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- Standard deduction increase helps, as savings can be reinvested in the business.
- Concerned that less IRS oversight may lead to unwanted scrutiny and more self-reporting challenges.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Graduate Student (Seattle, WA)
Age: 25 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- More savings through standard deductions is useful but my low earnings mean the impact won't be huge.
- Less IRS support could affect me if I need educational tax credits support.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 4 |
Accountant (Atlanta, GA)
Age: 55 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- The policy will mean explaining new rules to clients, which can always be a challenge.
- I'm less concerned for myself financially but curious to see this unfold at work.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Banker (New York, NY)
Age: 38 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 4/20
Statement of Opinion:
- With dual high incomes, the deduction does not impact us as greatly, but any savings is better than none.
- There's a possibly concerning side to IRS cuts when viewing long-term enforcement perspectives.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Nurse (Los Angeles, CA)
Age: 31 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- I appreciate any policy that helps me financially, but I wish it more effectively targeted healthcare workers.
- There’s some concern about potential delays in receiving tax refunds due to IRS changes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 5 |
Cost Estimates
Year 1: $15000000000 (Low: $12000000000, High: $18000000000)
Year 2: $16000000000 (Low: $13000000000, High: $19000000000)
Year 3: $17000000000 (Low: $13500000000, High: $20000000000)
Year 5: $19000000000 (Low: $15000000000, High: $22000000000)
Year 10: $22000000000 (Low: $18000000000, High: $26000000000)
Year 100: $35000000000 (Low: $25000000000, High: $45000000000)
Key Considerations
- The balance between immediate budgetary savings and long-term tax revenue losses.
- Potential economic stimulation through increased disposable income due to higher standard deductions.
- Impact on IRS operations and long-term revenue collection efficiency.