Bill Overview
Title: To prevent the use of additional Internal Revenue Service funds from being used for audits of taxpayers with taxable incomes below $400,000 in order to protect low- and middle-income earning American taxpayers from an onslaught of audits from an army of new Internal Revenue Service auditors funded by an unprecedented, nearly $80,000,000,000, infusion of new funds.
Description: This bill prohibits the use of additional funds appropriated to the Internal Revenue Service under the Inflation Reduction Act of 2022 for audits of taxpayers with taxable incomes below $400,000.
Sponsors: Rep. Brady, Kevin [R-TX-8]
Target Audience
Population: People with annual taxable incomes below $400,000 globally
Estimated Size: 320000000
- The goal of the bill is to prevent additional IRS funds from being used to audit taxpayers with incomes under $400,000.
- High-income individuals are defined as households making over $400,000 per year.
- As of the most recent U.S. Census data, there are approximately 126 million households in the United States.
- Approximately 102 million households earn below $150,000 annually.
- The target group is low-to-middle-income earners, which is a larger portion of households.
- The bill protects against audits by preventing funds from new IRS hiring to be used against these households.
- This implies the target population is the majority of U.S. households earning below $400,000.
Reasoning
- The policy primarily benefits individuals earning less than $400,000 by providing a degree of protection from increased audits due to the restriction on how the IRS can use additional funds.
- Most U.S. households fall into this income bracket, suggesting widespread potential impact, although the degree of impact may vary.
- Given the budget limits, the policy's protection measures may initially be more reassuring than materially impactful, particularly in the first few years as systemic effects unfold.
- Over time, the confidence in reduced audit risk can influence financial wellbeing by reducing stress and uncertainty for many households, possibly leading to slight welfare improvements.
- Since audits are relatively rare, the immediate tangible impact may not be very high; however, the policy could have positive psychological effects, improving perceived financial security.
- The distribution of income and the targeting of the policy suggest varied impacts; households near the $400,000 threshold might feel marginally less protected than lower-income households.
Simulated Interviews
Teacher (Chicago, IL)
Age: 40 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 18/20
Statement of Opinion:
- I always dread tax season. Knowing I'm at a lower risk for audit makes me feel a bit more secure.
- This change may not affect my day-to-day life, but it's reassuring to have this protection.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Software Developer (Houston, TX)
Age: 30 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- It's nice to know we're less likely to be targeted for audits, which could be a nightmare with a family.
- Not worrying about extra audits helps me focus on growing my savings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Small Business Owner (Buffalo, NY)
Age: 55 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- As a small business owner, audits terrify me; anything that reduces that risk is welcome.
- This gives me peace of mind to focus more on expanding my business.
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 | 7 | 5 |
| Year 20 | 6 | 5 |
College Student (Los Angeles, CA)
Age: 22 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 16/20
Statement of Opinion:
- I'm not really worried about audits at this stage, but it's good to know I'm protected.
- It feels like one less thing to worry about as I start to enter the workforce.
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 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Retired (Miami, FL)
Age: 68 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- Audits at my age seem daunting - having this policy feels like a relief.
- I hope this means fewer issues with my taxes moving forward.
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 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 6 | 7 |
Engineer (Seattle, WA)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- We earn enough to be cautious about audits, but this protection is great for peace of mind.
- Fewer chances of an audit allow us to concentrate on saving for the kids' college.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Nurse (Atlanta, GA)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 13/20
Statement of Opinion:
- After my divorce, I can't handle any more stress, so this is a relief.
- Feeling that I won't be unfairly targeted by audits is comforting.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Freelancer (San Francisco, CA)
Age: 35 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 11/20
Statement of Opinion:
- Dealing with taxes as a freelancer is complex enough - less chance of audit is a relief.
- This policy gives me a bit of breathing room to focus on my projects.
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 | 7 | 5 |
| Year 20 | 6 | 5 |
Construction Worker (Denver, CO)
Age: 28 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 17/20
Statement of Opinion:
- It's reassuring to know I'm not likely to be audited, makes life a bit easier.
- This is one less thing for me to stress about. I can focus on my upcoming wedding.
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 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Store Clerk (Birmingham, AL)
Age: 60 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 13/20
Statement of Opinion:
- This doesn't really change my financial worries right away, but it's good to have some security.
- Feels a little relief knowing I can avoid audit hassles.
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 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Cost Estimates
Year 1: $1000000000 (Low: $900000000, High: $1100000000)
Year 2: $1000000000 (Low: $900000000, High: $1100000000)
Year 3: $1000000000 (Low: $900000000, High: $1100000000)
Year 5: $1000000000 (Low: $900000000, High: $1100000000)
Year 10: $1000000000 (Low: $900000000, High: $1100000000)
Year 100: $1000000000 (Low: $900000000, High: $1100000000)
Key Considerations
- The IRS's efficiency in using funds for audit is integral to maximizing tax compliance.
- The capability for audits is a significant factor in taxpayer behavior and revenue collection.
- Potential shifts in IRS strategy in response to funding constraints must be tracked.
- The policy aims to mitigate an increased audit burden on low and middle-income taxpayers.