Every politician promises not to raise taxes. If you have gray hair, you might remember President George H.W. Bush saying "read my lips, NO NEW TAXES." What was the next thing he did? Raise taxes, of course. Do you remember President Biden saying less than two years ago, "You will not pay more in taxes if you make less than $400,000?" Did you believe him? You shouldn't have.
The Inflation Reduction Act passed the Senate last week and is expected to pass the House of Representatives this week. The first question you might ask is, "what is in this act?" Good question, but let me remind you of Rep. Nancy Pelosi's comment to the Obama Care Act. "We have to pass the bill so we can see what is in it."
One thing we know that is in the bill is 87,000 new IRS agents. Right now, there are about 77,000 IRS agents, so the new 87,000 will bring the size of the IRS greater than the size of the Israeli Army or the United Kingdom's Army. We will need to raise taxes just to pay the 87,000 new employees.
What will these new agents do? The IRS posted a job description for some of the agents. Two requirements stand out. First, you must be legally capable of carrying a firearm. Second, you must be willing to use deadly force if necessary. One qualification which isn't mentioned is the ability to speak a foreign language. Is the IRS planning to only need armed agents for English-speaking taxpayers? By the way, that job posting has been deleted.
The first thing that comes to mind is that these new agents will handle big corporate accounts. Probably not. Corporations and very rich people have lots of accountants and lawyers. The IRS doesn't usually play with them and definitely not with guns a blazing. The fact is the less you make, the greater your chances of an audit.
Does that seem to make sense? A small business owner has the greatest chance of an audit. Why the amount due can't be that much? That's what the IRS counts on. They are looking for people who will write a check because it is cheaper than hiring an accountant or lawyer for many, many hours. There is an earnings amount for the average person where he or she will write a check. Only the IRS knows that number.
Don't spend those tax savings you were counting on just yet; you might get a surprise instead.