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GOP Secures Accelerated Reductions in IRS Budget Through Recent Funding Agreement

Congressional leaders this week announced a $1.66 trillion top-line spending agreement that will hasten funding cuts to the Internal Revenue Service (IRS), a move favoured by Republicans. This decision marks a significant shift in the fiscal approach towards the IRS.

Details of the Agreement

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The bipartisan deal proposes a $10 billion cut from the IRS budget during fiscal 2024. This reduction comes a year earlier than what was previously agreed upon by Democrats and Republicans in a deal to raise the debt limit last summer.

Context of the Funding Cut

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The decision to accelerate the funding cut is part of a broader agreement that included $20 billion in overall reductions to a controversial IRS funding boost. This boost was initially part of the Inflation Reduction Act of 2022.

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IRS’s Planned Funding

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Originally, the IRS was slated to receive $80 billion in funding through the 2022 Inflation Reduction Act. The purpose of this funding was to revamp the agency and improve tax collections in the U.S., particularly from the richest taxpayers.

Republican Stance on IRS Funding

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Republicans have been actively opposing the IRS funding increase. They voted to repeal the entire allotment last year after retaking the House and have been reducing it through successive funding deals.

Speaker Mike Johnson’s Statement

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Speaker Mike Johnson (R-La.) highlighted the achievement of additional cuts to the IRS in a letter to fellow legislators. He mentioned that the deal includes an additional $10 billion in cuts, totalling $20 billion, which was a key part of the Democrats’ Inflation Reduction Act.

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Johnson’s Perspective on the Deal

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Johnson acknowledged that the final spending levels might not satisfy everyone and do not cut as much as some would prefer. However, he sees the deal as a path to move forward and reprioritize funding towards conservative objectives.

Future Implications for the IRS

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The new timetable for IRS funding cuts suggests that one-quarter of the $80 billion funding increase for the IRS over the next decade has been entirely removed within fiscal 2024. This change could have significant implications for the agency’s operations.

Potential Impact of Further Cuts

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Experts believe that while the remaining $60 billion is substantial, the rapid pace of rescission indicates that further cuts could lead to more significant changes at the IRS. Janet Holtzblatt, a former head of tax policy studies, expressed concerns about more cuts in the future.

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Democrats’ View on IRS Modernization

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Democrats maintain that the new timetable for IRS cuts will not disrupt the agency’s ongoing modernization and operational updates. They believe the agreement preserves critical investments secured in the last Congress.

Schumer and Jeffries on Funding Levels

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Senate Majority Leader Chuck Schumer (D-N.Y.) and House Democratic Leader Hakeem Jeffries (D-N.Y.) stated that the agreement allows for the protection of key domestic priorities. They emphasized the importance of maintaining non-defense discretionary funding.

Appropriations Process

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The top-line deal is seen as a pathway to a more normal appropriations process for the rest of the year, moving away from the chaotic negotiations of 2023. This agreement, however, brings into focus the ongoing debate over IRS funding and its impact on tax collection and the national deficit.

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