October 2, 2022

US Senator Elizabeth Warren, Democrat of Massachusetts, speaks to reporters before a vote on an election reform bill on June 22, 2021 on Capitol Hill in Washington, DC.

Olivier Douliery | AFP | Getty Images

Three U.S. Senators, led by Massachusetts progressive Elizabeth Warren, on Tuesday called for a massive $ 3.5 trillion Democratic budget to allocate funds to help the Internal Revenue Service improve its tax enforcement.

In a letter to IRS Commissioner Charles Rettig, viewed by CNBC, the Senators urged the agency to show how better enforcement could help raise billions in taxes owed to the federal government.

Warren and those co-signers of the letter stressed the importance of restoring the tax collectors’ budget to hold wealthy Americans accountable for flaunting US tax laws. The letter arrives as the Democrats’ jockey to include preferential provisions in a budget reconciliation package yet to be defined.

Warren, who joined Sens. Bernie Sanders, I-Vt., And Sheldon Whitehouse, DR.I., wrote that a revitalization of the IRS budget would enable him “to investigate rich tax fraud and serve the majority faster and better to offer”. the Americans who pay their fair share. “

“For too long, the richest Americans have been able to use a number of accountants, tax strategists, financial advisors, lawyers and lobbyists to avoid their fair share of taxes,” added the senators. “The top 1% of Americans fail to declare more than a fifth of their income on their tax returns, and they account for over a third of all unpaid federal income taxes.”

In particular, Warren, Sanders and Whitehouse urged Rettig to answer a litany of questions designed to show how incremental funding of Congress would help the IRS better enforce tax law.

Warren and other progressive Democrats are outraged by the widening tax gap – the difference between taxes owed to the IRS and taxes actually paid, viewed by many as a substitute for tax avoidance.

The Treasury Department, which oversees the IRS, estimates the gap will widen to $ 7 trillion over the next decade. The department did not immediately respond to CNBC’s request for comment.

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Deputy Secretary of State Mark Mazur told lawmakers in June that the yawning loophole was due to a 20% cut in the IRS budget over the past decade.

This reduction has resulted in a number of layoffs and a decline in exam rates. The IRS announced earlier this year that budget cuts had forced it to cut 33,378 full-time jobs between fiscal 2010 and 2020, including a significant number of taxpayer services and enforcement staff.

“It would not be absurd to believe that the actual tax gap could approach and possibly even exceed one trillion dollars a year,” said Rettig in April before the Senate Finance Committee.

Warren told Rettig Tuesday that it was critical that the Democrats include additional IRS funding in the $ 3.5 trillion budget resolution the party is trying to bring without Republican support from Congress.

The Warren, Sanders and Whitehouse trio have beaten up Republicans in the Senate for failing to comply with an earlier agreement to fund the IRS for $ 40 billion as part of the bipartisan infrastructure bill that cleared the chamber on Tuesday to have.

This infrastructure bill, which Senate passed 69-30, provides an additional $ 550 billion for transportation, broadband, and utilities.

Senator Rob Portman, a key Republican negotiator, said in July that the GOP abandoned its commitment to funding after learning that the Democrats were also planning to add a larger proposal to the IRS to enforce the separate $ 3.5 trillion reconciliation spending package to add.

“It is now more important than ever that we include investment in the IRS and fair tax enforcement,” Warren concluded Tuesday. Corporate lobbyists who benefit from a weaker IRS “will continue to falsely claim that these proposals would somehow harm law-abiding taxpayers, despite their concern that the IRS has the tools to tackle the complex tax systems of property and corporate taxes “. cheats. “

Immediately after the Infrastructure Act was passed, the Senate began voting on changes to the spending plan.