Ignore for a moment the fact that the bill contains ten years of tax increases to pay for a few years’ of spending that Democrats later wish to extend, suggesting that independent budget analysts have secured the bill’s true ten-year cost not at $1.75 trillion but nearer to $5 trillion. Also, ignore the fact that front-loading the bill’s spending suggests it will almost surely increase federal deficits in the short term, increasing inflation at a time when price rises are now at 30-year highs.
Rather, the proximate argument with CBO concerns whether an increase in tax enforcement will yield as much revenue as Treasury claims. On that aspect, one of the most prominent arguments against the Biden administration’s position comes through Joe Biden himself.
The New York Times reported Monday that “the White House has begun bracing lawmakers for a disappointing estimate” from CBO, and is “urging lawmakers to disregard the budget office assessment, saying it is being overly conservative in its calculations.” While administration officials announce additional tax enforcement will produce $400 billion in new revenue, CBO Director Philip Swagel on Monday announced he stood by the agency’s September estimate that enhanced enforcement authority will net approximately $120 billion.
The difference between the lower and higher revenue figures could decide whether the bill gets scored as a budget-saver or budget-buster. Treasury has hence come out swinging at CBO, with Assistant Treasury Secretary Ben Harris describing the office’s methodology as “patently absurd” in an interview with the Times.
Though, given his own boss’ behavior, Mr. Harris doth protest too a lot about tax enforcement. After leaving the vice presidency in early 2017, Joe Biden and his wife Jill created two S-corporations. They characterized most of their book and speech earnings as profits from those corporations instead of taxable wages.
These maneuvers enabled the Bidens to dodge almost $517,000 in payroll taxes. The Tax Policy Center called the Bidens’ actions “pretty aggressive.” And a recent Congressional Research Service report described several examples in which federal courts agreed with the IRS in requiring S-corporations to pay back taxes—all of which arguably applied to the Bidens.
Yet notwithstanding the Bidens’ public release of their returns, and coverage of the flaws surrounding them, no news has yet emerged of an IRS audit.
Political bias gives one plausible explanation for this, given past IRS harassment of conservative non-profit organizations, and unanswered questions about the leak of a tax return to the liberal activist site ProPublica. The Times’ reporting on Donald Trump’s taxes last year affirmed the IRS had initiated audits of his returns well before he attained the presidency, so it’s logical to ask why Biden’s pre-presidential returns have not come under similar scrutiny.