Breakingviews - Debt deal sacrifices $140 bln return on investment

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From Breakingviews - Debt deal sacrifices $140 bln return on investment

U.S. President Joe Biden exits the White House to speak to reporters before boarding Marine One on the South Lawn of the White House in Washington, U.S., May 29, 2023. REUTERS/Bonnie Cash - RC2J81A5VPO2

WASHINGTON, May 30 - The U.S. government could soon shrink one of its most promising investments. The budget deal agreed to by President Joe Biden and top congressional Republican Kevin McCarthy would moveaway from the Internal Revenue Service over the next two years. The change shores up cash for other agencies, but projections suggest the IRS funding would’ve made a significant step toward closing the government’s $925 billion budget gap.

Biden approved $80 billion of new cash for the IRS in 2021, arguing the funding would strengthen enforcement and increase revenue collected by Uncle Sam. The non-partisan Congressional Budget Office backs that assertion. The CBO in 2021 that for every $1 increase to IRS funding the government would recoup $6.40 to $7.10. The $20 billion being diverted from the agency could therefore raise as much as $142 billion through 2031.the deal shouldn’t weaken tax collection. That’s unhelpful. The shift erodes one of the most obvious solutions to the government’s deficit problem: Improving enforcement is akin to, or even better than, raising taxes.

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Breakingviews - Debt deal sacrifices $140 bln return on investmentThe U.S. government could soon shrink one of its most promising investments. The budget deal agreed to by President Joe Biden and top congressional Republican Kevin McCarthy would move $20 billion away from the Internal Revenue Service over the next two years. The change shores up cash for other agencies, but projections suggest the IRS funding would’ve made a significant step toward closing the government’s $925 billion budget gap.
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