The potentially hidden costs of President Biden’s nearly $2 trillion “Build Back Better” plan could raise taxes on average Americans — who would also be more likely to get put under a microscope by the IRS, critics said Friday.
“The spending is unsustainable. As Margaret Thatcher said, at some point, you run out of other people’s money,” Rep. Nicole Malliotakis (R-Staten Island, Brooklyn) said.
Malliotakis also derided the massive spending plan — which narrowly passed the House on Friday morning over unified GOP opposition — as the “Build Back Broke bill” and a “Democratic socialist spending spree.”
“The short-term impacts will be inflation and a higher cost of living — and the longer-term impact will be tax increases on the middle class,” she said.
“It is a destructive bill that will crush the middle class and hard-working Americans.”
An analysis this week by the University of Pennsylvania’s Penn Wharton Budget Model estimated that the true cost of Biden’s plan would rise to $4.6 trillion over 10 years if all of its temporary provisions are made permanent.
Another study by the nonpartisan Committee for a Responsible Federal Budget — which on Thursday said the actual cost of the plan was $2.4 trillion — put the potential total even higher, at $4.9 trillion.
The temporary provisions include child tax credits that were part of the $1.9 trillion pandemic-related stimulus package that Biden signed into law in March, which provided parents with $3,600 for each child under age 6 and $3,000 each up to age 17, at a total cost of about $130 billion.
The Build Back Better plan only extends that popular program for another year — but many observers expect lawmakers will vote to extend it ahead of the 2020 midterm elections.
“Politically, no one believes that will be allowed to expire after one year,” said Peter Warren, director of research at the conservative Empire Center for Tax Policy in Albany.
Warren said that “Democrats are using every budgetary gimmick available to them and the main budget gimmick they used is to sunset these provisions.”
“But if they were to continue those programs the question is: Where will this money come from? And they’d need even more tax increases,” he said.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, called the nature and impact of the potential tax hikes “a great question, but one that can’t be answered.”
“It could be a carbon tax. It could be income tax rates. It could be corporate tax rates. It could be a surtax on every American,” she said.
“We have no idea … which goes to the point that the result of this bill in its current form is a lot of uncertainty.”
Meanwhile, Biden’s plan also includes $80 billion in new IRS funding to hire 87,000 more agents for a massive crackdown on tax cheats.
Republicans warn that would more than double the number of audits to over 1.2 million a year, with nearly half hitting Americans who make $75,000 or less annually.
Policy analyst James Lucier of Capital Alpha Partners in Washington, DC, said the IRS would most likely target small business owners with “large amounts of non-wage income,” such as bodega operators, construction contractors, landscapers, painters and even crafters who sell their handiwork on Etsy.
“These people will be harassed by the IRS and guess who a lot of these people are? Recent immigrants,” he said.
“Think about what immigrants do – they open nail salons, they are restaurant owners. These are the people that will be most harassed by this.”
Lucier added sarcastically: “If you like Facebook tracking you, you’re gonna love the IRS — the privacy and civil liberties concerns are extreme.”