So, the new (and inexperienced) Speaker of the House Mike Johnson just announced the position he will take in supporting a “stand alone” bill to provide military funds to Israel during the conflict in Gaza. He will support funding to Israel to the tune of billions of dollars ($14.3 billion) only if commensurately IRS funding is slashed by the same $14.3 billion dollars.

For me that proposal gets personal. Why might be asked? Over the last ten years I have had IRS audits, IRS disputing my tax returns (I have two LLCs that support businesses that I own, or partially own). Every year I must provide detailed documentation to support my tax returns, in most cases I have successfully defended my returns…and in a few cases agreed with the IRS findings and therefore paid additional taxes, penalties, and interest. I accept the IRS doing its job and I accept paying taxes that I owe.

However, in 2018 I was shocked to hear the IRS had not audited Donald J. Trump’s tax returns in his first two years in office as required by law. In Congressional hearings the IRS admitted they had not conducted the audits due to the complexity of Trump’s tax returns (having hundreds of LLCs and thousands of unsubstantiated deductions) and lacking sufficient staff to dedicate to such an effort. The IRS admitted Trump’s tax returns were supported by accounting firms and tax attorneys and the IRS had ACCEPTED the results of their filing of taxes for Trump and his organization. In the same congressional hearings on why Trump’s taxes had not been audited it also was announced that Trump’s personal taxes (not his organizations) had not been audited since 2009. His claim to being under continued audit as to why he would not release his personal tax returns seems to have been just another lie.

So here we are. The IRS is unable to audit a tax return that is, even on the surface, is questionable with “thousands of unsubstantiated deductions”. But do they have the staff to look into my taxes virtually every year? Does what we learned about Trump’s tax returns and the IRS mean the very wealthy are “cocooned” from IRS oversight due to the lack of staff? Two bits of data on this:

One – In 2022 individuals reporting income of over $1 million dollars had a 1.1% chance of being “audited”, individuals in the lowest income class – those with “anti-poverty earned income” – had a 12.7% chance of being audited. (all classes of income had an overall 2.7% chance of being audited)

Two – in 1975 there were 14,285 revenue agents that conducted audits. This represented one revenue agent for every 15,000 US citizens. In 2022 the IRS had only 8,700 revenue agents. This represented one revenue agent for every 38,000 US citizens. A simple view is the IRS has less than half the ability, per US citizen, to conduct a physical tax audit in 2022 versus 1975. And yes, automation and technology has progressed, so that “letters of inquiry” go out on tax disputes, but for actual revenue agent audits the IRS has far less ability today than 50 years ago.

And now, Speaker Mike Johnson wants to tie support for Israel to reducing the funding (and the ability of the IRS to do its job) that was approved in the Inflation Reduction Act (which increased IRS funding over a ten-year period by $80 billion). That $14.3 billion reduction in IRS funding (cut over the ten-year period covered by the act) is GREATER than the current IRS annual budget.

Who will benefit most by the reduced IRS funding? Those of us who faithfully file accurate income tax returns? Or those scofflaws who knowingly file fraudulent tax returns? Any question on that?