Conservative groups opposed to a tax-cheat crackdown ramp up lobbying, threatening infrastructure deal

The White House and congressional Democratic leaders are pushing to translate the nearly $1 trillion bipartisan infrastructure deal into legislative language and get it to the Senate for a vote. The legislation could reach the Senate floor as early as the week of July 19, Politico reports, citing President Biden's legislative affairs team. The White House later clarified "it would be a mistake" to think of that week as "anything more than the opening of a window."

The group of about 20 moderate Senate Democrats and Republicans have split into groups to turn various parts of their deal into legislation, though "lawmakers are still trying to figure out how exactly to make their revenue sources, which include no new taxes, cover nearly $600 billion in new spending," Politico says. The senators have landed on infrastructure privatization, unused coronavirus relief funds and unemployment benefits, and increased tax collection enforcement among their funding sources.

But that last source, spending $40 billion to recover $140 billion in unpaid taxes, has drawn opposition from well-funded conservative political groups, threatening the entire infrastructure deal, The Washington Post reports. The conservative groups are preparing to send Senate GOP leaders a letter warning them not to negotiate with the White House without first pledging "no additional funding for the Internal Revenue Service."

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The idea of beefing up the IRS budget after a decade of steep cuts "has broad support among Democrats and Republicans alike, who in recent years have pointed to weaker IRS enforcement and estimates of the nation's persistent 'tax gap,'" the Post reports. But the devil is in the details, and "even these more modest moves may be a tough sell among the GOP" if the legislation "includes not just more funding for the IRS but bolsters a crackdown on tax evasion, even if focused on corporations and the rich."

"Enforcement of tax laws is one thing, but what people are concerned about is aggressive audits," Jason Pye, a federal lobbyist formerly at the conservative group FreedomWorks, tells the Post. Sen. Angus King (I-Maine), one of the bipartisan negotiators, suggested the weakened IRS has already let the rich evade taxes with near-impunity. "Why is it fair to working Americans who pay their taxes to allow people who can afford fancy lawyers and accountants to cheat?" he asked. "I'm not talking about tax avoidance. I'm talking about outright cheating, hiding income."