Small-business owners might be the best place to start if you want to see who is getting the lowest deal in 2021 America. Many people are working 60- to 80-hour work weeks just to survive.These companies suffered a severe beating during the peak of COVID-19. According to Economic Tracker, between Jan. 1, 2020 and Dec. 31, 2020 approximately 30% of small businesses in the United States closed while small-business revenue fell by 31%. The stock market boomed during the same time, while multinational corporations thrived.These economic disasters are evident in all parts of the country. America's main streets are filled with empty storefronts.This dynamic makes it almost impossible that Senate Republicans will vote to pass an infrastructure package to allow the IRS to generate more revenue by aggressively policing small businesses.The tax code is extremely complex. To navigate this complexity, large companies employ a lot of accountants and lawyers. They often pay very low taxes as a result. This advantage is not available to small businesses. The effective tax rate for a dentist in America is often higher than that of a hedge fund manager. Although the dentist earns a decent living, when you consider education, health care, as well as other expenses, it is difficult to call him wealthy.There have been major discussions about how progressive the tax code should look (should the wealthy pay higher wages or should there be a flat tax system?). However, no one outwardly supports a regressive system where the rich get less. This is exactly what we have at top of the tax ladder. It is causing a lot of political dysfunction.Faced with all this, Senate Republicans have an answer: To fund the bipartisan infrastructure package, they will unleash more IRS agents upon small businesses in order to close the so-called Tax Gap.The IRS defines the tax gap as the difference between the amount it calculates and the actual payment each year. In 2019, the IRS estimated that there was $600 billion of tax gap. This is a lot of money. This would be a wonderful solution if it were about catching tax cheats. Unfortunately, that is not the case. Complexity of tax codes can lead to confusion and inadvertent mistakes more than actual fraud.We need some level of national healing more than any other thing in America. It is refreshing to see Washington work together on an infrastructure package.America's long-term productivity will be improved if we spend on infrastructure such as roads and bridges. However, we should not pay for it by giving the IRS new powers to harass small businesses. Bipartisan infrastructure deals call for $40 billion in additional IRS funding for enforcement and agents. This is a staggering number, which will result in thousands to thousands of new IRS agents.As a bureaucracy, the IRS has not been able to justify more resources and authority. The IRS leaked tax returns from America's richest individuals to a news source recently, in an attempt to make the case for higher taxes. This information is not supposed to be released. It's the greatest breach of trust that federal officials can leak private tax returns of Americans.Also, it wasn't that long ago that Lois Lerner's IRS nonprofit tax office was found to have delayed liberal nonprofits' applications more than it did liberal nonprofits. This may be due to ideological reasons. Another major breach of trust was the use of the enormous power of the IRS to tip the political balances.Reform is needed for the IRS, not a large new enforcement budget. The government must aggressively pursue tax cheats. However, the tax-gap controversy is not about tax cheats. It's about a tax code which is too complex and costly to navigate.We would simplify the tax code if we wanted to reduce the tax gap. It is not possible to unleash thousands of IRS agents on small businesses in America that are already struggling.It is not surprising that Washington Republicans are so unable to or unwilling read the faces of their voters. Many Republicans believe Washington exists to serve corporate interests at the expense small business owners. It appears that the GOP is trying to prove them wrong.The Senate's Republican negotiators might have the answer to how trust in political institutions can fall further than it already is.COPYRIGHT 2021. CREATORS.COMThe Daily Signal offers a wide range of perspectives. This article is not meant to represent the views of The Heritage Foundation.Do you have a comment about this article? Send us an email at [email protected] with your comments. We may publish them in our We Hear You section. Include the URL of the article or the headline, along with your name and the town/state.
