Republicans Chop IRS Budget Again, Setting Up Clash With Obama

(Bloomberg) U.S. House Republicans are proposing a 7.7% cut to the IRS budget, setting the boundaries for a budget standoff over the next few months.

With a $10.1 billion budget for the Internal Revenue Service, Republicans rejected President Barack Obama’s call for an 18% increase that would allow the beleaguered agency to end a hiring freeze and answer more phone calls from taxpayers.

The parties are now $2.8 billion apart on IRS funding—a rounding error for the federal budget but an enormous gulf on a politically sensitive topic.

“Every day, Americans are making tough decisions about their own budgets and rightfully expect federal agencies to do the same,” said Representative Ander Crenshaw, a Florida Republican who oversees the IRS budget.

Republicans have been pointing to Obama’s IRS budget as a major source of conflict as the two parties try to hash out a federal budget by Sept. 30 for the first time since Republicans took control of the Senate in January.

“There is the threat to veto funding for the troops and their equipment without similar increases at the IRS and EPA, which would diminish our military’s ability to respond to the myriad threats facing us today,” Senate Majority Leader Mitch McConnell, a Kentucky Republican, said last week, also referring to the Environmental Protection Agency.

Democrats argue, by contrast, that starving the IRS costs the government revenue from tax enforcement, with about a $6 return on every dollar spent.

The IRS budget for the year that ends Sept. 30 is $10.9 billion, about what the agency received in inflation-adjusted terms in 1998.

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