On Wednesday, the House will vote on H.R. 4664, the Financial Services and General Government (FSGG) Appropriations Bill, as part of Speaker Mike Johnson’s ambitious schedule to pass all 12 single-subject appropriations bills. So far, the House has passed seven.
The FSGG bill includes several policies that protect U.S. taxpayers, cut back wasteful spending, and constrain the power of unelected bureaucrats.
Below are three of the many critical reforms the FSGG bill would implement:
Prohibits IRS Funds from Being Used for Government-Run Tax Preparation Software
In August 2022, as part of the Inflation Reduction Act (IRA),Democrats passed $15 million in funding for the IRS to conduct a report on the cost, feasibility, and public trust of a government-run tax preparation system. The IRA did not include funding/give authority for the creation of such a system nor a pilot program.
The Biden-picked IRS Commissioner Daniel Werfel repeatedly told congress and the public that he understood the IRA authorized only a study, and he promised that he would complete the study and then reflect with congress before deciding what to do next.
Instead, the Biden IRS began (illegally) moving forward with a pilot program and the creation of a prototype system.
Critically, the FSGG bill would explicitly prohibit IRS funds from being used to create government-run tax preparation software.
Government-run tax prep would incentivize the IRS to overcharge taxpayers and/or withhold information from filers to maximize revenue. Private tax preparation companies, in contrast, have a financial incentive to minimize the taxes their clients owe. Congress must resist any effort to empower the IRS to simultaneously act as tax preparer, collector, and auditor.
Rescinds Funding for Democrats’ IRS Expansion/87,000 New IRS Agents
The FSGG bill would also rescind $1.231 billion of IRS enforcement funding, helping conservatives, slowly but surely, claw back the $80 billion Democrats spent on supercharging the IRS in the Inflation Reduction Act. In May, Republicans successfully clawed back some of these funds in the Fiscal Responsibility Act. The FSGG bill would also ensure that the funds provided for enforcement cannot be increased through a transfer of funds from other IRS accounts.
While Democrats claim heightened spending on enforcement would enable the IRS to go after “wealthy tax cheats,” it simply empowers the agency to extract even more money from already struggling, working families.
A key reason audits will increase for middle-income households is that Biden’s IRS is refusing to amend its internal definition of “high-income household.” The official IRS watchdog – the Treasury Inspector General for Tax Administration – recommended the IRS update its definition of “high-income” households from its current definition (in place since 1976) of $200,000 per year in order to avoid an increase in audits of middle-income households and small businesses.
But the IRS refused, asserting that it needs “agility” to target whomever it wishes.
In other words, the IRS is not equipped to fulfill Biden’s supposed vow to avoid an increase in audits on households making less than $400,000.
TIGTA said: “There is no way to identify the complete population of taxpayers that meet the criterion of $400,000 or more specified by the current Treasury Secretary.”
So the Democrats’ additional funding will instead be used for invasive, time-consuming, and non-fruitful audits of middle-class Americans and small businesses. The IRS previously announced a goal to increase small business audits by 50 percent.
Rescinding enforcement funding will protect middle-class Americans and small business owners from overeager IRS agents.
Implements Several Reforms to Rein in Unaccountable Independent Agencies
Under the FSGG bill, the Consumer Financial Protection Bureau (CFPB) would receive $635 million, $15 million less than the authorized level and $26 million below the Federal Reserve transfer received through the third quarter of Fiscal Year 2023.
The bill further includes reforms to the Consumer Financial Protection Bureau (CFPB), ensuring a more accountable, well-run agency:
- The CFPB is currently funded through the Federal Reserve System. The bill would change this funding structure by subjecting the CFPB to the Congressional appropriations process.
- Would restructure the CFPB by replacing the unaccountable CFPB director with a bipartisan, five-person commission – similar to the FCC, SEC, FTC, and other independent agencies.
- Would prohibit CFPB funds from being used to require small banks to collect and report private information on their customers.
Further, the FSGG bill would prohibit the Securities and Exchange Commission (SEC) from using Congressional appropriations to finalize, implement, or enforce several problematic rulemakings, such as the climate-related disclosures rule.
The bill also prohibits the Federal Housing Finance Agency (FHFA) from using Congressional appropriations to implement the new single-family mortgage pricing framework that cross-subsidizes risky borrowers (borrowers who are less likely to pay back their mortgages) by charging certain responsible borrowers (borrowers who complete their mortgage payments on time) a higher fee.
Finally, the FSGG approps bill includes $84,530,000 for the Federal Trade Commission (FTC), well below the agency’s request for $590 million in FY2024 and $135.5 million less than the FY2023 enacted level. The bill restricts the FTC from using these funds to enact several proposed rules, including the “Motor Vehicles Dealers Trade Regulation Rule,” “Trade Regulation on the Use of Earnings Claims,” or the “Review of the Business Opportunity Rule.” Given that the FTC is using its current resources to collude with European regulators and wage antitrust lawsuits that fall apart in court, this provision is a welcome first step in getting the FTC back under control.