Congressional Democrats and the Biden administration are focused on making our tax code work better for all Americans. Currently, parts of the tax system reward wealth over work and allow the richest Americans to avoid paying their fair share. Despite these challenges, the Inflation Reduction Act took important steps to make the tax code more equitable, streamline how Americans file their taxes, and focus audits on wealthy tax cheats.  

The progressive federal income tax helps level the playing field 

The individual income tax is used to raise revenue from those who can afford to support public services. It is progressive, meaning that higher-income Americans pay a larger percentage of their income in taxes than low-income Americans. This allows Congress to raise necessary revenues without doing so on the backs of families already struggling to get by. 

Provisions in the tax code unfairly reward wealth over work 

A range of tax loopholes unfairly value wealth over work. They do this by taxing income from work at higher rates than income from wealth. Instead of fixing this, current federal tax provisions that help families build wealth are overwhelmingly tailored for high-income Americans. They also benefit white families more than families of color and cost taxpayers a total of $529 billion per year.  

Investments in the IRS can help pursue wealthy tax cheats while improving services for all taxpayers 

In order to fairly collect taxes from the very wealthy, the IRS must be able to audit complex finances when necessary. By investing in the IRS, the Inflation Reduction Act and President Biden’s budget proposal for fiscal year 2024 will improve staffing, legal support, and technology to make sure that revenues are collected correctly and on time. This increased scrutiny of high-income taxpayers will not affect small businesses or any families making less than $400,000—instead, it will focus on large corporations and the highest-income families who use complex tax structures such as partnerships to avoid paying their fair share  

Democrats are working to strengthen the tax system for all Americans 

Under President Biden, Democrats have made significant progress in strengthening the tax code to make it fair for all Americans. Building off progress made in 2021 and 2022, President Biden’s budget proposal would enact a 25% minimum tax for billionaires and permanent expansions of low-income tax credits. In addition, the Inflation Reduction Act reversed years of chronic underfunding for the IRS, enabling them to improve their customer service and better focus their audits on wealthy tax cheats.