The Biden administration has promised not to raise taxes on anyone making under $400,000 a year. And despite estimates from official congressional scorekeepers that the Schumer-Manchin-Biden tax increase indeed would raise taxes on those Americans, the administration has doubled down on the claim as a final vote nears on Democrats’ bill.

Treasury Secretary Janet Yellen sent a letterWednesday to IRS Commissioner Charles P. Rettig that includes this statement:

Specifically, I direct that any additional resources—including any new personnel or auditors that are hired—shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels.

Yellen’s directive follows Rettig’s Aug. 4 letter to U.S. senators declaring the same objective:


These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans. As we’ve been planning, our investment of these enforcement resources is designed around the Department of the Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000.

But considering the sheer magnitude of 87,000 new IRS agents and an estimated $204 billion in new revenues from enforcement, is it possible for all those new audits and revenues to involve only taxpayers making over $400,000?

—Returning to 2010 audit rates for all individuals making over $400,000 would  generate only 28%, or $9.9 billion, out of the estimated $35.3 billion in new IRS enforcement revenues in 2031.

—Even increasing recent audit rates thirtyfold for taxpayers making over $400,000—including 100% audit rates on taxpayers with incomes over $10 million—still would fall more than 20% short of raising the estimated $35.3 billion in new revenues in 2031.

Note: This assumes a 98% increase in the number of tax filers making over $400,000 between 2019 and 2031, based on annual growth rates between 2014 and 2019. Audit rates from 2010 to 2019 by income group and additional tax per individual tax return audited for 2021 is available here from the nonpartisan Government Accountability Office.

Estimated revenues from a thirtyfold increase in audits almost certainly is overstated, since 30% to 40% of audits in these income groups result in no additional tax being owed, and audits already target returns with higher likelihoods of underpayments.

—Auditing every single taxpayer with annual income over $1 million would require only 25,000 new IRS enforcement agents, but Democrats’ bill calls for 87,000 new agents. What will all those extra agents be doing?

Note: Estimates are based on the Treasury Department’s estimated new full-time-equivalent agents, and the Government Accountability Office’s estimated hours per audit by individual income level.

Calculations conservatively assume that only 57.3% of the Treasury Department’s estimated 86,852 new IRS agents (49,754 in total) would be assigned to enforcement, based on $45.6 billion of the bill’s $79.6 billion increase for the Internal Revenue Service dedicated to enforcement.

Calculations also assume that 8.9% of IRS enforcement agents would be assigned to corporate audits, based on the Congressional Budget Office’s estimate that corporations account for 8.9% of the tax gap. Enforcement agents are assumed to spend 75% of their paid time auditing tax returns.

Despite the Biden administration’s claims, it’s almost certain that households making less than $400,000 a year would face increased audits under Democrats’ bill.

And that seems to be the true intent of the IRS. According to a 2021 report from the Government Accountability Office, “From fiscal years 2010 to 2021, the majority of the additional taxes IRS recommended from audits came from taxpayers with incomes below $200,000.”