IRS bashing by GOP has unintended consequences
Republicans in Congress are OK with tax cheating and favor Americans paying more in federal income taxes. While that might not be the stated position, it is the unintended impact of IRS bashing — particularly budget cuts to the tax collection agency.
House Republicans saw it as good politics last week when they marked what they called “I.R.S. Week” with renewed attacks.
Granted, few people are fans of the Internal Revenue Service. But cuts to the IRS budget hurt honest taxpayers because staff cuts mean fewers tax cheats are caught, forcing others to pay more in federal income taxes or increasing the federal deficit.
Over the past five years, congressional Republicans have slashed the IRS budget by $1 billion, forcing staff reductions of about 17,000. Fewer IRS agents working on audits and investigations means more cheating and reduced enforecement and collection. IRS cuts also grow the “tax gap” — the difference between the amount of taxes owed and the amount collected, estimated at about $400 billion a year.
One action taken by Republicans last week was not unreasonable — it established that no IRS employees would receive a bonus until customer service improves. Most people would agree with that action. In fact, many might question bonuses for government employees in general.
Budget cuts by Congress mean the agency has fewer people not only for audits and investigations, but also to answer taxpayer questions and provide customer service.
Attacks on the IRS are seen as good politics. Nobody likes paying taxes and many people blame the IRS for tax-related headaches. But at least when it comes to the complex and loophole-ridden tax code, it’s Congress that’s to blame. Congress passes tax laws and inserts loopholes, often under pressure from special interests and campaign contributors.
Cutting the IRS budget has been part of the Republican agenda in recent years, but analysis shows the harm these cuts cause honest taxpayers -- for every $1 spent by the IRS on tax compliance it collectes about $4 in tax revenue.
The IRS is a rare federal agency that pays for itself.
After several years of budget cuts, tax audits are at the lowest level in a decade. This is good news for tax cheats, but bad news for honest taxpayers.
One report found that reduced tax compliance efforts by the IRS cost about $6 billion in uncollected revenue in 2014 and $8 billion in 2015.
The IRS needs more people, not fewer, to work on audits and go after tax cheats and tax evasion schemes.
In addition, the IRS needs more employees working to protect taxpayers from increasing numbers of scams, including phone schemes targeting older Americans threatening legal action unless money is paid immediately. These bogus calls have been placed to an estimated 20,000 Americans, costing many vulnerable and trusting senior citizens thousands of dollars. Other scams include identity theft used by criminals to claim — and receive — hundreds of millions of dollars of other peoples’ tax refunds.
There is plenty to complain about when it comes to the IRS, but cuts to the agency’s budget, which means fewer agents, auditors and investigators only hurts average and honest taxpayers.
IRS bashing is a favorite activity for Republicans in Congress, but it’s mostly misguided and counterproductive. While the IRS needs to improve its operations, efficiency and customer service, it’s important for people to understand the implications of budget cuts at the agency.
