Last year the budget slicing Republicans did not spare the IRS from their cuts. The Obama administration had been increasing the budget for the IRS because every dollar spent on tax enforcement results in three to four dollars of revenue. In other words, spending more on the IRS means saving money.
Of the $13.3 billion requested for the IRS in the president's FY 2012 budget, roughly $6 billion would go toward enforcement activities, an increase of $463 million over FY 2010 levels. Of note, $936 million of the $6 billion enforcement request would come from moving IRS funds around internally, which could help to make the budget increase more palatable to a Congress that appears intent on cutting spending. As the budget request notes, the move could also decrease future deficits.
Hoping to better deter taxpayers inclined to evade their responsibilities while also vigorously pursuing those who do, the IRS's enforcement activities have received steady budget increases under the Obama administration. Economists and federal tax analysts generally agree that for every dollar invested in enforcement actions, the federal government nets three to four dollars in additional revenue.Speaker Boehner objected. This is despite the fact that the additional funding to the IRS would have saved taxpayers money (except for cheaters who would be caught) and would have involved creating jobs, one of the Republican mantras that never seemed to be part of their legislation.
But when the White House released its budget in February, some Republicans expressed skepticism about giving the agency a roughly 9 percent funding increase over 2010 levels, which reportedly would add another 5,000 IRS employees.
Despite the bad reputation of the IRS, it does endeavor to help people in Missouri and in the rest of the country. Part of doing so is the Taxpayer Advocate Service (TAS) of the IRS. Save the link, it appears to be really useful. TAS made its annual report to Congress yesterday. Funding is the number one concern, the most serious problem at the IRS.“'I’m from the IRS. I’m here to help you,'” Rep. Todd Akin (R-Mo.) said at a House Budget Committee hearing shortly after President Obama’s budget was released. “That’s hard to sell in the state of Missouri.”
The most serious problem facing U.S. taxpayers is the combination of the IRS’s expanding workload and the limited resources available to the IRS to handle it.
Among the consequences:The report highlights the complexity of the tax code, currently at around 3.8 million words. More than five hundred changes are made by Congress each year. Republicans are right that the code needs to be streamlined and simplified. They are wrong to stifle the IRS in the interim. From the conclusion of the most serious problem section:
- The IRS is unable to adequately meet the service needs of the taxpaying public.
- The IRS is unable to adequately detect and address noncompliance, requiring honest taxpayers to shoulder a disproportionately large share of the tax burden.
- The IRS is unable to maximize revenue collection, contributing to the federal budget deficit.
The IRS does not have enough resources to handle its current workload. The lack of adequate funding for the IRS causes multiple problems. Taxpayers calling the IRS with tax-law questions often cannot get through, creating considerable frustration and potentially reducing compliance. Compliant taxpayers whose refunds are held up or who are audited do not receive timely responses to their phone calls and correspondence. The IRS lacks the resources to maximize revenue collection, thereby exacerbating the federal budget deficit. And compliant taxpayers who see that the IRS is not able to pursue noncompliant taxpayers adequately begin to feel like “tax chumps,” potentially making them less likely to comply in the future, particularly in the case of small business taxpayers for whom paying taxes may place them at a competitive disadvantage.Instead of across the board cuts and endeavors to dismantle government, Republicans need to look at what is really happening and the effect on real taxpayers. In this election season we are already hearing Republican contenders talking about broad fixes to government, mostly on a slash and burn basis. We are getting hurt already by results of Republican broad cuts from last year.