Promoting freedom, innovation, and growth

Connect with IPI

Receive news, research, and updates

February 3, 2014

The IRS Budget's Been Cut, But Not Nearly Enough

  Rare

What do you call it when the government is complaining that the IRS’s budget and staff have been cut so much that the agency cannot “do its job effectively,” and that if the shortfall continues “the government will have fewer dollars available to fund all federal programs”? You call it a good start!

The National Taxpayer Advocate just released its annual assessment entitled “IRS Budget: The IRS Desperately Needs More Funding to Serve Taxpayers and Increase Voluntary Compliance.” Gotta laugh at the word “voluntary”; who feels like their tax bill is voluntary?

The National Taxpayer Advocate is supposed to be an “independent” office operating out of the IRS to, as its name indicates, “advocate” for the taxpayer.

Anyone recall our “advocate” speaking out for conservatives and Tea Party groups when the country learned that IRS employees had been harassing them and stonewalling their efforts to get a 501(c)(4) tax exempt status? Yea, me neither. (Note: while 501(c)(4)s are nonprofit “social welfare” organizations, and so don’t pay taxes, contributions to them are not tax deductible.)

According the NTA, the IRS budget has been cut by 8 percent over the past four years, from $12.1 billion in 2010 to $11.2 billion in 2013. Meanwhile, it says inflation has increased by 6 percent.

The paper also moans that staffing has been cut by 8 percent over the same time period, from 94,618 employees to 87,031.

Here’s a question: Were any of those employees “cut” because they were illegally targeting conservative groups or releasing confidential information? The answer is no, though a few of the most egregious harassers got to retire with their full pensions—pensions, I might add, that are paid for by taxpayers and are, on average, much more generous than what private sector workers get.

The NTA’s conclusion is that without significant new funding, the IRS won’t be able to do its job. The bigger question is just how well it has been doing its job with the money it’s had?

Where was this budget concern when the IRS spent $60,000 making a Star Trek video spoof? Were any of those employees fired?

In his congressional testimony, then IRS Commissioner Steven T. Miller claimed that they were training videos that helped the agency reach the public and actually saved the IRS money—$1.5 million in 2011, he said. Then why complain if training funds were cut?

Instead of restoring IRS funding, Congress should cut its budget even more. In the recent budget deal, Congress cut some of the Department of Health and Human Services’ budget for implementing Obamacare. Why not the IRS, which also has an Obamacare implementation role?

Of course, the agency will say that further cuts would hinder its ability to catch tax cheats.  It’s a fair point.  But which is the bigger threat to our constitutional liberties: Some Americans lying to the IRS or IRS officials lying to the country, including members of Congress in sworn testimony?

Instead of seeking forgiveness and reforming the agency, the IRS has decided to be even stricter on 501(c)(4)s engaging in what it calls “candidate-related political activity”—or at least some of those organizations. President Obama’s Organizing for Action is also a (c)(4), and even though it actively works to implement the president’s political agenda, I suspect the IRS will give OFA an pass.

While some on the right call for shutting down the IRS, that’s not realistic so long as we have a complicated tax system that is getting more complicated all the time. But sweeping tax reform that created a low, flat tax (or close to it), or even a national sales tax, would allow us to dramatically shrink the IRS. Our pocketbooks would be safer, and so would our liberties.


 

  • TaxBytes-New

Copyright Institute for Policy Innovation 2017. All Rights Reserved Privacy Policy Contact IPI.

e-resources e-resources