The Internal Revenue Service building, Washington DC.
Ann Hermes/The Christian Science Monitor via Getty Images

The counterproductive campaign against the IRS

Updated
It’ll take a while for members of Congress – and the rest of us, for that matter – to dig through the $1.1 trillion spending package unveiled last night, which will fund nearly all of the government for the next year. The closer one looks, the more the details matter.
 
The agreement, for example, includes over $5 billion to finance the federal response to the Ebola outbreak, and a similar amount to combat Islamic State militants. There’s money for a few dozen F-35 fighter jets and a boost to Israel’s Iron Dome missile-defense system.
 
But it was one of the budget cuts that jumped out at me. Ed O’Keefe reported overnight:
At domestic agencies … the IRS would lose $345.6 million. The nation’s tax agency also would be banned from targeting organizations seeking tax-exempt status based on their ideological beliefs.
Since the IRS wasn’t planning on targeting organizations seeking tax-exempt status based on their ideological beliefs, that latter half of the paragraph isn’t too big a deal, but cutting the IRS budget by another $345.6 million is a very bad idea.
Shrinking resources are hurting a key IRS system that collects outstanding taxes, potentially leading to lost revenue for the federal government, according to a new report. […]
 
IRS officials have made reversing recent budget cuts a top priority, and advocates for more resources say it would allow the agency to bring in revenues that are currently owed but uncollected.
Confronted with this knowledge, congressional Republicans insisted on slashing the Internal Revenue Service’s budget anyway. Why? Because of the discredited, year-old “IRS scandal” that never really existed outside the far-right fever swamp.
 
I realize that defending IRS funding isn’t exactly a sexy topic, and we’ll never see an organized “Leave the IRS Alone!” campaign, but this is actually symptomatic of a larger problem.
 
As we discussed over the summer, since Republicans took over the House in 2011, the IRS’s budget has already been cut deeply, “leading to sharply reduced staff, less enforcement of the tax laws and poor taxpayer service.” The new response from far-right lawmakers is to make matters worse, on purpose, in part because of a “scandal” that’s largely imaginary.
 
The policy consequences are real.
As the economist Jared Bernstein noted recently in The Washington Post, a weakened I.R.S. enforcement staff will be unable to make a dent in the $385 billion annual gap between what taxpayers owe and what they pay – an unintended tax cut, mostly for the rich, that represents 11 percent of this year’s spending. […]
 
But it is bad news for building roads, keeping the air clean, protecting the nation’s security, and countless other vital government tasks. Revenue collected by I.R.S. enforcement actions has fallen by more than $4 billion over the last four years, according to a new report from the Center on Budget and Policy Priorities. And every dollar spent on enforcement yields $6 in additional revenue. Many I.R.S. computers use obsolete Windows XP operating systems and cannot keep up with a growing problem of identity theft that is directing refunds to criminals.
I’ve seen some GOP lawmakers struggle with the logic: how can cutting spending cost more money? The answer requires a little bit of thought, but it’s really not that complicated.
 
Have folks heard the phrase “Penny wise, pound foolish”? As we’ve discussed before, if we cut spending on volcano monitoring and tsunami warnings, we save a little money on maintenance, but pay a lot of money on damage repairs after disaster strikes. If we cut spending on food safety, we save a little money on inspection, but pay a lot of money on health care costs when consumers get sick. If we cut spending for the Securities and Exchange Commission, we save a little money on enforcement, but pay a lot of money to clean up financial catastrophes.
 
And if we cut the IRS’s budget, we save a little money on administrative costs in the short term, but we lose out on a lot more money needed to fund the government and pay our debts in the long term.

For reasons that only seem to make sense to them, congressional Republicans don’t seem to care.
 

IRS

The counterproductive campaign against the IRS

Updated