The Last Word with Lawrence O'Donnell, 7/10/13, 11:09 PM ET

Republicans rewrite the IRS budget

In a case of cut-off-the-nose-to-spite-the-face, the Republicans on the House Appropriations committee voted to cut the IRS budget by nearly a quarter and MSNBC's Lawrence O'Donnell explains just how much it will cost.

Bringing in the bucks: Why a bigger IRS is better


“On an annual basis,” said the Cincinnati IRS manager who oversees the team that examines groups applying for tax exempt status, “we receive upwards of 70,000 applications each year. On a monthly basis, there would be 4,000 to 5,000 applications that would go through my group for a review…My agents would typically look at 20 to 25 cases daily.”

That’s a lot of work for the team that recently came under heavy criticism for allegedly targeting Tea Party-related groups with unequal scrutiny. You  might think the Republican-controlled House Appropriations Committee would want more staff members in this Cincinnati department to better deal with the flood of 501(c)(4) applications. But by proposing to cut the federal IRS budget by 24%, as they did Tuesday, the Appropriations Committee would effectively do the opposite.

“This bill right-sizes federal agencies and programs that are simply not working efficiently or effectively, while investing in programs that directly serve the American people,” House Appropriations Committee Chairman Hal Rogers, a Kentucky Republican, said in a statement Tuesday.

It’s unclear how giving each IRS agent a heavier workload would make the agency more efficient. In fact, acting IRS commissioner Danny Werfel explained to House Republicans last month why the reverse is true. “We’ve asked for an increase in our enforcement budget of $412 million that would yield more than $1.6 billion in annual enforcement revenue,” Werfel said, “which is a $6 return for every $1 invested.”

Simply put, IRS agents make money for the government. “IRS data show that auditors assigned to the 14,000 or so largest corporations found $9,354 of additional tax owed for every hour spent testing tax returns in the 2009 fiscal year,” wrote David Cay Johnston in 2012.

According to Johnston, the highest paid specialized auditors earn $71 an hour. That’s $9283 less than what they make for taxpayers in the same period of time. On a yearly basis the number becomes staggering: about $19 million in lost revenue for every senior auditor job that’s cut.

For some Republicans, a 24% reduction of the IRS budget would not be enough.

“It’s time to abolish the IRS,” said Texas Senator Ted Cruz in a video that accompanied a petition to do just that. “We need to get rid of the army of IRS agents trying to police every aspect of our lives. We need a tax code that is simple, fair and that protects our freedoms.”

But is it really a bad idea to have an “army of IRS agents” if that means more cash (and therefore a lower deficit) for the government?

Bringing in the bucks: Why a bigger IRS is better