Given the record deficits, there is hesitation in suggesting that more money be allocated to a government agency. However, doubling the Internal Revenue Service (IRS) budget would actually reduce the deficit.
Most people’s income consists of wages, pensions, interest on bank accounts, and dividends – payments reported to the IRS by employers, pension funds, banks, and dividend issuers.
IRS computers compare these amounts with those reported on tax returns, flag inconsistencies, and charge taxpayers for the additional money due.
Enforcing tax laws against companies and high-income individuals – who get most of their income in a way that is not reported to the IRS by those who pay them – is much more difficult.
Auditing these taxpayers requires the personal attention of the IRS accountant. But for decades, Congress not only failed to increase the IRS budget enough that inflation would not undermine it. It actually reduced the number of dollars in the budget. The IRS can no longer employ enough accountants to enforce tax law against corporations and wealthy families.
Corporate fraud costs the government an estimated $ 125 billion annually. Nobody knows how many rich people are cheating, but that is probably a large amount too.
The estimated additional $ 6-14 that could be raised for every dollar added to the IRS funding would soon add up. A joke, often attributed to the late Senator Everett Dirksen, said, “A billion here, a billion there, you’ll be talking about real money pretty soon.”
Nothing can be said for allowing the rich to cheat their taxes, which puts a greater burden on the average population. Why didn’t Congress take the opportunity to increase revenue without increasing tax rates?
Tax fraudsters have a lot of extra money that they owe but don’t pay under current tax law. You can donate some of this money to members of Congress who are always hungry for campaign money and are seeking re-election. By some estimates, members spend more than half of their working hours raising funds instead of doing their job.
Members of Congress, of course, hesitate to bite the hands that feed them. Reducing or eliminating the need for campaign donations could allow Congress to give the IRS the financial assistance it needs.
It would also make it more likely that Congress would legislate in the general interest, rather than in the interests of businesses and the wealthy.
When campaign funding reform fails, don’t you hold your breath and wait for Congress – “the best politicians money can buy”? – to double the IRS budget.
Unless it can significantly increase the IRS budget, Congress should at least try to keep funds reasonably stable from year to year rather than moving them up and down.
Fluctuating support from Congress makes it nearly impossible to hire and retain the highly skilled accountants necessary to evenly enforce tax laws.
From today’s perspective, outstanding new accounting graduates interested in an IRS career can have many years ahead of them if that agency does not hire new staff. You will, of course, be interested in the big accounting firms and other great opportunities that come up.
Then, as the IRS gets a bigger budget and tries to hire many freshly graduated new examiners, it will have to be less selective in hiring the desired number. This suggests that if Congress miraculously decides to double the IRS budget, the doubling should happen over several years, rather than all at once.
A New York Times reader recently suggested that the IRS could hire private accounting firms to audit companies and high net worth individuals. This would not cost the IRS anything as it could be funded by giving private companies a small percentage of the additional taxes it collects.
Of course, lobbyists for the rich and powerful would argue – possibly rightly – that this would have to be approved by Congress. Well, it was a nice idea while it lasted!
Paul F. deLespinasse is Professor Emeritus of Political Science and Computer Science at Adrian College. He can be reached at firstname.lastname@example.org.