In Punishing IRS, GOP Is Harming Honest Taxpayers

If he thinks this is hard to imagine, he hasn't been paying attention to politics for a good while.

http://www.thefiscaltimes.com/Articles/2014/06/27/Punishing-IRS-GOP-Harming-Honest-Taxpayers

BY ROB GARVER, The Fiscal Times
June 27, 2014

It’s hard to imagine Republicans in Congress actively championing legislation that would make it easier for criminals to get away with breaking the law and make it harder for law-abiding citizens to get help from the government all while simultaneously increasing the federal deficit, but that’s exactly what a bill marked up in the House Appropriations Committee on Wednesday would do.

The legislation in question is the spending bill that appropriates money for the Treasury Department, the White House, the federal judiciary and number of other federal agencies. Over the past five years, House Republicans have used the appropriations process to pummel the Internal Revenue Service with cuts that have left the agency funded at a lower level than it operated under in 2008.

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But the nation needs tax revenues to be collected fairly and efficiently in order to function, and both the agency itself and outside observers say that the constant budget cuts have damaged its ability to do its job. Even doing something as seemingly basic as answering taxpayers’ phone calls has become a struggle, according to the Treasury Inspector General for Tax Administration, which cited “long customer wait times” and “customers abandoning calls” in a report issued earlier this year.

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The more far-reaching damage to the country, though, may come as a result of the revenue that is foregone by crippling the agency’s enforcement division. Every dollar the IRS collects in tax payments is a dollar the Treasury doesn’t have to borrow to meet the country’s spending needs. To be blunt, making it harder for the IRS to do its job is fiscal stupidity distilled to its essence. It’s the equivalent of leaving money on the table, then borrowing the same amount of money and agreeing to pay it back with interest.

And the amount of the money sitting on the table is huge. The “tax gap” — that is, the difference between the amount of money the government collects and the amount it is actually owed — is more than $40 billion a year domestically. Add in unpaid taxes from companies and individuals doing business overseas and it balloons to more than $100 billion.

Every $1 spent on the IRS Enforcement Division, which is in charge of making sure that people and corporations pay what they owe in taxes, yields $6 in increased revenue. And, to be clear, that’s not revenue gained by squeezing law-abiding taxpayers for more of their money. It’s getting people breaking the law to pay what they owe. Yet the Enforcement Division has had to cut its staff by 15 percent since 2010. The result has been a decline in audits, a decline in examination, and the loss of billions of dollars in revenue.

The damage isn’t just fiscal, either, notes Marr of CBPP. It’s fundamentally unjust to those who do pay their taxes. “Honest people deserve to have less-than-honest people pay their taxes, too,” he said.

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