Given record deficits, one hesitates to suggest appropriating more money for any government agency. But doubling the Internal Revenue Service (IRS) budget would actually decrease 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 declared on tax returns, flag discrepancies, and bill taxpayers for extra money due.
Enforcing tax laws against corporations and high income individuals — who receive most income in ways not reported to the IRS by those paying them — is much harder.
Auditing these taxpayers requires personal attention from IRS accountants. But for decades Congress has not just failed to increase the IRS budget enough to keep it from being eroded by inflation, it has actually reduced the number of dollars in the budget. The IRS therefore can no longer employ enough auditors to enforce tax law against corporations and wealthy families.
Corporate cheating costs the government an estimated $125 billion annually. Nobody knows how much rich individuals are cheating, but this probably is also a large amount.
The estimated extra $6 to $14 that could be collected for every dollar added to IRS funding would soon add up. As a witticism often attributed to the late Senator Everett Dirksen put it, "A billion here, a billion there, pretty soon you're talking real money."
Nothing can be said in favor of allowing the wealthy to cheat on their taxes, leaving more of the burden on average people. So why hasn't Congress grabbed the opportunity to increase revenues without raising tax rates?
Tax cheaters have lots of extra money which they owe under existing tax law but aren't paying. They can donate some of this money to members of Congress — always hungry for campaign money — seeking re-election. By some estimates members spend more than half of their working time soliciting donations rather than doing their job.
Members of Congress are naturally reluctant to bite the hands that feed them. So reducing or eliminating their need for campaign donations could allow Congress to give the IRS the financial support it needs.
It would also make it more likely Congress would legislate in the general interest rather than in the interest of corporations and the wealthy.
Failing campaign finance reform, do not hold your breath waiting for Congress — "the best politicians money can buy" — to double the IRS budget.
If it cannot substantially increase the IRS budget, Congress should at least try to keep appropriations reasonably stable from year to year instead of jerking them up and down.
Fluctuating congressional support makes it nearly impossible to hire and retain the high quality accountants needed to enforce tax laws evenhandedly.
As things stand now, outstanding new accounting graduates interested in an IRS career may face many years when that agency is not hiring any new employees. They will naturally gravitate into the big accounting firms and other good opportunities that are available.
Then, when the IRS is given a bigger budget and tries to hire many freshly graduated new auditors, it will have to be less selective in order to hire the desired number. This suggests that if, by some miracle, Congress decides to double the IRS budget, the doubling should be phased in 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 corporations and wealthy individuals. This would cost the IRS nothing since it could be financed by giving the private firms a small percentage of the extra taxes it collects.
Of course lobbyists for the rich and powerful would argue — possibly correctly — that it would have to be authorized by Congress. Oh 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 received his Ph.D. from Johns Hopkins University in 1966, and has been a National Merit Scholar, an NDEA Fellow, a Woodrow Wilson Fellow, and a Fellow in Law and Political Science at the Harvard Law School. His college textbook, "Thinking About Politics: American Government in Associational Perspective," was published in 1981 and his most recent book is "Beyond Capitalism: A Classless Society With (Mostly) Free Markets." His columns have appeared in newspapers in Michigan, Oregon, and a number of other states. Read Prof. Paul F. deLespinasse's Reports — More Here.
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