Few of us like the annual chore that is filing our taxes. The process is tedious, time-consuming and tense. And if we need help? Well, fuhgeddaboudit. The IRS is answering only 1 in 5 phone calls.
This isn’t incompetence at work. It’s the result of a dastardly, decades-long and mostly successful campaign by elected Republicans and their allies to demean and defund the IRS. As a result, the beleaguered agency is severely understaffed and working with outdated technology. Which means hundreds of billions of dollars in taxes are uncollected — money that could go toward everything from health and education programs to putting a dent in the national debt.
Yet many Republicans don’t want to fix it. They are pushing back against President Biden’s plan — part of his Build Back Better agenda — to give the IRS $80 billion over the next decade to improve its operations.
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The money would pay for desperately needed system upgrades and boost the number of auditors capable of analyzing the richest Americans’ complicated tax filings.
But many Republicans say it’s just an excuse for the government to get its hands deeper into your wallet. “This additional money for the IRS to target all Americans is absolutely wrong,” Sen. Rick Scott (Fla.) claimed late last year. “It will target our families, it’s going to target our small businesses, and it’s going to go after them to get them to pay more money.” They say administration vows to stick with sticking it to the rich won’t be honored. “We know that most of this $80 billion will be used to enhance the ability of the IRS to target middle Americans,” said Sen. Todd C. Young (Ind.).
It’s the latest ploy from an old playbook.
No one ever loved the IRS. But criticism got much more heated after Republicans took control of Congress in the 1994 midterm elections and announced plans to radically reduce taxes and shrink the federal government.
“Kick the IRS out of your wallet,” said Newt Gingrich within weeks of becoming speaker of the House in 1995. Soon Senate Republicans were fundraising by promising to “virtually abolish the IRS as you know it.” In 1997, the Senate Finance Committee held dramatic hearings on claimed abuses by overzealous IRS tax collectors, with some agency employees testifying with their faces hidden. In the face of the publicity disaster, Democrats joined with Republicans to enact sweeping reforms in 1998.
This set the stage for a second, more devastating round of Republican attacks following the rise of the tea party movement in 2010. Outraged at the tax code provisions of the Affordable Care Act, Rep. Tom Price (Ga.) claimed the IRS would hire 16,000 new enforcement agents, while Maine Gov. Paul LePage deemed the IRS the “new Gestapo.”
Controlling the House from 2011 to early 2019 and the Senate from 2015 to early 2021 helped Republicans implement successive cuts in the IRS budget. When adjusted for inflation, the agency’s appropriations fell every year but one between 2010 and 2018.
The long-term result: According to figures put together by the Center on Budget and Policy Priorities (CBPP), the agency’s overall funding is down by 17 percent in real dollars since 2010. Money for enforcement has been cut by 21 percent and for taxpayer services by 8 percent.
Between 2010 and 2019, the audit rate decreased by more than half, with millionaires 71 percent less likely to encounter an IRS agent asking questions about their returns, while audits of corporations with at least $10 million in profits are down by more than 60 percent. The number of auditors able to conduct complex investigations of high-net-worth individuals and companies fell by 40 percent between 2010 and 2020.
This diminished enforcement deprives the U.S. government of as much as $600 billion a year, according to a Treasury report last September.
That is partly because the lowest-income filers are the ones getting the most enforcement: Households poor enough to receive the earned-income tax credit are five times more likely to be audited than higher-earning filers, according to research released by Syracuse University’s Transactional Records Access Clearinghouse.
Why? The IRS says auditing the poorest of the poor is the most “efficient” use of agency resources, because their fairly brief and simple returns take an average of only about five hours to process. But the strategy is penny-wise, pound-foolish — not to mention cruel. Lower-income Americans might be an easy target, but they are far from a rich one.
The wealthy are wise to what’s going on. They — and their paid financial factotums — know the IRS doesn’t have the time and resources to investigate their long and complex returns properly.
The failure of the IRS to enforce the law efficiently and fairly feeds into increased public cynicism about government. “It undermines public trust,” says Chuck Marr, vice president of federal tax policy at the CBPP.
This isn’t good. We need to fix the IRS, not watch it degrade further. Biden’s plan is a good place to start.
In the meantime, if you are trying to call the IRS this week and can’t get through to a live human, here’s an idea: Call a Republican.