Pretty much everyone hates the Internal Revenue Service. And I realize this is an especially strange time to stick up for the agency, given the suspicious disappearance of a few thousand key e-mails that Congress wants to see. But right now, the IRS desperately needs a champion.
Our country’s fiscal future — not to mention taxpayers’ collective mental health — depends on it.
For several years, the IRS has been laboring under more expensive mandates but with fewer resources. Since 2010, when Congress first began hacking away at discretionary spending, the bureau’s funding has fallen 14 percent, in inflation-adjusted terms, according to the Center on Budget and Policy Priorities. Its staff has also shrunk by about 10,400 employees, or 11 percent, over the same period. These cuts have come even though the agency’s responsibilities and workload have increased, thanks to new laws such as the Affordable Care Act and the Foreign Account Tax Compliance Act, as well as the growing problems of identity theft and tax refund fraud.
Now House Republicans want to hobble it even more. Last week, the House Appropriations Committee voted to slash the bureau’s budget by another $340 million.
If you care about narrowing the budget deficit — as Republicans generally say they do — gutting your chief revenue- collection agency makes little sense. It’s a bit like a supermarket trying to save money by getting rid of its cashiers.
The IRS generates way more money than it spends, after all. For every dollar appropriated to the IRS in the 2013 fiscal year, the agency collected $255, according to the national taxpayer advocate’s office. That’s a darn good return on investment.
Some of that money comes from going after tax cheats, and staffing in key enforcement positions has been sliding. This again seems like something you should care about if you’re a member of the conservative contingent that suspects many Americans aren’t paying their fair share. As several cash-strapped European countries can confirm, rampant tax evasion has a tendency to drive statutory tax rates higher so that the government can extract more money from those poor saps still obeying the law.
For now, at least, the vast majority of Americans pay the full amount they owe Uncle Sam under the law, but IRS budget cuts could threaten voluntary compliance going forward. That’s because one of the bureau’s core jobs is helping honest taxpayers like you and me navigate the byzantine tax system that Congress — that’s right, Congress, not the IRS — has constructed.
In fiscal 2013, for example, the agency received 109 million phone calls from taxpayers. Of the callers who wanted to speak with a customer representative, nearly 40 percent never got through, compared with 13 percent a decade earlier. Even the lucky callers who finally reached someone first had to spend an average of nearly 18 minutes waiting. A decade ago, the average wait time was 2.6 minutes.
Service looks likely to get worse, too: The IRS Oversight Board recently forecast that, unless Congress gives the bureau additional funding, almost half of all customer service calls won’t be answered in 2015 “due to projected increases in demand anticipated by the Affordable Care Act.” Meanwhile, backlogs for taxpayer correspondence have gotten substantially longer, and the IRS has curtailed many services at its walk-in tax preparation clinics around the country. None of this is good for “tax morale.”
Perhaps most alarming, a shortage of funds has caused the bureau to chronically underinvest in infrastructure, threatening its ability to operate effectively and efficiently. Some IRS computers, for example, run on an operating system so old and outdated that Microsoft has stopped supporting it. Given this, perhaps it’s not so far-fetched to believe that lost e-mails were the result of crashed computers and bureaucratic incompetence rather than malevolent cover-up and conspiracy.
But then, for many conservatives, bureaucratic incompetence may be a feature of IRS budget cuts rather than a bug. After all, one effective way to convince Americans that the government deserves to be shrunk and defunded is by making it grossly dysfunctional through inadequate appropriations. Budget cuts beget distrust in government, which begets more budget cuts.
“Starving the beast” doesn’t make agencies like the IRS less wasteful, just less functional. If, in the coming years, the U.S. government looks increasingly inept, outdated and inefficient, that may be partly by design.
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