The IRS reported Monday that it examined only 0.45 percent of individual income tax forms in 2019 — lower than in 2018 and less than half of 2010’s rate. The agency’s budget has dropped by about a fifth, adjusted for inflation, since 2010, and it lost 30,000 employees over the past decade. “These losses directly correlate with a steady decline in the number of individual audits during the past nine years,” the IRS noted. An additional 20,000 full-time employees are slated to retire over the next five years. Republicans’ anti-IRS campaign came even as the agency had to manage Obamacare’s rollout, a major shift in the tax code and the rise in concern about identity theft. The beneficiaries have been the lawbreakers who get away with shortchanging the treasury — and the victims have been everyone else whose taxes had to fill the gap.
The IRS boasts that it processed 255 million tax documents and collected $57.5 billion in enforcement revenue last year. Yet the amount the IRS has left on the table is staggering: The agency pegged the net gap between revenue and what the government was owed at $381 billion between 2011 to 2013. Because no enforcement system is perfect, there will always be some tax gap. But Harvard economist and Post contributor Lawrence H. Summers found that, with better funding and reorganizing, the IRS could collect an additional $1 trillion over 10 years — without raising tax rates or demanding any more from those already obeying the law. Focusing on those who tend to avoid paying taxes — the 1 percent makes up about 70 percent of the tax gap — would also help.
On the other hand, continuing to erode the IRS could have the opposite effect. If people realize that they can get away with cheating, more will do so. The IRS reports that Amerians pay voluntarily, without enforcement proceedings, about 84 percent of the revenue they owe. A loss of confidence in the IRS could diminish this number.
Few people enjoy doing taxes, and audits are not fun. But the alternative is a less efficient, less fair system that punishes those trying to comply — including with tax rates that are higher than they would otherwise need to be in order to fund the government. The GOP effort to hobble the IRS has been an irrational populist spasm that Congress should finally suppress.