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The Real Internal Revenue Scandal
the real scandal is what Republicans did to cripple the agency when virtually no one was looking. Since the broad Tea Party-driven spending cuts of 2010, the agency’s budget has been cut by 14 percent after inflation is considered, leading to sharply reduced staff, less enforcement of the tax laws and poor taxpayer service.
As the economist Jared Bernstein noted recently in The Washington Post, a weakened I.R.S. enforcement staff will be unable to make a dent in the $385 billion annual gap between what taxpayers owe and what they pay — an unintended tax cut, mostly for the rich, that represents 11 percent of this year’s spending. Middle-class taxpayers who struggle to fill out their 1040s may welcome a diminished threat of an audit, but in fact this reduction is not about them. The I.R.S. audits a far higher percentage of tax returns from people reporting incomes over $200,000 than from those reporting less, because that is where the money is (along with the most profitable cheating).
But in 2013, it audited only 24 percent of returns over $10 million, compared with 30 percent in 2010. Of returns reporting between $1 million and $5 million, it audited 16 percent in 2013, compared with 21 percent in 2010. That is great news for the nation’s highest-income taxpayers, many of whom donate generously to Republican politicians to keep their taxes low. They are getting their money’s worth from lawmakers who debilitate revenue collection while claiming to be deeply worried about the budget deficit.
But it is bad news for building roads, keeping the air clean, protecting the nation’s security, and countless other vital government tasks.
Revenue collected by I.R.S. enforcement actions has fallen by more than $4 billion over the last four years, according to a new report from the Center on Budget and Policy Priorities.
And every dollar spent on enforcement yields $6 in additional revenue. Many I.R.S. computers use obsolete Windows XP operating systems and cannot keep up with a growing problem of iden y theft that is directing refunds to criminals.
But rather than meet their legal responsibilities, House Republicans have proposed cutting I.R.S. funding by yet another $341 million in 2015, to $10.9 billion. (Their bill also would outlaw the agency’s collection of the health law’s individual mandate penalty.)
President Obama’s budget, by contrast, would increase the agency’s spending by $1.2 billion compared with this year’s — not nearly enough, but at least a start in reversing a troubling trend and letting the I.R.S. do its job of collecting the money to pay for essential government services.
http://www.nytimes.com/2014/07/06/op...ndal.html?_r=0
