Slashing the IRS Budget—Penny-Wise and Pound-Foolish

[ElNono]

Bruce Bartlett - The Fiscal Times
January 17, 2014

There is an old trick in both government and business to get rid of an operation you don’t like through stealth—you simply cut its budget gradually, thus causing its effectiveness to suffer, and then cut it some more because it is ineffective. Repeat until the operation is so weak and can be abolished altogether.

Republicans have been playing this trick with the Internal Revenue Service for years. The agency has become the all-purpose whipping boy to excite Tea Party members and divert attention from the performance problems resulting directly from Congress’s failure to fund it properly. The Obama administration has stood by passively, doing nothing whatsoever to counter Republican attacks.

The problems at the IRS will only get worse; the new budget gives it $526 million less than it got in 2013, which was cut from what it got in 2012, which was cut from what it got in 2011. And these are dollar cuts; in inflation-adjusted terms the budget reduction is even greater.

Full Story:
http://www.thefiscaltimes.com/Column...-Pound-Foolish

[boutons_deux]

The Internal Revenue Service (IRS) recently estimated that the gross tax gap—the difference between taxes owed and taxes paid on time—was $450 billion for tax year 2006.

For a portion of the gap, IRS is able to identify the responsible taxpayers. IRS estimated that it would collect $65 billion from these taxpayers through enforcement actions and late payments, leaving a net tax gap of $385 billion.

The tax gap has been a persistent problem in spite of a myriad of congressional and IRS efforts to reduce it, as the rate at which taxpayers voluntarily comply with U.S. tax laws has changed little over the past three decades.

Given that the tax gap has been persistent and dispersed across different types of taxes and taxpayers, coupled with tax code complexity and a globalizing economy, reducing the tax gap will require applying multiple strategies over a sustained period of time.

IRS enforcement of the tax laws is vital for financing the U.S. government. Through enforcement, IRS collects revenue from noncompliant taxpayers and, perhaps more importantly, promotes voluntary compliance by giving taxpayers confidence that others are paying their fair share. GAO designated the enforcement of tax laws as a high-risk area in 1990.

http://www.gao.gov/highrisk/enforcem.../why_did_study

Can't find it now, but IRS's return on investment of 1$ in enforcement is much more than $1.

[boutons_deux]

US tech firms make eleventh-hour attempt to halt tax avoidance reforms

Silicon Valley has launched a last-ditch attempt to derail plans devised by the G20 group of countries to close down international loopholes that are exploited by the likes of Google, Amazon and Apple to pay less tax in the UK and elsewhere.

The Digital Economy Group, a lobbying group dominated by the leading US digital firms, has written to the OECD, the Paris-based thinktank tasked by G20 leaders with drawing up reforms, saying it is not true that communications advances have allowed multinational groups to game national tax systems.

Suggesting that any leakage of tax revenues flowing from the complex corporate structures of digital groups is merely coincidental, the Digital Economy Group says: “Enterprises that employ digital communications models do not organize their business operations differently as a legal or tax matter.”

Their denial of tax engineering follows a string of tax scandals in Europe and the US in the past two years. In the UK, Google bore the brunt of criticism from Margaret Hodge, who chairs the public accounts committee, after it emerged that Google – which the Guardian understands is a member of the DEG – had been allowed to pay £3.4 million in tax to HMRC in 2012 despite UK revenues of £3.2 billion.

. “We believe that [digital] enterprises operating long-standing business models, subject to established international tax rules, should not become subject to altered rules on the basis that they have adopted more efficient means of operation.”

Baker & McKenzie did not respond to a request for further information on DEG membership. When asked if they were members of the lobby group, Amazon and Apple were either unavailable or declined to comment. One source with knowledge of the DEG said: “It is largely if not exclusively made up of tech companies, mainly from Silicon Valley … Most of the big guys are there.”

http://www.rawstory.com/rs/2014/01/19/us-tech-firms-make-eleventh-hour-attempt-to-halt-tax-avoidance-reforms/

"subject to established international tax rules", compliance with tax rules the wealthy and megacorps/transnational corps have paid legislatures to rig, mostly secretly, in their favor.

[Wild Cobra]

Move to a consumption tax and get rid of the income tax system, and we can made deep cuts in the IRS.

[boutons_deux]

consumption tax

punitively regressive, exactly what the wealthy and their Repug s want.

[Wild Cobra]

punitively regressive, exactly what the wealthy and their Repug s want.

Why are you always a crybaby?

[scott]

Why are you always a crybaby?

Boutons is a barely coherent crybaby... you are a complete moron...

These are the self-evident truths of the Politics forum.

[FuzzyLumpkins]

You and I both know that you are considered the village idiot by quite a few people. If not for boutons, then many others would take that tact but he draws the conservative ire. Despite that people like DMC and teysha mock you with regularity and none of the board conservatives come to back you up. Quite the contrary as time and again they distance themselves from you.

Boutons is a barely coherent crybaby... you are a complete moron...

These are the self-evident truths of the Politics forum.

See, WC?

[TDMVPDPOY]

all these cuts dont make sense, when the fed doesnt keep track of how much money they are printing...

[boutons_deux]

all these cuts dont make sense, when the fed doesnt keep track of how much money they are printing...

The bank-owned-and-operated Fed subsidizes only the financial sector.

The Repugs only care about austerity to screw the parts of govt that helps the 99%.

Less power for the govt, more power for the -the-99% private sector.

[DUNCANownsKOBE]

It's been researched that every additional $1 spent on an IRS employee brings in about $200 of additional tax revenue. Cutting the IRS budget is both penny and pound foolish.

[boutons_deux]

It's been researched that every additional $1 spent on an IRS employee brings in about $200 of additional tax revenue. Cutting the IRS budget is both penny and pound foolish.

and of course, the NSA is no help at all in catching tax cheats like Bishop Gecko and 10Ks other with richies with offshore accounts.

[boutons_deux]

A standard dejection in the IRS help line

DALLAS — By midmorning, the line of taxpayers outside the IRS office stretched along the marble wall, past the elevators and water fountain, back to the metal detectors near the entrance of the Earle Cabell Federal Building.

Andrew Concha came out into the hall holding a purple sign. He checked his watch — 11:04 a.m. — then calculated how many people could be seen before the Taxpayer Assistance Center closed at 4:30 p.m. He placed the sign behind the 17th customer, signaling to the other 30 or so in line that their chance of seeing a specialist that day was slim.

“I’m not technically turning them away yet,” Concha explained. “I’m letting them know it may not be in their interest to wait three to four hours to see someone.”
With Tax Day approaching, it was the best the IRS could offer.

Five years of budget cuts by Congress ( THANKS, REPUGS! ) have left the agency so cash-strapped that Commissioner John Koskinen doesn’t bother sugarcoating the state of customer service.

“It’s abysmal,” he said.

Nationwide, only 4 in 10 callers to the agency’s toll-free help line are getting through to a real person.

The number of “courtesy disconnects” — a euphemism for an overloaded system hanging up on the customer — has reached 5 million so far this year, the agency reported.

When callers do get a real person, they can forget about asking questions that require expertise. These are now considered “out of scope.” The customer-service agents have been instructed to only tell callers what tax forms they need, where to get them and where to look for online information. Staff can no longer offer line-by-line assistance, provide guidance on tax planning or tax law, or help make payment arrangements.

And with 5,000 fewer agents than four years ago to go after tax cheats, officials estimate that $2 billion in revenue will go uncollected.

http://www.washingtonpost.com/politics/a-standard-dejection-in-the-irs-help-line/2015/04/07/333594d6-d7f0-11e4-8103-fa84725dbf9d_story.html?ncid=newsltushpmg00000003

Thanks, Repugs!

VRWC/conservative strategy: non-stop misgovern, up of govt (that serves the 99%) so badly, deeply, widely that citizens detest it, a self-fulfilling prophecy.

[CosmicCowboy]

Not saying it's necessarily right to cut their funding but this also goes to the hubris at the IRS. They gave congress a big " you" on the Lois Lehrner debacle and it's not exactly smart to bite the hand that feeds you. It certainly didn't help them that they wasted millions on nutty conferences and "training films" where they took the funds directly from their enforcement budget...

http://www.washingtonpost.com/politi...027_story.html

[spursncowboys]

Move to a consumption tax and get rid of the income tax system, and we can made deep cuts in the IRS.

here here

[CosmicCowboy]

here here

Not to be a spelling cop but technically I think it's hear, hear.

[FuzzyLumpkins]

Not to be a spelling cop but technically I think it's hear, hear.

'hear here' makes the most sense to me. at least that conveys the thought directly.

[ElNono]

Not to be a spelling cop but technically I think it's hear, hear.

winner, winner, chicken dinner

[CosmicCowboy]

historically I think it was a drunken hear, hear as in hear what this guy is saying but I admit it's not a normal usage in my vocabulary arsenal.

[boutons_deux]

Not saying it's necessarily right to cut their funding but this also goes to the hubris at the IRS. They gave congress a big " you" on the Lois Lehrner debacle and it's not exactly smart to bite the hand that feeds you. It certainly didn't help them that they wasted millions on nutty conferences and "training films" where they took the funds directly from their enforcement budget...

http://www.washingtonpost.com/politi...027_story.html

Repugs fabricated the entire episode that included going after Lerner. She pushed their back in their faces.

[Winehole23]

IRS picking on the working poor:

If you claim the earned income tax credit, whose average recipient makes less than $20,000 a year, you’re more likely to face IRS scrutiny than someone making twenty times as much. How a benefit for the working poor was turned against them.

https://www.propublica.org/article/e...t-working-poor