The writer is a former vice president of Chevy Chase Bank
US President Joe Biden’s introduction of additional funding for the Internal Revenue Service (IRS) has been demonized by Republican leaders in the House of Representatives and Senate. But their reasoning is flawed to the point of being reprehensible.
Here’s why.
The IRS has been systematically downsized over the past 15 to 20 years despite the ever-increasing number of increasingly complex tax returns to process and the many additional burdens imposed on its staff by Congress. Lawmakers have also dramatically increased the agency’s burden, such as handing out tens of millions of checks for Covid relief funds and processing refundable child care tax credit payments.
As a result, the agency is close to breaking point. It is unable to process tax returns in a timely manner or provide acceptable levels of service to taxpayers and it is woefully incapable of enforcing tax laws.
The result – according to very detailed and well-researched studies by the IRS – is that tax evasion has reached a level of $600 billion a year and continues to grow. Unless action is taken, it is reasonable to expect that up to $7,000,000,000 in tax revenue, legally owed over the next 10 years, will remain unpaid.
IRS studies have further analyzed how and where cheating occurs. He is absolutely not among the vast majority of taxpayers who receive a regular paycheck, interest or dividend payment, or even proceeds from the sale of securities.
Rather, it happens with high-income taxpayers, usually businesses designed specifically as “partnerships” and which receive income that is not reported to the government. More than 50% of this “opaque” income is not declared and therefore not taxed, according to IRS studies.
To meet this enormous challenge, the Biden administration secured an additional $80 billion in funding (an annual increase of about 7% above the level of inflation) over the next decade. This will pay up to 87,000 new employees and help bring the IRS’ woefully outdated technology up to 21st century standards.
First, the number of 87,000 is the number that has caused the most consternation among Republicans, but they don’t seem to notice that it’s a goal for the next 10 years.
Second, the IRS today has 25,000 to 30,000 fewer employees than 25 years ago, when its workload was much smaller. Third, up to half of its current staff (78,000) are expected to leave over the next decade, so 35,000 to 40,000 staff will need to be hired just to replace retiring workers. and rolling provided.
Most of the remaining hires will be customer service representatives trained to answer the phone and answer taxpayer questions. The number of “revenue officers” skilled in the difficult work of reviewing and verifying tax returns is expected to be around 17,000 by 2031, barely more than the 15,000 revenue officers employed in the 1990s.
To suggest that recently passed legislation proposes to suddenly send 87,000 firearms officers into homes and workplaces, as Republican Senator Chuck Grassley has suggested, is the height of irresponsibility. He and his fellow proposal opponents Kevin McCarthy, Lindsey Graham and Rick Scott must stop this shameless cover-up. The additional funding for the IRS amounts to just over 1% of the amount lost due to cheating.
Strengthening the IRS presents a huge opportunity to increase tax revenue and reduce our deficits. The contribution to tax fairness is equally important, because collecting the taxes owed by high-income taxpayers ultimately reduces the burden on those who already pay what they owe.
Tax evasion is a matter of public order. Failure to take aggressive corrective action is condoning criminal conduct. It’s that simple.
