One of the most-hated federal agencies deserves some love from Congress
The Internal Revenue Service building in Washington, D.C., is seen on Friday, April 1, 2022.
As late filers scurried to meet the April 18 income tax filing deadline this year, the Internal Revenue Service (IRS) was still trying to work through mountains of tax returns from last year. The Washington Post reported in February that nearly 24 million taxpayers were still waiting for the IRS to process their returns. Many refunds have been held up for 10 or more months.
Trying to phone the IRS for help with this year’s taxes was nigh unto impossible. Only one in five phone calls was answered. If it is any consolation to frustrated taxpayers, that rate is significantly better than the one chance in 50 of reaching a human being reported last year.
As if that was not enough to cause taxpayers to hate on the IRS, how about the tax structure, which decidedly favors the wealthiest Americans. The 2017 tax bill, for instance, greatly favored America’s highest earners. One study found that the richest 400 families in the U.S. paid an average tax rate of 23 percent under the bill, while the bottom half of households paid a rate of 24 percent. The fundamental flaws in the tax bill were not the responsibility of the IRS, but the agency has been a focal point of taxpayer anger.
It is no wonder then that the IRS is one of our most-hated federal agencies. The agency was on the bottom rung of the ladder in public perception in 2013, with an overall unfavorable rating of 51 percent, which climbed to 65 percent among mainstream Republicans. By 2019, the IRS saw some improvement, with a 55 percent overall favorable rating that included 49 percent of Republicans. So, what has brought about the dysfunction at the IRS and the consequent lack of public esteem for the agency?
Beginning with the Republican takeover of the House of Representatives in 1995, there has been a steady drumbeat against the IRS among congressional Republicans. We started hearing calls among the mainstream GOP for abolishment of the IRS. Republicans have made repeated efforts to cut the agency’s budget and limit its audit capabilities. They have had a good measure of success, particularly in the last decade.
The House Budget Committee reported in October 2020 that from 2010 through 2018 “IRS funding was cut by 20 percent in inflation-adjusted dollars, resulting in the elimination of 22 percent of its staff.” This has left the agency “understaffed, constrained, and operating with archaic information technology systems.” In turn, IRS audits and collections “sunk to historic lows.” As the agency’s staff was shrinking, its workload was increasing — first, with administration of the Affordable Care Act and, more recently, with disbursement of federal stimulus funds.
The Republican drive to cripple the IRS goes hand in hand with its repeated efforts to deliver tax relief to the wealthiest Americans. Lobbyists for the top earners work both aspects — get the tax breaks for the well healed and then hobble the ability of the IRS to collect what is actually owed. The fewer IRS auditors, the lesser the chance that the IRS will collect taxes that are legitimately owed. The IRS has fewer auditors now than at any time since 1953.
IRS Commissioner Charles Rettig told Congress last April that the U.S. is losing $1 trillion or more in collectible revenue every year through complicated tax dodges. According to Rettig, the loss of talented audit and enforcement personnel has left the agency “outgunned” when “challenging aggressive moves by some of the most sophisticated taxpayers.
Despite its loss of auditors, the IRS has tried to maintain the number of audits it conducts in a year, but that has produced a perverse result. The easiest audits are those conducted against low-income taxpayers, where a result can be found by the simple flick of a computer. The poorest families in the country are five times more likely than anyone else to be audited. Even collecting from tens of millions of low-income taxpayers could not make a noticeable dent in the $1 trillion or more left uncollected every year.
The way to ensure that tax filers get first rate service from the IRS, including prompt refunds, is to adequately fund this important agency. Proper funding would also allow the agency to collect the billions of dollars that are left owed every year by those wealthy individuals who don’t believe they have a responsibility to pay what they legally owe to the country. A concerted effort to go after the scofflaws would make everyone else feel more comfortable forking over their hard-earned cash.
President Biden has proposed spending $80 billion over the next 10 years to improve the operations of the IRS. Fred T. Goldberg, Jr., an IRS commissioner under the first President Bush, has called Biden’s plan “transformative.” He said: “A decade of stable funding is necessary to recruit and train talent and build on the necessary technology – not only for compliance purposes but to meet the quality of services that the vast majority of compliant taxpayers expect and deserve.” Amen!
It’s time for the country to show some love for the only federal agency that takes in much more revenue than it expends. Republicans in Congress need to get on board to properly fund this essential agency, rather than continuing their dogged efforts to destroy it.
Jim Jones is a Vietnam combat veteran who served eight years as Idaho attorney general (1983-1991) and 12 years as a justice on the Idaho Supreme Court (2005-2017). He is a regular contributor to The Hill.