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Budget Cuts Series: The IRS.... Trump's Treasury Secretary Disagrees
The Budget Cuts Series marches towards to examine the White House proposed budget cuts and learn what's hidden beneath the surface. We will later update based on Congressional budget proposals and actions.
The Interal Revenue Sservice is proposed to suger a $239 million reduced budget, the latest in a series of cuts since 2010 first imposed by the Republican Congress. The IRS is an unsurprising target of Trump who previously complained was treating him unfairly.
Reducing the agency’s budget might not save money, experts on taxes warn, because the IRS will have fewer agents to sniff out tax dodgers. IRS Commissioner John Koskinen...said that each dollar spent at the agency results in $4 in unpaid taxes returned to the Treasury [and as much as $10 when invested in enforcement activities]. Trump’s treasury secretary, Steve Mnuchin, has also said that a lack of resources for the agency is already costing the government money.
The effectiveness of the IRS to achieve its mission has been greatly compromised by past budget cuts and would continue to deteriorate with the proposed additional cuts.
The size of the audit staff has fallen by 30 percent, resulting in a decades-low audit rate of 0.7 percent for individual taxpayers. For large corporations, the number of returns audited in 2016 fell by nearly half compared to 2006, to 9.5 percent from 17 percent.... the enforcement unit lost 7,000 employees. The criminal investigations unit has suffered staff reductions, resulting in fewer cases, prosecutions and convictions.
The agency’s data show the average time taxpayers spend waiting on the phone to talk with an IRS representative has increased from three minutes in 2004 to 18 minutes last year.
Trump's appointed Treasury Secretary Steven Mnuchin is strongly against the proposed cuts that worsen an already deploration situation, stating a need to increase funding and enhance the resources of the IRS.
At his confirmation hearings in January, Mr. Mnuchin bemoaned the cuts to the I.R.S. budget over the last seven years. The agency “is under-resourced to perform its duties,” he said, adding that further cuts “will indeed hamper our ability to collect revenue.” He also acknowledged that money spent on the I.R.S. is a good investment: “To the extent that we add resources, we can collect more money.”
Mr. Mnuchin said that additional investment should be devoted to manpower and modernization. With respect to manpower, Mr. Mnuchin has linked a depleted I.R.S. work force to falling collections. Beefing up the staff, he says, is “an important part of fixing the ‘tax gap,’ ” a shortfall that exceeds $450 billion a year, or 80 percent of last year’s budget deficit.
Further cuts to the IRS leaves more tax dollars owed to our country in the hands of the wealthy and corporations who can't be held accountable by a purposely starved agency.
Since $1 in I.R.S. appropriations yields at least $4 in additional revenue (and, again, as much as $10), cutting $239 million from the I.R.S. would reduce revenue by nearly $1 billion, and perhaps by as much as $2.39 billion. Alternatively... reinvest[ing[ in the I.R.S. with, say, $1 billion, could generate at least $4 billion (and as much as $10 billion) toward bridges and roads, Medicare and, yes, aircraft carriers.
Sources:
https://www.nytimes.com/2017/03/27/opinion/why-steven-mnuchin-wants-a-stronger-irs.html
Photo Credit: Adam Maida/NY Times