The Sad, Troubling State of the IRS

June 28, 2016
DMD Staff

For many, the Internal Revenue Service is an scary villain. But do we really want a country without an effective revenue collection service?

My entire life, I’ve had a soft spot for the villain. I was 7 when Star Wars exploded onto the scene, and I rooted hard for those fellows in the cool white armored outfits.

Antigone’s

King Creon was a friend of mine, and the Dallas Cowboys are a lifelong rooting interest. This may explain, in part, my affinity for the otherwise seemingly universally despised Internal Revenue Service (IRS).

So it is with a heavy heart that I lament the current state of the IRS—underfunded, compromised, broken. A commissioner unfairly marked for impeachment. An audit division severely limited in its capacity to conduct audits and collections. How did we get here, and why does it matter?

The Atlantic

’s Norm Ornstein describes in detail the political and fiscal circumstances that have led to the IRS losing about $1 billion from its 2010 budget in inflation-adjusted terms. Those budget cuts, in turn, have forced the agency to downsize by about 13,000 people—a huge chunk of the agency’s workforce—many of whom are responsible to responding to public inquiries and performing tax audits. Ornstein’s full article is worth a read, even if you don’t normally have a big foam finger that reads: “IRS No. 1!”

How Does this Affect Me?

In addition to rooting for Duke basketball, I am a card-carrying capitalist, a firm believer that a smaller government is a better government, and a devout reader of Adam Smith. But those characteristics don’t extend to a belief that tax evaders or tax cheats should get away with their crimes.

Beyond having a rooting interest in the IRS, consider this: Compromised tax collection efforts and insufficient auditing procedures harm the vast majority of honest Americans who dutifully calculate and pay their taxes. Thus, our entire society suffers. As Ornstein astutely points out, “Intimidating, undermining, and destroying the IRS’s capacity to carry out its role, to collect all the tax money that’s owed, to starve government, makes all agencies perform more poorly, and leads to a backlash against government. The poor service that results from cutting personnel also alienates taxpayers, frustrates their efforts to keep up with tax law, and makes it easier to evade the law.”

Ouch.

As a law-abiding taxpayer, there may not be much you can about this current sad state of affairs. Maybe it’s enough to be aware of it—to know that there are consequences when even a body few have an affinity for, can’t meet its obligations.