PD Editorial: IRS cuts may cost more than they save

In just a few short months, Americans must file tax returns. If they need help completing their forms, they might be out of luck. Congress cut the Internal Revenue Service’s budget again this year, and the agency lacks the resources needed to answer every tax question.

IRS bashing and slashing might be good politics, but it is terrible policy.

Few people like paying taxes. A recent survey by the Pew Research Center found that Americans dislike the IRS more than any other federal agency. Only 45 percent hold a favorable view, though the partisan divide is stark. Republicans, especially tea partiers, loathe the agency. Democrats generally like it.

Republican disdain runs deep because of the party’s anti-tax ideology and a perception that the IRS under President Barack Obama has unfairly targeted conservative nonprofits accused of violating the rules for tax-exempt organizations. Cutting funding, then, plays well with the GOP base and harms an agency that Republicans would just as soon eliminate.

Since 2009, Congress has slashed the IRS’ budget by 10 percent, 3 percent this year alone. As in most things, you get what you pay for.

IRS Commissioner John Koskinen says he will have to suspend worker overtime, hold off on new hires and keep fewer people around to serve the public. According to National Taxpayer Advocate Nina Olsen (yes, there is such a job), fewer agents will be available to handle more than 100 million phone calls seeking tax help. Wealthy people who can afford accountants might not mind, but for average Americans struggling to figure out byzantine tax rules, it will mean long waits on hold or maybe no answer at all.

Less IRS money also will mean fewer audits. Tax cheats will get away with paying less than their fair share. Again, that probably won’t bother wealthy people and corporations who tend to have the sort of complicated tax returns that allow for creative accounting. But it will affect people who benefit from public services that the revenue would have funded.

America has run a deep deficit for years, and belt-tightening is one means to help close the spending gap. But those cuts need to be strategic. The $346 million Congress cut from the IRS this year will prevent the agency from collecting $2 billion that are lawfully owed. The result will be a bigger deficit or more cuts elsewhere.

Last week, Republican Sen. Ted Cruz, who wants to run for president in 2016, told the Iowa Freedom Summit, “We need tax reform, and the most important tax reform we can do is we need to abolish the IRS.” He suggested stationing all IRS agents on the southern border to enforce immigration laws.

One has to admire his audacity, if not his fiscal acumen or personal accountability. If anyone is to blame for the broken tax system, it is not the IRS but Congress. The IRS tries its best to enforce the laws that Congress passes. Lawmakers set the rates, create loopholes and carve out breaks that pander to special interests. Only they can reform the tax system.

But that would require political courage and compromise. It’s easier to scapegoat the IRS.