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Monday, April 8, 2013

Johnston: The Tax Police Budget Shrinks

Tax Analysts David Cay Johnston (Syracuse),  The Tax Police Budget Shrinks, 139 Tax Notes 211 (Apr. 8, 2013):

With the cuts under the budget sequestration, the IRS budget is down sharply from 2002 and is much too small to ensure the revenue collection necessary to sustain our democracy. 

IRS Budget Change Per Capita (in 2012 dollars)

Budget Cuts

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Republicans and Conservatives are always saying government should be run like a business. Well in a business that has accounts receivable, the company will invest resources to collect those receivables. As long as the money spent is less than the money collected, the money will be spent and that spending is a good thing.

The same principle applies to government, but for some reason Republicans will not support tax law enforcement expenditures at a level necessary to increase net revenue. So the problem in this situation with conservative Republicans is not their principles, it's the fact that they will not adhere to their principles.

Posted by: David R. | Apr 8, 2013 6:06:20 AM

Uh duh. The article is not about sequestration or those evil Republicans. If you read it or if it was accurately reported on the blog here, you would observe that it is a call to Obama to take care of IRS in the budget. Of course, the author takes a shot at business owners, especially global ones, and real estate professionals, but we have come to expect that in his writing.

Posted by: Jay | Apr 8, 2013 6:48:04 AM

Two comments. I have trouble following how the author came to his calculation that the sequester (the sequester?) will cause the IRS budget to decline by 50% in 2013. The author says his chart is self-calculated. I have not heard of any other department experiencing a 50% decline because of sequester. Also, what caused the IRS budget to zoom up and down during the last few years. The IRS budget could not have changed so much - was it the effects of "per capita."

David R should attempt to read the article rathe than just attach a "conservatives are bad" post. The author states the IRS budget decline is due to the sequester - something that was supported by the President and both parties. Why just blame conservatives?

Posted by: air65cav | Apr 8, 2013 7:14:59 AM

I'd prefer to sustain our Republic. Obamacare gives the IRS direct access to our checking accounts, and the use of computers figuring out or reviewing the easiest returns might free up humans to go after the rest of the taxpayers, unless you work for Uncle Sam and owe Uncle Sam money. Then you get a pass. Or you're part of the privileged like Corzine.

Posted by: Sandy P. | Apr 8, 2013 10:47:37 AM

Recent history refutes the notion that Republicans and other conservatives oppose effective tax enforcement.

To wit, the most recent wave of widely marketed abusive tax shelters (BLIPS, OPIS, CARDS, SOS, etc.) all arose under the Clinton Administration.

It fell to the Bush 43 Administration to clean this mess up. The IRS and DOJ under Bush 43 did just that. The government's victories in major tax shelter litigation since 2008 are the fruit of seeds sown by the previous Administration.

The point is not even remotely debatable.

Posted by: Jake | Apr 8, 2013 5:30:40 PM

@ Jay, I did not take a shot at business owners (which includes me). I pointed out that we have two systems, separate and unequal, for tax reporting and payment of taxes. That is unfair and offends the concept of equal justice under law.

@ AirCav, you misread. Nowhere do I say the IRS budget is down 50 percent. The inflation adjusted per capita budget is down 20 percent (or maybe 17). The sequester was to cut IRS spending by 8.2 percent, the OMB reported. Just before my deadline the IRS came up with the smaller $594.5 million project but would not explain this to me or another journalist who asked the reason. I reported both figures and will continue to ask about the basis for the new figure.

You can check the math by getting the published budget figures (from OMB or the IRS), adjusting for inflation (BLS) and population (Census).

@ Jake, you are quite right that the tax shelter explosion was largely ignored during the Clinton administration. Charles O. Rossotti, the first IRS head who was not a tax lawyer, fell short here. Having interviewed Rossotti several times (1997-2002) about these matters I believe he did not have a stomach for putting crooks behind bars, though he would never say that to me directly. I also think the GWBush administration could have been much more aggressive, both civilly and criminally, in cleaning up the tax shelters and that one of its shortcomings (which I will write about in the future) fostered one of the biggest the tax cheating problems that now vex us. Plenty of blame, and not much praise, to cover the current and last two administrations.

And @ DavidR, while Capitol Hill Republican leaders declare their hostility to tax law enforcement, I don't see the Democrats doing much, other than the soon-to-be retired Sen. Carl Levin's investigations. But funding -- notice after a strong start that Obama is replacing GWBush's scalpel with an axe -- is a problem with both parties.

Posted by: David Cay Johnston | Apr 8, 2013 6:49:10 PM