EDITORIAL: IRS funding boost will help track down tax cheats
Aug. 23—Since the passage of the Inflation Reduction Act, much attention has been on its push for energy production, clean energy initiatives, subsidies for Affordable Care Act health insurance plans and deficit reduction.
But another key component of the Democrats' sweeping legislation is $80 billion in added funding to the IRS over the next decade. The money will help address bottlenecks due to staffing shortages and to beef up efforts to collect taxes from corporate and wealthy filers who currently escape paying what they owe.
The funding is long overdue. The agency has shed 13% of its staff in the past decade and now has staffing levels near-1974 levels. In the same period the IRS' budget has dropped from $14.3 billion to $13.7 billion, or about 15% when adjusted for inflation.
Charles Rettig, commissioner of the IRS and a Trump appointee, told Congress the funding boost was needed so the agency can do the job it's charged with doing.
"We are the greatest country in the world, yet the agency that touches more Americans than any other continually struggles to receive sufficient resources to fulfill its important mission," he said.
Rettig noted the agency has long been unable to properly examine the returns of corporate and high-net-worth taxpayers to ensure they are paying their fair share.
The agency said the added funding will not mean more audits for most taxpayers. The number of audits done annually will not increase for those with incomes under $400,000 a year.
More than 95% of wages are reported for taxation because of W-2 reporting. But there is no third-party verification such as W-2s for the very rich and businesses.
The gap between taxes owed and taxes collected is $600 billion a year — estimated to be $7.5 trillion over the coming decade, according to the Treasury Department. As the agency was gutted by Republican congresses over the past 10 years, it is outmanned by the teams of tax lawyers available to corporations and the very wealthy.
Working to ensure people pay the taxes they owe should be an obvious goal. But Republicans, who view the IRS as a bother to their corporate supporters, have assailed the added IRS funding with a vicious campaign of misinformation.
Several leading Republicans have even framed the issue in violence.
"Are they going to have a strike force that goes in with AK-15s already loaded, ready to shoot some small business person in Iowa?" the state's Sen. Chuck Grassley asked.
"If the FBI can raid the home of a former U.S. president, imagine what 87,000 more IRS agents will do to you," Indiana Rep. Jim Banks said.
Despite the GOP fearmongering, the funding will instead allow the IRS to beef up its (non-gun-toting) enforcement staff and replace the 50,000 employees expected to retire in the next five years.
The government needs to collect taxes that are owed in order to operate. The added funding will help move toward that goal.
