JONATHAN CHAIT APRIL 19, 2010
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Good column by Ezra Klein on the Republican war on the Internal Revenue Service:
In the late '90s, the Republican-controlled Senate Finance Committee held a series of dramatic hearings in which individuals sat behind screens and haltingly, tearfully, told stories of IRS persecution. Some of the stories featured genuine misdeeds. Others fell apart upon later examination (Robert McIntyre, the director of Citizens for Tax Justice, remembers one in particular where it turned out the witness was living off his employee's payroll taxes).
But the trials worked to demonize the IRS. The result was the IRS Restructuring and Reform Act of 1998, which made enforcement more difficult and began a long cut in the IRS's collection resources.
A report released by Citizens for Tax Justice shows that between 1995 and 2005, the IRS's budget was slashed by a fifth. Between 1995 and 2003, its enforcement division lost 36 percent of its staff. They were barred from conducting research on tax evasion, which meant they lost the ability to keep up with new tricks that accountants had discovered to game the tax code. More bizarrely, audits of the poor increased, through a special program meant to ferret out Earned Income Tax Credit fraud, but audits of people making more than $100,000 fell from 210,000 in 1996 to 92,000 in 2001—despite the fact that there were 80 percent more income filings over $100,000.
I suppose this behavior flows naturally from an ideological premise that deems anything that decreases tax revenue a positive good. But of course, decreasing tax revenue by creating a deterioration in tax compliance is insane. Why not make the IRS more effective and use the offsetting revenue to cut tax rates? At some point political ideology becomes incompatible with the the effective working of a modern administrative state.
8 comments
Two things conservatives can't stand: Poor people getting away with screwing the government, and rich people not getting away with screwing the government.
- Fishpeddler
April 19, 2010 at 4:11pm
There was a time when conservatives at least wanted a competent/lean government. Now they want an incompetent/lean government. The irony is that an incompetent government is NOT good for big business. Business needs predictability. When the GOP cuts the staff tasked to conduct environmental impact reviews, they probably think they're helping business. In reality, this only causes reviews to take years instead of months, and projects can't go forward in a timely fashion.
- Virginia Centrist
April 19, 2010 at 4:23pm
VC, I question one of your premises. Since when do conservatives want a "lean" government? The fastest and largest postwar expansion in government functions, employment, and cost came in the modern era of conservative political dominance. The more power conservatives have held, the less "lean" government has become. I know that conservatives preach the rhetoric of small or limited government, but they practice overweening government bloat. Sort of like how they preach fiscal responsibility but practice increased deficit spending, or how they preach pro-life rhetoric but practice pro-abortion policies.
- rhubarbs
April 19, 2010 at 4:33pm
They like tax cheats because it tends to support the argument that raising taxes on the wealthy not only is wrong -- which is a hard sell -- but ineffective, because wealthy people will just game the system in response. A rational person might respond, Well, hows about we make it harder to game the system? The conservative answer is, Because we're cutting IRS enforcement. Why? Because.... Because.... Taxing rich people is wrong!
- jhildner
April 19, 2010 at 4:33pm
Republicans weren't always this way. Prior to 1986, the tax court judges would regularly complain to the Congress that they were overburdened with all of the shelters (essentially investments that generated large tax paper deductions or credits). Under Reagan we passed the passive activity rule that required active participation in an investment to take write offs and Treasury Secretary Regan attributed that to his telling President Reagan that Reagan's secretary paid more in taxes than some millionaires. That's the only improvement to the tax code I can recall.
- Nusholtz
April 19, 2010 at 9:35pm
I have no idea where the GOP found the moral and political courage to oppose taxes and tax collectors. Unbelievable. If you are looking for principles, look no further.
- stevedwight
April 19, 2010 at 10:08pm
Jhildner, This is certainly one of their sillier claims. On second thought, lately it would probably qualify as one of their more reasonable claims. I imagine the nuance of their response might also go towards taxation being yet another example of government inefficiency, and therefore why we should spend and tax less. But like you, I think the simple answer is strengthening the IRS. Or we could always just raise the taxes on the wealthy even higher to make up the difference.
- elirector
April 19, 2010 at 11:42pm
I have a corollary to Fishpeddler's rule: Conservatives love law and order, but L&0 doesn't include collecting or enforcing tax laws. The reason is because only ambitious, virtuous deserving people pay taxes (read: have income)while lazy, immoral riff-raff doesn't (read: on the dole). Law and Order refers only to protecting wealth and property.
- desertdog
April 20, 2010 at 3:18pm