How the IRS Was Gutted — ProPublica 🔗
“The IRS conducted 675,000 fewer audits in 2017 than it did in 2010, a drop in the audit rate of 42 percent.”
How do you have a tax system in a top economy with such poor enforcement that millions are likely committing tax fraud.
The first bill introduced by House Republicans in 2011 was a budget that slashed funding across the government and took special aim at the IRS. In addition to calling for a cut to its budget of $600 million, the bill prohibited the IRS from using any of its funding to carry out key parts of the Affordable Care Act. It didn’t pass. Since then, Republicans have cited the ACA as a reason to withhold funding from the IRS.
Oh, that’s how. The petulant children of the Republican Party can’t differentiate between their political concerns and our government’s main income source.
Fortunately, John Koskinen, who oversaw saw such potential disasters as the post-collapse Freddie Mac and Y2K, was brought in to fix the mess:
Cutting the IRS budget didn’t make sense to him. It was one of the few areas of government that had a positive return on investment. Koskinen told the Senate, “I don’t know any organization in my 20 years of experience in the private sector that has said, ‘I think I’ll take my revenue operation and starve it for funds.’
Of course, Congress decided not to listen to him either and continued to starve the IRS.
Koskinen replied with a speech he’d given many times before and would give again. A collapse in tax compliance was really possible, he said. People will catch on. He worried about the U.S. becoming Italy or Greece. “What I don’t want to do is have somebody later on say, ‘You never warned us,’” he told Congress. “This is your warning.”
This is deeply concerning. Much of our tax system is voluntary and audits cannot be performed on a significant portion of the population. Once compliance falls, there could be an unstoppable snow ball effect.
Annual revenue from audits is down by about $10 billion, adjusted for inflation, since 2010, and billions more have been lost by not pursuing nonfilers and other sources of unpaid tax debts. If the IRS had maintained a level of enforcement similar to that of the years from 2004 to 2010, it would have collected about $18 billion more than it did last year, ProPublica estimates. The total shortfall since 2011 has been about $95 billion.
How anyone could think it’s a good idea to let more people get away with tax fraud is beyond me.