While watching the Ed Show's segment on "The Austerity Trap"from 30.01.2013, there was a brief mention of how the US could be on its way to imitating the problems in the Greek economy. While most of the focus was on one aspect, the austerity measures, another important item was mentioned: the fact that the Greek government does not collect much of the monies owed to it because people cheat on their taxes. Then the fact that cuts have been made to our IRS have hampered its ability to collect the monies owed:
The IRS budget has been reduced in each of the last two fiscal years, and appears likely to face further cuts in coming years. Although these cuts reflect across-the-board reductions in federal discretionary spending, underfunding the IRS makes no sense, Olson said. “The IRS is materially different from other discretionary programs in that it serves as the de facto Accounts Receivable Department of the federal government. Each dollar appropriated for the IRS generates substantially more than one dollar in additional revenue. It is therefore ironic and counterproductive that concerns about the deficit are leading to cuts in the IRS budget, when those cuts are making the deficit larger.”
How much has funding fallen? It's substantial. From Accounting Today (April 2012)
However, the long-term trend has been discouraging, Kelley said, noting that in 1995 the IRS had a staff of 112,024 to administer the tax laws and process 205 million tax returns. Today (2012), she said, the IRS staff is about 91,000 and must process more than 236 million much more complex tax returns.
And the Congress continues to slash at the IRS. Again, from the National Taxpayer Advocate:
IRS Funding Decisions Fail to Take Into Account “Return on Investment.” On a budget of $11.8 billion, the IRS collected $2.52 trillion in FY 2012. That translates to an average return-on-investment (ROI) of about 214:1. Yet the appropriations process treats the IRS like any other discretionary spending program, with no explicit recognition that each dollar appropriated for the IRS generates substantially more than one dollar in additional revenue. Last year, the IRS Commissioner estimated in a letter to Congress that proposed reductions in the IRS budget would cause tax collections to fall seven times as much.No one likes paying taxes. The weekends in my household dedicated to filling out tax returns are tense. I admit that if I were living in a Harry Potter book, my boggart would have the shape of a tax auditor. Yet I also realize how necessary it is. In fact, I have less problem with paying taxes than filling out the tax forms,
“No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. Shareholders would rebel and bring lawsuits, or at least oust the management or board of directors,” Olson wrote in her preface to the report. “Yet this is precisely what we are doing with the IRS budget.”
If we don't fund the IRS, filing becomes even more difficult. People who deserve money back may not get it. Those who should be audited - including major corporations - are not, or are audited weakly. Money is wasted. It goes down the drain.
I don't expect this to be the most popular issue, but it is a necessary one. One that makes good business sense for the country.
Rec list! Thanks. I hope is that it shines some light on the subject. I don't pretend to have all the answers - maybe none of them - and I probably don't even have all the questions.
Tired of politics? Need to escape? Try my Greek mythology based novels, either the story of Oedipus from the point of view of Jocasta, or a trilogy about Niobe, whose children were murdered by the gods - or were they?