If You Care About The Deficit, Fund The IRS

Posted by | March 20, 2013 08:37 | Filed under: Top Stories

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by Stuart Shapiro

Like President Obama, I don’t believe that deficits are our biggest problem.  However there is a relatively cheap way to reduce them that should clearly be pursued:

With mounting political support for deficit reduction, the Internal Revenue Service (IRS) has faced increasing pressure to reduce the “tax gap”—the difference between the taxes legally owed and the amount the agency collects on a timely basis.

The tax gap is apparently rising.  The IRS recently estimated a 2006 tax gap of $450 billion, of which the agency expects to collect only $65 billion through late payments and enforcement actions. In 2006, the IRS estimated that the 2001 tax gap was $345 billion.  The IRS claims that this rise is likely a result of total increases in tax liability rather than a change in taxpayer compliance rates.
Anyone who wants to make noise about the deficit or about enforcing the law, should start with more funding for the IRS to enforce our tax laws.

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Copyright 2013 Liberaland
By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.