The Foolishness Of De-Funding The IRS

Nobody loves the IRS.  Let’s get that out of the way.  But cutting the IRS budget as part of an attempt to reduce budget deficits is stupid.  Recent $1 billion cuts to the IRS budget have resulted in $8 billion in reduced tax revenues.  And as, Joseph Thorndike points out, this isn’t news; Harry Truman made the same point more than 60 years ago:

“I am advised by the Secretary of the Treasury and the Commissioner of Internal Revenue that the reduction of $20 million in the appropriation for the Bureau of Internal Revenue [as the agency was then known] will mean a reduction in personnel of 4,000 to 5,000 employees and will result in a direct loss of revenue of not less than $400 million in the fiscal year 1948.”

Then, as now, Congress chose to ignore the math.

De-funding the IRS doesn’t help people who are honestly going ahead and paying their taxes.  We will file anyway.  It just helps the people who are trying to cheat.

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.