Imprudent Budget Cutting, Ctd.

Republicans want to cut the IRS budget:

Every dollar the Internal Revenue Service spends for audits, liens and seizing property from tax cheats brings in more than $10, a rate of return so good the Obama administration wants to boost the agency’s budget.

House Republicans, seeing the heavy hand of a too-big government, beg to differ. They’ve already voted to cut the IRS budget by $600 million this year and want bigger cuts in 2012.

[…]

IRS Commissioner Doug Shulman told the committee Tuesday that the $600 million cut in this year’s budget would result in the IRS collecting $4 billion less through tax enforcement programs. The Democrat-controlled Senate is unlikely to pass a budget cut that big.

So here, cutting $600 million out of the Federal budget results in a loss of $4 billion. If you care about reducing deficits, how can this make sense?

I get that there are concerns about the intrusiveness of the IRS. But if you want to cut the IRS’ budget, I have a better idea: simplify the tax code. The simpler the tax code is, the easier it is to enforce, and the harder it is to cheat. Accordingly, you can shrink the IRS without costing the government revenue.

And simplifying the tax code also helps reduce the billions of dollars wasted every year on tax preparation every year. The fewer deductions, credits, and everything else there is, the less money and manhours need to be spent accounting and figuring out what taxes are owed.

FILED UNDER: Deficit and Debt, Quick Takes, Taxes, US Politics
Alex Knapp
About Alex Knapp
Alex Knapp is Associate Editor at Forbes for science and games. He was a longtime blogger elsewhere before joining the OTB team in June 2005 and contributed some 700 posts through January 2013. Follow him on Twitter @TheAlexKnapp.

Comments

  1. simplifying the tax code also helps reduce the billions of dollars wasted every year on tax preparation every year. The fewer deductions, credits, and everything else there is, the less money and manhours need to be spent accounting and figuring out what taxes are owed.

    Yes… but…. wouldn’t that eliminate jobs at H&R Block and Turbo Tax?

    /sarcasm

  2. Alex Knapp says:

    Yes… but…. wouldn’t that eliminate jobs at H&R Block and Turbo Tax?

    Yes, but I can’t imagine a scenario in which the tax code is simplified overnight. More than likely it would be phased in over a number of years, which would give the economy time to catch up.

  3. Trumwill says:

    I’ve been working on tax-related stuff today and was thinking the same things using foul language. I really wish it were politically feasible.

    A great example of what Joyner was talking about. Reducing government budgets without reducing scope is a financial loser.

  4. reid says:

    When your most basic axiom is that government is worse than everything else, the answer is always easy.

  5. gawaine says:

    Saying that we can’t cut the IRS budget because the enforcement is a revenue maker, is like saying that we should fund all of General Motors, because the Volt and their trucks are going to have a great ROI.

    Doing a little digging shows that they’re asking for more money than previous years, and that only a small portion of the increase is tied to enforcement. The rest of it has no ROI calculation that supports it. If they want the enforcement ROI, they can have it and have the cuts, too – they just have to ditch some of the other things they’re looking for.