Downsizing the IRS

There are many reasons to believe, going back decades, that conservatives care less about balanced budgets than about ideological purity. Republicans sent the national debt soaring not once, but twice, in the past 30 years with a combination of unaffordable tax cuts and military outlays -- first under Reagan than under George W. Bush.

How the right can credibly position itself as fiscally responsible is beyond me. And there may be no better microcosm of conservative hypocrisy on fiscal issues than their approach to the Internal Revenue Service.

Now, in theory, conservatives aren't against taxes per se. They just want lower rates and a less complex system. In practice, the right has being waging a war against the IRS nearly since its founding and uses every chance they get to take a whack at the agency's budget. As a result, our tax collection system has become a sieve and an estimated $3 trillion has been lost to tax evasion over the past decade alone. That lost revenue has helped jack up the national debt and accounts for about a fifth of this year's budget deficit. 

The Obama Administration has been working hard to stop the epidemic of tax cheating, which is so bad that the IRS fails to bring in 15 percent of all revenue owed to the U.S. Treasury. It has launched a wide ranging crackdown on tax cheats who stash cash in overseas accounts and it has dramatically stepped up audits on wealthy filers, as we wrote about here earlier.

Most importantly, the Obama Administration has sought to bolster the IRS's enforcement capacity, arguing that every dollar spent in this area helps reduce the deficit many times over. The Administration's current budget request would raise the IRS budget from $12.1 billion to $13.3 billion.

But conservative in Congress are pushing in the exact opposite direction. Just yesterday, the House Appropriations Committee cut $600 million from the IRS's current budget. In March testimony, IRS Commissioner Douglas Shulman warned that cuts of this magnitude would mean $4 billion lost to tax cheats.

In other words, for every dollar Republicans want to cut from the IRS budget, the government will lose over six dollars. Why would anyone see this as a good deal? Especially if they purport to be a deficit hawk?

Beyond this, there is another contradiction in the right's animus to the IRS: It helps guarantee higher tax rates.

Taxes are near a postwar historic low right now. But partly because the IRS can't collect what is owed, to the tune of over $300 billion a year, these low rates are not sustainable and higher taxes are inevitable.

There is a elementary trade off within any tax system: you can have lower rates and strong enforcement, or higher rates with weak enforcement. But you can't have lower rates and weak enforcement.

An IRS with the resources to do its job means smaller deficits and lower taxes. Aren't these goals that conservatives believe in?