Tax Lawyer's Blog

Three cheers to Eric Toder of Tax Vox Blog who wrote,

IRS audit resources have never fully recovered – in relation to the workload the IRS faces – from the IRS-bashing of the late 1990s. That’s too bad because IRS internal studies show each dollar spent on an additional examiner brings in on average 4 to 5 dollars of additional revenue. Fortifying enforcement would seem to be a “no-brainer” when we have a tax gap of at least $400 billion. 

Toder acknowledges that some people may think it’s unwise in a recession to take money from delinquent taxpayers that would be otherwise circulated in the economy. But he has an interesting answer:

[N]ew agents wouldn’t become serious revenue raisers until the recession has run its course. In their first year, the IRS estimates, so-called revenue productivity will be very low because experienced auditors will be kept busy training the new examiners. And paying this new cadre will add to the economic stimulus. In a few years, the revenues will come rolling in and the new agents will more than pay for themselves.  

I hereby renew my vow never to favor a tax increase of any kind until two things occur:

1.  The government eliminates or seriously curtails waste; and

2.  It substantially closes the tax gap.

Analogy: What would you do if your 15 year old son asked you to raise his allowance from $50 per month to $100 per month if you knew that he flushed $20 dollars of his monthly stipend down the toilet?

You wouldn’t give it to him.

So why give the federal government a raise for wasting your money?

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