John Oliver wants to give the IRS more money: Is he right?
It's not a message anyone wants to hear around April 15, but each additional dollar spent ensuring that more Americans pay what they owe yields $6 in new revenue.
Washington — John Oliver wants to give the IRS more money.
It's not a message everyone wants to hear around April 15, or any other time of year for that matter. Polls find the Internal Revenue Service to be one of the least-loved federal government institutions. Conservatives in particular sometimes say they'd like to abolish the agency altogether.
Enter Mr. Oliver, host of "Last Week Tonight" on HBO.
The British comedian is an alum of Jon Stewart’s “Daily Show,” so it’s not surprising that his perspective often tilts politically leftward. But he shared some thoughts that might be worth a listen for fiscal hawks (and defense hawks) on the right.
If you are for holding down the national debt or for finding some money to invest in a stronger military, after all, it isn’t bad to have a functioning agency for revenue collection, rather than a broken one.
Oliver pointed to the following US Treasury estimate: Each additional dollar spent ensuring that more Americans pay what they owe tends to yield $6 in new revenue.
Yet Congress has cut the IRS budget 18 percent since 2010, according to the Center for Budget and Policy Priorities, a Washington research group. The funding cuts affect those enforcement efforts (cutting enforcement staff by 10,000 people or 20 percent) and the efforts to help people comply with the tax laws that the same Congress makes more complicated each year.
That at least part of the reason IRS help line callers can expect long wait times or not getting through at all.
“The fact is, blaming the IRS because you hate paying your taxes is a bit like slapping your checkout clerk because the price of eggs has gone up," Oliver said. "It’s not her fault – she’s just trying to help you get out of the store.”
It’s not just John Oliver who cautions against blaming the “checkout clerk.”
The conservative Mercatus Center at George Mason University, in a 2013 report, concluded that Congress’s complex tax code means not only that Americans spend enormous time and money on tax filing, but also that even after all the returns come into the IRS, there’s a huge gap between the money owed and the money collected.
“Improving tax compliance in the United States would have important implication for US revenues,” wrote authors Jason Fichtner and Jacob Feldman. Using IRS data, they estimated that some “14.5 percent of 2006 estimated tax liabilities will never be collected after IRS’s enforcement efforts.”
That’s equal to almost 3 percent of GDP – roughly the size of the entire federal deficit – or $452 billion in 2012 dollars.
It’s not realistic to expect 100 percent compliance, even if stronger enforcement efforts were in place. And the Mercatus economists go down a different track from Oliver when recommending solutions to the compliance problem.
Oliver sought to soften public animosity toward the IRS, even as he acknowledged the agencies misdeeds – such as the targeting of tea party groups for extra scrutiny, which has drawn conservative ire. And he jabbed at Republican-led cuts to the agency's budget.
Mr. Fichtner and Mr. Feldman argue that efforts by Congress to simplify the tax code would make it easier for people to pay what they owe, harder to avoid taxes due, and help the economy by reducing paperwork burdens on taxpayers.
One radical type of tax code overhaul – shifting from an emphasis on income taxes to consumption levies like the sales taxes many states collect – might actually allow a massive downsizing of the IRS, some finance experts say.
But a big challenge confronts any attempted tax reform, whether aggressive or even fairly modest. Many interest groups are invested in a complex code, lobbying to create or protect tax breaks. Add in large doses of partisan debate over what constitutes a “fair” system, and how much revenue the federal government really needs, and you have a recipe for gridlock.
Important players in both major parties have at least been paying lip service to the idea of a simpler code, which would cast aside a medley of tax breaks so that overall tax rates might be cut. Some prominent business groups like the US Chamber of Commerce are pushing the idea, too.
A key sticking point between the two parties, though, is about the right level of revenue.
For many Republicans, attitudes about the IRS are shaped by a “starve the beast” attitude toward the federal government. The idea is, if you impose a squeeze on revenue collection (cutting tax rates and IRS funding), it will help hasten the day when federal spending is “right-sized” at a smaller level.
Democrats hope to dig in their heels against that approach, arguing that with baby boomers moving increasingly onto Social Security and Medicare, America is going to need more tax revenue rather than less.
Oliver’s commentary is unlikely to draw the two sides any closer. But at least he’s reminded Americans that it usually doesn’t help to slap the checkout clerk around.