Senior Director of Federal Tax Policy
The House voted this week to wipe out one quarter of the Internal Revenue Service’s (IRS) enforcement budget. This cut, which would dramatically worsen the hit that the IRS budget has taken since 2010, will further undermine the IRS’s ability to collect taxes that are owed. As we’ve described, this helps tax evaders and hurts honest taxpayers, and ultimately increases the deficit.
A less-noticed attack on tax compliance came last week from House Ways and Means Committee Chairman Dave Camp (R-MI), who characterized as tax increases — and therefore unacceptable — provisions in the Senate highway funding bill that are designed to better enable the IRS to enforce tax laws already on the books.
In a press release, Chairman Camp said:
I do not support, and the House will not support, billions of dollars in higher taxes to pay for more spending. And, I certainly do not support permanent tax increases to pay for just 10 months of highway programs. Furthermore, it is inconceivable that the House would, as the Senate proposes to do, grant the IRS additional authority to audit and investigate taxpayers simply so Washington can spend more money.
The so-called “permanent tax increases” that Camp condemned include ensuring adequate disclosure of mortgage transactions and clarifying what constitutes a “substantial omission of income” on a tax return. They are tax compliance provisions, meant to enable the IRS to collect the revenues that taxpayers owe.
As Senate Finance Committee Chairman Ron Wyden (D-OR) told Politico, “these are taxes owed” and “this is enforcing existing law.” Underscoring the bipartisan nature of this interpretation of the Senate bill, Sen. John Thune (R-SD) added “those are taxes that are owed, and to me, that’s simply a function of making sure that we’re getting paid.”
Camp’s attack was particularly stunning, coming from the chairman of the very committee that writes the nation’s tax laws. He deemed it “inconceivable” that the House would give the IRS the ability to enforce the tax laws — one of its core functions. In fact, it should be inconceivable that Congress does not routinely make modest technical adjustments to ensure that people pay taxes as the law intends. Honest taxpayers deserve no less.
Camp’s position, coupled with the House action to slash the IRS enforcement budget, reflect a fundamental shift in the tax debate, from policymakers supporting appropriate enforcement of the nation’s tax laws to actively seeking to undermine what should be bipartisan compliance efforts.