Senior Director of Federal Tax Policy
The House Appropriations Committee approved a steep cut in the Internal Revenue Service (IRS) enforcement budget yesterday, part of a bill funding various government agencies for 2014. These enforcement dollars support efforts to curb tax fraud, tax evasion, and other illegal activities, so cutting them would be penny-wise and pound foolish. Treasury Secretary Jack Lew estimates that “for every dollar we spend on our enforcement initiatives, we expect to collect six dollars in revenue.”
The $1.2 billion cut shrinks the IRS enforcement budget by 23 percent — not counting the impact of inflation — below this year’s already low level (after the cut caused by sequestration). In fact, it would bring the budget to its lowest level in over a decade.
Using Secretary Lew’s rule of thumb, a $1.2 billion cut to IRS enforcement next year would cause a revenue loss of nearly $7 billion over time in uncollected taxes (see graph), which means higher deficits.
This cut isn’t just fiscally irresponsible, it’s unfair to law-abiding taxpayers. People who pay their fair share of taxes shouldn’t have to shoulder an even bigger share of the tax burden.
Nor should they have to bear the pain of cuts to public services that might be necessary to make up for the lost revenue.