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The Tufts Daily
Where you read it first | Saturday, April 20, 2024

The Policy Perspective: Fund the IRS

The IRS has become a political boogeyman, but the agency does critical work in holding the rich accountable.

Policy Perspective Column Graphic (updated)
Graphic by Charlene Tsai

If there’s one thing that many Americans can agree on, it’s that they dislike the IRS. The Internal Revenue Service is a federal agency responsible for collecting and administering federal taxes. The IRS primarily ensures that everyone pays their taxes, often by auditing individuals or businesses, and processes requests for tax refunds. It’s understandable the IRS is not popular, especially as 56% of Americans feel their tax burden is unfair and a majority state that the complexity of the American tax system “bothers them a lot.” Furthermore, the IRS is often backlogged in its work, and as of February 2022, nearly 24 million taxpayers were waiting for their tax returns. For Americans frustrated with any part of the complex taxation process, recent calls to defund or even abolish the IRS might sound attractive. 

However, doing so would be a catastrophic mistake. Though American frustration with the taxation process is legitimate, defunding the IRS would exacerbate the problem rather than resolve it. Instead, the best way to improve the American tax system would be to increase funding and invest in the IRS.

Many of the reasons Americans dislike the IRS, such as slow processing and the lack of responsiveness, is because the IRS is understaffed and does not have the resources to fulfill its role. A lack of funding in the IRS also makes the tax system even more unfair, as it cripples the agency’s ability to ensure taxes are being paid. In 2020, the IRS had the fewest auditors in its history since 1953 and its budget had decreased by $3 billion since 2010. This meant large corporations were no longer audited each year, and a dramatic fall in the audit rate allowed corporations and ultra-wealthy individuals to use tax professionals to circumvent their tax burden. 

While auditing for the wealthy, a difficult task, dropped dramatically due to budget cuts, the one group the IRS didn’t significantly cut back on auditing was low-income individuals (who are far easier to audit). Therefore, not only did budget cuts gut the agency’s ability to hold the rich accountable, but it made the agency’s actions less equitable as well. 

In 2022, all this briefly changed. Congress passed the Inflation Reduction Act, which included $80 billion over the next decade in additional funding to the agency. The IRS announced it would use the funding to shift its attention from working-class taxpayers to the wealthy and corporations. Since then, the IRS has recovered almost $500 million in unpaid taxes from nearly a thousand millionaires. The average time on hold when calling the agency decreased and the percentage of consumer calls answered increased from 15% to 85% after IRA funding was directed to the agency. Finally, the IRS has stated it expects to collect hundreds of billions of dollars more in unpaid taxes due to new funding, revenue critical to reducing the government deficit. 

Unfortunately, the IRS budget is under threat once again, with politicians capitalizing on anti-IRS support to push for IRS budget cuts. Therefore, though it may be counterintuitive, if we want to live in a country with an enforced and fair tax code, where the rich are held accountable, we must make it clear to our representatives that we support the IRS.