Ross: Defunding the IRS is like saying you’ll save air by not breathing
I heard it again during the debates – this idea that one way to cut federal spending would be to eliminate the increase in the IRS budget.
Those 87,000 new IRS employees will unleash tens of thousands of auditors on the middle class.
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There have been several fact-checks on this; I won’t repeat them here.
I want to state that saving money by cutting the IRS is a little like saying you’ll save air by not breathing.
First of all, I notice that politicians who say they’ll cut spending never mention the programs that get most of the money… if you accuse them of wanting to cut Social Security, Medicaid, Medicare, income support for poor people, National Defense or veterans benefits they will say shame on you for even thinking I would do that.
They talk instead about cutting the cost of running the government, foreign aid, or the IRS.
Well, the cost of running the government is 2%, and foreign aid is 1%. And as for the actual cost of the IRS? That’s America’s best-kept secret.
Last year the revenue service collected just over 4 trillion in gross taxes and issued 1.1 trillion in refunds, that nets out to three trillion deposited into the U.S. Treasury.
The cost of funding the IRS to do all that was 13.2 billion, and that’s a really big number.
But as a percentage of the three trillion it collects, the cost of running the IRS is less than 1%! It’s less than .5%! It’s .44%!
That’s the IRS markup for bringing in three trillion dollars: .44%.
The typical markup when you buy something at Walmart is 30%.
But what’s even dumber than claiming that cutting the IRS staff will help balance the budget is the underlying assumption that less enforcement of the tax laws will somehow not lead to rampant tax evasion and will magically have no effect on revenue collection.
And to me, that’s as dumb as thinking that defunding the police will magically reduce crime.
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