Newt Gingrich and Trent Lott sign the IRS reform bill on July 21, 1998
Back in 1998, right around tax time, grandstanding congressmen paraded wronged taxpayers in front of the cameras, passed a few bits of taxpayer's-rights legislation, and demanded a kinder, gentler IRS — a taxman with a smile. Two years later, it turns out he's practically toothless.
In 2000, your chances of being audited by the IRS plunged to 1 in 204, the agency reported Thursday — half the rate of 1998. Even upper-income types earning $100,000 a year or more, traditionally auditors' favorite targets, saw their chances fall 31 percent from 1999, to less than 1 in 100. Audits of corporations fell 13 percent. Even the working poor, whose use of the Earned Income Tax Credit got them particular scrutiny from IRS enforcers because of a congressional order, could roll the dice 161 times without coming up audit.
No IRS, no surplus
The IRS blames a decrease in staff that goes back 10 years, a rickety computer system that goes back a lot further, and the IRS legislation that Newt Gingrich and company passed after those 1998 hearings to try and get the voters to like conservative Republicans again. (It didn't work very well.) The bill forced the IRS to divert enforcement resources to happier things like customer service, with predictable results.
Worried about the surpluses? Worry about the IRS. Commissioner Charles Rossotti estimates that the declining audits cost the government more than $2 billion in 2000, and insists that the more audits decline, the worse it will get. "Most people are paying their taxes," he said diplomatically Thursday. "It's only fair to them that they should expect the IRS to go out and do something about cheaters." Translation: Fear of enforcement helps keep everybody else in line.
Honor thy taxman
Springtime already brings out the cranks who claim all income taxes are illegal and need not be paid; the news that cheaters don't get caught will only breed other cheaters, whether or not they think they've got the Constitution backing them up. When the cops are off the streets, eventually the fear goes away. And few things tempt Americans more than the prospect of sticking it to the taxman and getting away with it.
And yet we are also fixated on fiscal discipline, on the size and affordability of George W. Bush's $1.6 trillion tax cut, on whether those ballooning surplus projections are really to be believed. The IRS, remember, is what makes the tax base the tax base. It's how the government makes its money and pays its bills. It's how the surplus gets there.
Big tax cuts, certainly, are no longer the irresistible political catnip they once were — perhaps IRS-bashing, for years the only political stunt more popular than cutting taxes, is due for its own reassignment in the cultural landscape.
Honor the taxman, people. Throw a couple of hundred billion his way. Upgrade his computers. Staff his enforcement arm. And simplify the tax code, so paying is easier and cheating easier to spot. Face it: We need these guys. Taxpaying is the foundation of civil society, and an effective taxman is the government institution on which all others are built.
Just look how well Russia's doing without one.