Sympathy for the Tax Man

Mitt Romney, bless his inherited-wealth-heart, has given us all a glimpse of some of the ways the obscenely rich multiply their billions by avoiding the tax man.

But that scenario depends on enough tax collectors to actually threaten the untaxed rich with having to pay.

As the Associated Press reported, "every dollar the Internal Revenue Service spends for audits, liens and seizing property from tax cheats brings in more than $10, a rate of return so good the Obama administration wants to boost the agency's budget." It's an easy way to reduce the deficit: You don't have to cut heating oil for the poor or Pell grants for students. You just have to make people pay what they owe."

This problem actually started under Reagan, who deliberately under-staffed the IRS despite the fact that each additional IRS agent increased revenue by more than her salary and benefits. In other words, unlike at most agencies, at the IRS hiring more people increases government revenue.

But the repugs couldn't have more IRS agents cracking down on rich parasites and forcing the obscenely wealthy to actually pay the taxes they owe, so funding for IRS agents got slashed, and government revenues plummeted.

Seems neither Bill Clinton nor Barack Obama, for all their concern about deficits and jobs, ever figured out the easiest way to both create jobs and increase revenue: hire more - lots more - IRS agents.

TPM:

Before Warren Buffett and Mitt Romney enter a bidding war over who will volunteer more of their millions to reduce the deficit, the government could recoup many billions of dollars every year if Congress just made it easier for the Treasury to collect what it’s already owed by law.

Meet the tax gap — the difference between taxes owed and taxes paid.

Via the Center on Budget and Policy Priorities, the IRS has found that in 2006, taxpayers shorted the government by about $385 billion — and an additional $65 billion was paid late. Back then, the tax gap was bigger than the annual budget deficit. With the economy still suffering, that’s likely not true today. But closing it even partially would take substantial pressure off of strained federal programs, which have been under constant attack by the GOP for over a year.

As you can see, the tax gap is on the order of the government’s biggest expenditure categories, and dwarfs the voluntary contributions Republicans suggest wealthy liberals like Buffett should volunteer to the Treasury.