The IRS is a perennial budgeting football for Congress, even though it's one of the few agencies for whom increasing their budget creates positive net revenue for the federal government; its enforcement arm is down 30% in staffing since 2010, with predictably dismal results.
As an anecdotal comparison, I had a fairly long-running issue years ago with the IRS over a minor problem (some expenditures got posted to one fiscal year for the IRS, the following fiscal year for the SSA, which created an imbalance in their systems), and I was able to promptly get helpful folks on the phone and via scheduled in-person visits. Now even my CPA can't get anyone to pick up the phone there. It's a disaster.
I had friends and relatives who worked for the US IRS in the 80s, they all would say the IRS was the one place that budgets will never be cut, so the felt far more secure than I did in Tech.
Little did they know the top 1% would get with one specific US Political Party to cut the IRS budget so thy can all cheat on their taxes. It is cheaper for them to hire lawyers than to pay their "fair share".
It's a narrative that's easy to believe in because audit rates are going down. But when you think about it... why should be they going up?
In the 1980s and before, the IRS literally had no way of knowing if you're telling the truth without auditing you. Everything was done on paper, cash was king. So the audits were indiscriminate and invasive, and needed a large army of employees to orchestrate.
Now, the IRS knows almost everything about your finances. They get electronic data from your employers, your bank, your brokerage. Most of commerce is settled electronically. Paypal and Venmo send them your info if you receive more than $500 in a year. There is nothing to be gained by randomly auditing the average family if the numbers on their report match what the IRS knows. The IRS can zero in on specific activities, such as people claiming unusual business deductions. But they no longer need to routinely audit most of us, and they don't need funding to that effect.
If the IRS budget since the 80s hasn't decreased on a per-capita, inflation-adjusted basis, then something has gone horribly wrong. Why the heck would we want tax collection to get more inefficient every year?
This one of the most misguided narratives I see from people of the other "specific US political party" to the one you're referring to.
As another commenter pointed out, if the transition away from cash and self-reporting to automatic data collection on hundreds of millions of Americans hasn't produced any productivity gains, then everything the the "evil 1%ers" have been saying about the ills of government are in fact true.
This cannot be stated clearly enough. The Republican Party at the federal level has made it their policy position to defund the IRS to make it easier for the wealthy to cheat on their taxes.
> the top 1% would get with one specific US Political Party
This is where people get it wrong, and VERY wrong. The IRS's budget had even significantly fallen between 2010 and 2014[0,1]. But it also increased from 2000 to 2004, then decreased, and increased from 2007 to 2010. Democrats only held congressional control (house and senate) in that second increase[2], but in some of those times the entire government was Republican controlled (granted, very narrow).
I'm not trying to say the Republicans are the "good guys." Actually I'm saying the opposite. I'm just saying that the defunding of the IRS isn't a partisan issue. It's just one is much more vocal about it.
This isn't an issue we can solve if we simply blame one side. Just remember, you can hold those that you side with accountable. So if you're a Democrat, it's important to be critical of Democrats or if you're a Republican, to be critical of Republicans. If you give your side a pass and just blame the other side, you bet people are going to take advantage of that. And they have.
The government could fix this issue. The problem is, the people who care about this (regular taxpayers) don’t matter. Or rather, people who care about getting this fixed haven’t shown themselves to be a significant voting block.
I recommend anyone who calls their representatives to get their situation sorted out include “propose or vote for legislation to fix this or I will not vote for you” as an ultimatum. If you’re going to vote for them either way (or not vote for them either way) then it makes no difference if they fix the problem or not.
My understanding is part of the problem is that they have not been well-funded enough to even think about going after the top earners, who can easily afford to outnumber them with lawyers and CPAs. So, they give the people at the very top a pass because even if they are tax-dodgers, it's too expensive to prove it. Which leaves them going after middle class people who exaggerated their charitable deduction a little or hid a $100 eBay sale. They're easy marks and won't be able to resist with an army lawyers.
I don't really have anything substantive to say; really just stacking onto this. My tax payments are not "regular enough" for the IRS. I generally end up owing $15k at the end of the year. It's an inconvenience for me, but I'm happy to pay it since, you know, taxes pay for things to be done. These folks have the gall to charge me money for that now, with threatening letters to boot, suggesting that I should supplement my W2 tax contributions that my employer makes quarterly. Portland, the city I live in, mimicked this system entirely and now demands the same for smaller amounts. I'm left feeling that we gave these folks billions to make things better and the people they went after weren't billionaires; they're instead nickel and diming high income earners. I don't claim anything on my taxes, I don't have much (if any) business income, and I'm not married. I have the simplest taxes in the world and these folks can't advise my company on the correct amount they should deduct for taxes and I'm the one that gets a bunch of legalese in the mail.
This to say, the billionaires running the system are certainly something but so are the people at the IRS who had an opportunity to actually do something with all that money. I look at them less with the lens of victims of partisanship and look at them more as part of the problem.
In my case they know exactly how much money I've made quarter to quarter and could provide better advice to the company I work for. They also could have a system to notify me ahead of time so I have a chance to pay the bill they're expecting. They did none of these, but instead shook the couch for change.
One of the major parties is deliberately sabotaging it (along with USPS, FDA, and NOAA) so they can point out how useless it is and it should just be shut down.
Don't forget the USCIS. It takes a lot of time, patience, and skill to navigate the phone tree in a way that doesn't either end the call immediately, or tell you to visit the website and then end the call. I had a paper and pencil marking my choices so I'd remember what I'd tried, and it was nearly full by the end.
A better strategy would be to do away with income tax altogether and replace with something easier to comply with and enforce like a Federal sales tax. States that run on sales tax alone need only to collect revenue from businesses, which shrinks their staffing requirements. And since it's a straightforward % of sales, it's easier to audit as well.
These are not 1:1 replaceable. Income tax is progressively structured where higher earners pay a larger percentage in income that falls into higher income brackets. Sales tax is a flat percentage which varies based on item category, not the cost of the item.
I have no issue with billionaires, and don't resent their cash. But if you drop all income tax, and do only sales tax you'd miss a lot of their income.
Same for the moderately wealthy too.
I suspect you'd need 100% or even 200% sales tax to capture what you so now.
That's going to lead to black markets, reduced economic output, etc too.
All fine and dandy until somebody can’t stand that somebody makes more than them and wants to point out that because you make more and maybe even spend less that your overall tax to income rate is smaller than somebody else.
Taxes are not just about revenue. It’s a political tool first. As the US government could just print money and dilute the value of the dollar as the tax.
Recent moves that show it is political. Trump administration changed rules on how income is reported that affected blue states with high house prices and income tax without affecting red states with sales tax and low house prices much, by way of limiting the deduction of interest paid and state income tax on your federal tax bill. Meanwhile the current administration often says how bad trumps “tax cuts” where without even trying to undo the increased taxes on blue states.
Taking a step back... one big problem is that our tax code is way too complex. It means that even common people are wading through a minefield every time they file their taxes.
Between unclear deductions and credits, trickiness for those that have to pay estimated taxes, and a mafia led by Intuit lobbying against simple filing it's definitely a pay to play system.
More broadly, our tax code is designed to benefit the uber wealthy. High $$$ assets can be sold through holding companies, etc. making enforcement extremely difficult.
Phone lines being flooded seem more of a symptom than anything.
There’s a good book “The Dictator’s Handbook” that proposed the Selectorate Theory that explains this, among other things. The complex tax code is a feature, not a bug. And I don’t just mean that Intuit is profiting off of the complexity, although that is also true.
Politicians care about staying in office, rewarding their supporters, and maybe implementing prosocial policies. In that order. So tax cuts for the wealthy aren’t because they think it’s good for the economy, they are kickbacks for support.
Every single tax deduction and carve out is a reward to the winning coalition at a particular time. We see this with farm subsidies, which are more of a vestige at this point, but at one time farmers were an important demographic. When politicians get into office they reward their supporters.
The book is a lot better than I am at explaining it all, so I recommend reading it or watching the Rules for Rulers video on YouTube.
All of this is enabled by the ability to print money and not have the painful consequences that other countries have to deal with. What happens when this is no longer the case? All this old cruft (farm bill for example) will cause a collapse. What would that even look like?
This sounds a lot like “this codebase is too complex, probably because the last developers weren’t very good, we don’t need all these code branches and special cases, they’re just making it messy, it’s time for something simpler and cleaner” stuff that precedes the often underwhelming rewrite efforts that devs get sucked into.
I’m sure it’s possible to improve tax policy but that’d happen through specific conversation about how dynamics from specific relevant pieces of the tax code play out vs how they could play out, not through general judgements like “too complex” that are basically vibes-based.
> It means that even common people are wading through a minefield every time they file their taxes.
According to the IRS, 87% of people take a standard deduction. There's really no minefield there. So long as you don't lie about how many children you have or any sort of tax credits you're applying for, it's dead simple. And worst case, if you mess something up, the IRS already knows the right answer and will send you a letter correcting your mistake or asking for proof.
The complexity is mostly for businesses, with a little bit of it being tax-free savings vectors like IRAs, 509, HSAs, etc. But even those are largely streamlined.
So really, it's an 80/20 thing, 80% of the complexity effects 20% of tax paying entities. And certainly those 20% don't want a "simplified" tax code if that means losing out on the money they save by dealing with the complexity.
I’ll share my story. The IRS incorrectly sent me a fine for over a thousand dollars claiming I had filed late. I tried calling them 9 times on different days to dispute it. Within a minute of opening, end of day, middle of the day, didn’t matter. Not even a wait line, just “sorry try later.” I finally gave up and paid the damn thing then got a refund for the fine over a year later when I guess they figured out it was invalid.
The IRS is one place I absolutely want my tax dollars to fund and it’s sad to see it get cut to the bone.
If you are an American citizen, just call your US representative. They will have you on the phone with an actual person at the IRS in a day or two.
Literally, I've learned this lesson the hard way. The moment I have to wait more than an hour or so to figure out a government service or agency, I immediately lodge a formal complaint with my representative. They have a large staff dedicated to constituent services, and they have internal connections. They also follow up, and if the agency isn't doing well, they track it.
I've literally been begged by federal agents to leave good reviews with the congressman in order that they don't get their budget cuts. It's a welcome change of pace to be speaking with an agent that wants to help me.
As an example, my son's name was mis-spelled on the birth certificate and thus social security card. We waited for three hours in an SSA office to change it but the woman did not want to help us at all, and insinuated we were committing fraud.
I had it. I called my US representative and my two Senators and e-mailed them a full portfolio of the details. Within a day, I had their office calling me with a special SSA representative on the line. They were able to make me an actual appointment for next day service at the local SSA office speaking to a much more intelligent SSA agent, who was so friendly and helpful, it was almost unbearable. The best part was, I didn't have to even wait in line or at the front desk. She took my materials, told me she will personally investigate and get back to me. Within a day, she called me back, had everything figured out and had completed several steps of the process for me.
In sum, never deal with the agencies if it's becoming antagonistic. Contact your representative. It is literally their job.
This assumes that the Representative is competent, and believes that they act for the good of all people in their district, not just the ones who believe in their version of God. This not true across the country, and particularly, not in the district that I live in. I would never call my Representative. My Senators, not too bad, but there are only 2 of them for the entire state.
It seems like they had some sort of software/oversight issue, in addition to inadequate filer service. Why do you believe that giving them more money will cause them to improve? This seems like some sort of Stockholm syndrome.
Because scaling up linearly is relatively straight-forwards. If the problem is a shortage of people answering the phone, you hire more people to answer the phones. If you don't have the money to hire more people, you don't get more people, which means you don't have more people. When you don't have more people, you have a shortage of people answering the phones.
It's not rocket science.
I have no idea why paying them less (which, not-increasing is the same as, given increase in population and inflation) would make them do better. Are they a petulant child and we're trying to "teach them a lesson"?
I had a similar issue where they claimed I didn’t pay one year. Calling led nowhere but my CPA friend said send them a letter. As in a physical snail mail dispute letter. I could be wrong but I think they have to reply within a certain amount of time even if the reply is “we’re still looking into it”. 6 months later I got a letter saying basically I was correct and you don’t owe anything.
You should be happy that Biden and Democrats allocated $60 billion to the IRS then. It was $80 billion until Republicans extracted a $20 billion decrease in negotiations.
> External applications that have been received are far below the IRS targeted goal and there is an overall shortage of individuals with the desired background and experience
> IRS had planned to bring on 3,833 revenue agents in fiscal 2023, but in the first six months officials had recruited just 34. [1]
It seems somewhat remarkable they managed to hire 7,000 additional customer-service representatives. They missed their other recruiting goals by 100x.
One job requires much more specialized training than the other. My father in law was a revenue agent, and the size of the books he had to use to do his job was astounding.
Hard to believe they actually get back to you and help. Any correspondence I've had with representatives is basically met with a form letter that doesn't even address the actual content of my concern.
If you send details about a particular case (rather than a general political issue) to their constitutent services department, they will often get back to you in a day.
Out of curiosity, was your correspondence in reference to navigating the federal government’s services, or were you corresponding to share your concerns about political matters?
It seems like the congressional offices can be useful for bringing exceptional cases to the attention of the various federal bureaucracies, from taxes to passports to capital tours.
As a European, the need or desire for such an indirect system is mindbogglingly weird. Just fix the broken machinery, instead of this world where "your party" provides you with government services.
Readit News
As an anecdotal comparison, I had a fairly long-running issue years ago with the IRS over a minor problem (some expenditures got posted to one fiscal year for the IRS, the following fiscal year for the SSA, which created an imbalance in their systems), and I was able to promptly get helpful folks on the phone and via scheduled in-person visits. Now even my CPA can't get anyone to pick up the phone there. It's a disaster.
Little did they know the top 1% would get with one specific US Political Party to cut the IRS budget so thy can all cheat on their taxes. It is cheaper for them to hire lawyers than to pay their "fair share".
In the 1980s and before, the IRS literally had no way of knowing if you're telling the truth without auditing you. Everything was done on paper, cash was king. So the audits were indiscriminate and invasive, and needed a large army of employees to orchestrate.
Now, the IRS knows almost everything about your finances. They get electronic data from your employers, your bank, your brokerage. Most of commerce is settled electronically. Paypal and Venmo send them your info if you receive more than $500 in a year. There is nothing to be gained by randomly auditing the average family if the numbers on their report match what the IRS knows. The IRS can zero in on specific activities, such as people claiming unusual business deductions. But they no longer need to routinely audit most of us, and they don't need funding to that effect.
This one of the most misguided narratives I see from people of the other "specific US political party" to the one you're referring to.
As another commenter pointed out, if the transition away from cash and self-reporting to automatic data collection on hundreds of millions of Americans hasn't produced any productivity gains, then everything the the "evil 1%ers" have been saying about the ills of government are in fact true.
Deleted Comment
This is where people get it wrong, and VERY wrong. The IRS's budget had even significantly fallen between 2010 and 2014[0,1]. But it also increased from 2000 to 2004, then decreased, and increased from 2007 to 2010. Democrats only held congressional control (house and senate) in that second increase[2], but in some of those times the entire government was Republican controlled (granted, very narrow).
I'm not trying to say the Republicans are the "good guys." Actually I'm saying the opposite. I'm just saying that the defunding of the IRS isn't a partisan issue. It's just one is much more vocal about it.
This isn't an issue we can solve if we simply blame one side. Just remember, you can hold those that you side with accountable. So if you're a Democrat, it's important to be critical of Democrats or if you're a Republican, to be critical of Republicans. If you give your side a pass and just blame the other side, you bet people are going to take advantage of that. And they have.
[0] https://www.cbpp.org/research/federal-tax/the-need-to-rebuil...
[1] https://www.taxpolicycenter.org/taxvox/war-irs
[2] https://en.wikipedia.org/wiki/Party_divisions_of_United_Stat...
Things have flipped over the last decade. The populist and 1%er parties have flipped.
Dead Comment
I recommend anyone who calls their representatives to get their situation sorted out include “propose or vote for legislation to fix this or I will not vote for you” as an ultimatum. If you’re going to vote for them either way (or not vote for them either way) then it makes no difference if they fix the problem or not.
Also, they are increasing the inforcement arm substantially, to the point it should be above the 2010 levels.
This to say, the billionaires running the system are certainly something but so are the people at the IRS who had an opportunity to actually do something with all that money. I look at them less with the lens of victims of partisanship and look at them more as part of the problem.
In my case they know exactly how much money I've made quarter to quarter and could provide better advice to the company I work for. They also could have a system to notify me ahead of time so I have a chance to pay the bill they're expecting. They did none of these, but instead shook the couch for change.
Dead Comment
Dead Comment
Dead Comment
Same for the moderately wealthy too.
I suspect you'd need 100% or even 200% sales tax to capture what you so now.
That's going to lead to black markets, reduced economic output, etc too.
Taxes are not just about revenue. It’s a political tool first. As the US government could just print money and dilute the value of the dollar as the tax.
Recent moves that show it is political. Trump administration changed rules on how income is reported that affected blue states with high house prices and income tax without affecting red states with sales tax and low house prices much, by way of limiting the deduction of interest paid and state income tax on your federal tax bill. Meanwhile the current administration often says how bad trumps “tax cuts” where without even trying to undo the increased taxes on blue states.
Between unclear deductions and credits, trickiness for those that have to pay estimated taxes, and a mafia led by Intuit lobbying against simple filing it's definitely a pay to play system.
More broadly, our tax code is designed to benefit the uber wealthy. High $$$ assets can be sold through holding companies, etc. making enforcement extremely difficult.
Phone lines being flooded seem more of a symptom than anything.
Politicians care about staying in office, rewarding their supporters, and maybe implementing prosocial policies. In that order. So tax cuts for the wealthy aren’t because they think it’s good for the economy, they are kickbacks for support.
Every single tax deduction and carve out is a reward to the winning coalition at a particular time. We see this with farm subsidies, which are more of a vestige at this point, but at one time farmers were an important demographic. When politicians get into office they reward their supporters.
The book is a lot better than I am at explaining it all, so I recommend reading it or watching the Rules for Rulers video on YouTube.
I’m sure it’s possible to improve tax policy but that’d happen through specific conversation about how dynamics from specific relevant pieces of the tax code play out vs how they could play out, not through general judgements like “too complex” that are basically vibes-based.
According to the IRS, 87% of people take a standard deduction. There's really no minefield there. So long as you don't lie about how many children you have or any sort of tax credits you're applying for, it's dead simple. And worst case, if you mess something up, the IRS already knows the right answer and will send you a letter correcting your mistake or asking for proof.
The complexity is mostly for businesses, with a little bit of it being tax-free savings vectors like IRAs, 509, HSAs, etc. But even those are largely streamlined.
So really, it's an 80/20 thing, 80% of the complexity effects 20% of tax paying entities. And certainly those 20% don't want a "simplified" tax code if that means losing out on the money they save by dealing with the complexity.
Deleted Comment
I called once on the Spanish line and just spoke English, got my problem solved in under 5mins.
Y sabiendo es la media guerra . . .
The IRS is one place I absolutely want my tax dollars to fund and it’s sad to see it get cut to the bone.
Literally, I've learned this lesson the hard way. The moment I have to wait more than an hour or so to figure out a government service or agency, I immediately lodge a formal complaint with my representative. They have a large staff dedicated to constituent services, and they have internal connections. They also follow up, and if the agency isn't doing well, they track it.
I've literally been begged by federal agents to leave good reviews with the congressman in order that they don't get their budget cuts. It's a welcome change of pace to be speaking with an agent that wants to help me.
As an example, my son's name was mis-spelled on the birth certificate and thus social security card. We waited for three hours in an SSA office to change it but the woman did not want to help us at all, and insinuated we were committing fraud.
I had it. I called my US representative and my two Senators and e-mailed them a full portfolio of the details. Within a day, I had their office calling me with a special SSA representative on the line. They were able to make me an actual appointment for next day service at the local SSA office speaking to a much more intelligent SSA agent, who was so friendly and helpful, it was almost unbearable. The best part was, I didn't have to even wait in line or at the front desk. She took my materials, told me she will personally investigate and get back to me. Within a day, she called me back, had everything figured out and had completed several steps of the process for me.
In sum, never deal with the agencies if it's becoming antagonistic. Contact your representative. It is literally their job.
It's not rocket science.
I have no idea why paying them less (which, not-increasing is the same as, given increase in population and inflation) would make them do better. Are they a petulant child and we're trying to "teach them a lesson"?
> External applications that have been received are far below the IRS targeted goal and there is an overall shortage of individuals with the desired background and experience
> IRS had planned to bring on 3,833 revenue agents in fiscal 2023, but in the first six months officials had recruited just 34. [1]
It seems somewhat remarkable they managed to hire 7,000 additional customer-service representatives. They missed their other recruiting goals by 100x.
[1] https://www.govexec.com/workforce/2024/03/applications-reven...
It seems like the congressional offices can be useful for bringing exceptional cases to the attention of the various federal bureaucracies, from taxes to passports to capital tours.
How will the ATF help me with my taxes?
</sarcasm>