Report: “Unfair and Irresponsible” To Increase IRS’s Power

President Joe Biden has touted beefing up IRS enforcement as a key way to help fund his trillions in federal spending, but a new report suggests the plan would not work and could have serious consequences.

A new report released by Chris Edwards at the Cato Institute lays out the analysis, which says that Americans pay taxes better than most other nations, leaving less money to be found by an aggressive IRS.

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“Supporters think that greater enforcement would be good policy because the expected higher tax revenues would outweigh the cost of higher IRS spending,” the report reads. “But that ignores the higher costs that would be imposed on the private sector, including tax compliance burdens and a loss of civil liberties. More aggressive IRS enforcement would mean more paperwork, more lawyer fees, more time consumed on tax matters, and more anguish and uncertainty for taxpayers. It could also result in less privacy and personal financial security. These private costs are difficult to measure, and are usually ignored by policymakers.”

The report argues Biden’s plan would actually backfire.

“The Democrats want to increase IRS enforcement to reduce the tax gap, but their tax plan would increase tax‐​code complexity resulting in the opposite,” the report said. “Tax‐​code complexity increases tax avoidance and evasion by making IRS administration more difficult and by prompting taxpayers to combine disparate provisions in unexpected ways.”

Ultimately, the report argues additional IRS enforcement is not ideal.

“In sum, it makes sense to improve IRS computer systems, employee training, and phone service to reduce taxpayer errors and shrink the tax gap,” the report reads. “But it would be unfair and irresponsible for Congress to increase the agency’s enforcement powers when there is so much wrong with the current tax code and its administration.”



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