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USA Today: Our view: Tax evaders benefit from spending plan

April 13, 2011- During this week, when millions of Americans are scrambling to finish their taxes, it’s hard to muster much sympathy for the Internal Revenue Service. But consider the agency’s plight: Virtually each year, Congress asks it to take on new duties and enforce a tax code that grows increasingly, maddeningly complex.

If the IRS budget doesn't grow with these developments, corporations and wealthy individuals with access to smart lawyers and accountants will claim breaks they don't deserve, knowing that the IRS doesn't have the resources to challenge them. When that happens, either you pay more or the nation needs to borrow more.

In that regard, it is quite possible for presidents and lawmakers to be penny-wise and pound-foolish, in effect increasing deficits by cutting spending. The deal reached by House Republicans and President Obama last weekend comes perilously close to that undesired result. The IRS allocation is about $500 million below Obama's request and is frozen at last year's level of $12.1 billion. This is, to be sure, better than an additional $600 million in cuts that Republicans originally pushed for, and which IRS Commissioner Doug Shulman said would rob the Treasury of $4 billion in revenue. But the cut still looks costly.

The IRS estimates that each year it collects 15% to 16.6% less than what it would get if all taxes owed were paid. That’s roughly $300 billion, or one-fifth of this year’s deficit. About 80% of unpaid taxes result from underreporting of income.

If controlling the federal debt is the nation’s biggest domestic priority, which it should be, going after this “tax gap” should be one of Congress’ first lines of attack. Instead, the tax collector is an object of hostility.



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