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Tyler Cowen

The IRS Has Problems That $80 Billion Won't Solve

Defenders of the Internal Revenue Service say it needs more money to do a better job collecting taxes. Fine. But first it needs to earn our confidence.

More paper, more problems.

More paper, more problems.

Photographer: Bloomberg

The recent Democratic bill on climate and taxes increases the funding for the Internal Revenue Service by an additional $80 billion over 10 years, with the purpose of collecting more revenue by enforcing existing tax laws. Bloomberg reports that the agency will use the money to “add auditors, improve customer service and modernize technology.” I have general sympathy for this idea, but the more I read from its defenders the more wary I feel.

The general chorus is that the IRS doesn’t have the people or technology needed to perform its mission. For instance, the nonpartisan Center on budget and Policy Priorities says that budget cuts have left the IRS “depleted,” with the agency losing 19% of its budget and 22% of staff between 2010 and 2021. The agency has also been struggling to replace workers who leave.