The power to tax is the power to destroy. The Internal Revenue Service's national headquarters in Washington, D.C.–a hulking New Deal-era monstrosity that's ironically located on Constitution Avenue–has U.S. Supreme Court Justice Oliver Wendell Holmes' oft-repeated words carved on the exterior facade: "Taxes are the price we pay for a civilized society."
Yet there's nothing particularly civilized about the IRS–the nation's heavy-handed, incompetent and scandal-plagued tax-collection agency. The building's columns and detailing echo the French Renaissance style, but behind the façade the IRS' inspiration is more aligned with Robespierre given the terror its agents inflict on American citizens.
The IRS' current authority goes well beyond our founding document's simple language granting Congress the power to levy taxes on behalf of the common defense and the nation's general welfare. The agency already has 80,000 employees and an enforcement budget larger than the general-fund budgets of a dozen U.S. states.
In its zeal to wrangle more change out of American taxpayers' and businesses' pockets, the Biden administration wants to beef up that budget and its auditing staff. Senate Majority Leader Chuck Schumer (D–N.Y.) and Joe Manchin (D–W.Va.), the supposed moderate, recently hammered out a deal to pass the oddly named Inflation Reduction Act.
Expecting a $739-billion spending bill to reduce inflation is like expecting a tanker of gasoline to douse a fire, but that's the least of our problems. The measure proposes to provide an additional $80 billion to the IRS–boosting its budget six times and doubling the number of federal revenue officers.
As The Wall Street Journal noted, "The bill earmarks $45.6 billion for 'enforcement,' including 'litigation,' 'criminal investigations,' 'investigative technology, 'digital asset monitoring' and a new fleet of tax-collector cars." This cash infusion is so obscene the IRS will struggle to spend it all–but ultimately it means 80,000 new IRS officials will be breathing down our necks.
The president and his fellow Democrats claim this is simply about targeting multi-millionaires and billionaires and forcing them to pay their fair share, but, per the Journal, Congress itself reports "78 percent to 90 percent of the money raised from under-reported income would likely come from those making less than $200,000 a year."
The administration claims the bill will reduce the deficit by $102 billion over 10 years. Even if true (and don't bet on it), the federal budget tops $6 trillion. The federal deficit has fallen since 2020 as pandemic spending has subsided, but remains at $1 trillion. Federal debt is pushing $31 trillion. Government's insatiable spending is the problem. It won't be fixed by shaking down Americans for more cash.
Sorry, but "shaking down" is the correct term. This legislation isn't primarily about gathering more money, but about taking the reins off of an already inefficient and abusive agency. Let's set aside the IRS' scandals–allegations of its officials using audits to target political enemies, possible leaks of confidential information, and other nasty business–and focus on how the agency does its daily job.
I interviewed a prominent tax attorney who had spent years at the IRS and she confirmed what others have reported. When the IRS determines that someone owes money, it sends out threatening letters, but then the targeted person has no actual recourse or due process. The IRS hotline only is capable of handling a tiny percentage of calls.
One typically must spend hours on hold to speak to someone at the IRS, only to receive incomplete and conflicting answers. The agency doesn't have a modern online system that allows taxpayers to handle most of these matters efficiently. In the past, if the IRS issued a levy it would include the name of a revenue officer that a taxpayer could contact. Now the IRS uses bots–and it typically takes months to get an answer via mail.
Here's a typical scenario. The IRS determines that you owe a large sum of money. You and your accountant can't get through to an agent. The agency places a lien on your property, freezes your bank account, or garnishes your wages. The only way to resolve the issue is to hire an attorney and spend thousands of dollars to get your day in court.
A cynic might argue that the IRS purposefully targets moderate-income people given that billionaires and large businesses have legions of accountants and attorneys on retainer. "The IRS promises to focus on the rich," wrote Joe Bishop-Henchman in National Review, "but then targets the middle class, since those taxpayers are more likely to pay and not fight back."
Only a tiny portion of the new spending goes for improvements in the agency's customer-service system or for technology upgrades. That speaks volumes about the Biden administration's priorities. Perhaps the IRS ought to use some of its new funding to replace the Holmes quotation with this one from another iconic high-court justice, John Marshall: "The power to tax is the power to destroy."
This column was first published in The Orange County Register.
Union-Tribune's California columnist.
is western region director for the R Street Institute and was previously the