If a new report dealing with unpaid federal taxes is accurate – and doubt has not been cast regarding the correctness of the information – it is time for the government to assemble a major strategy built upon the old adage “you have to spend money to make money.”
Beyond that, the federal government must implement the strategy without unnecessary delay, in order to capitalize quickly on benefits from the badly needed action.
The federal treasury is losing big-time, and the country as a whole is losing big-time because of the loss of the money in question.
The unavailability of the money prevents using it for beneficial programs and projects. Some of the now-uncollected money also could be applied to the nation’s monstrous budget deficits and behemoth overall debt.
The problem is not small, and there ought to be a bipartisan effort to address it.
First the troubling figure, which was reported in the April 14 edition of the Wall Street Journal:
The Journal’s article began with the statement that “as much as $1 trillion a year in federal taxes may be going unpaid because of errors, fraud and lack of resources to enforce collections adequately.”
The article was based on IRS Commissioner Charles Rettig’s appearance before the Senate Finance Committee on April 13, during which he said “it would not be outlandish to believe that the actual tax gap (the amount between what is due and what is collected) could approach, and possibly exceed, $1 trillion a year.”
Rettig did not come to the session with lawmakers without a recommendation on how the unconscionable situation can be resolved, and that recommendation rests on the spend-money-to-make-money philosophy – reasonable based on the revenue at stake.
The commissioner told lawmakers that with proper resources, the IRS probably could bring in 10% to 20% of the tax gap, and that a modernized federal tax agency probably could beat that estimate. However, he said, his agency has experienced a sharp decline in the number of workers available to enforce the tax code.
“We’re down 17,000 enforcement personnel over the last decade,” he said, while expressing the viewpoint “that has to have an effect.”
Sure it does, a grossly adverse effect.
Meanwhile, complicating the IRS’ assigned mission has been the financial chaos resulting from the pandemic. The tax agency reportedly still hasn’t finalized its 2019 work amid the task of dealing with the mountains of 2020 returns that continue to pour in as the result of the extension of the 2020 filing deadline to May 17 from April 15.
People who work diligently to give the federal treasury every dollar that is owed can be excused for being bitter that so many taxpayers are skipping out on this obligation of citizenship.
It is reasonable for them to be crying out for an upfront expenditure with the prospect of providing a significant return.
Past IRS estimates have suggested that an additional $5 to $7 in revenue could be gained from each added dollar spent on enforcement.
It is troubling that Washington has failed so miserably in its responsibility to ensure that this basic component of this country’s existence has been so ignored in terms of operational and human resources.
Launch a strategy to spend the money necessary to collect the most tax revenue possible.
People of this land lose in some way for every dollar that is not collected.