News Journal: Why make cuts from a needed agency like the IRS?

It is always puzzling to watch someone do something that fits a “cutting off your nose to spite your face” description.

But Congress has been doing that to the country for the past three years, and not enough people realize just how counterproductive some of their cuts have been.

When businesses feel they have to make budget cuts, they are very careful about reducing the size of their sales forces. That’s what produces revenue, and if you knew that cutting $1,000 in sales expenses would mean a loss of $255,000 in revenue, you obviously wouldn’t do it.

No matter how much you dislike the IRS, there are certain facts that can’t be denied. Until and unless Congress comes up with an alternative, the IRS collects 93 percent of the U.S. government’s

total revenue. Historically, while most of us grumble on April 15, we have also believed in the essential fairness of the system.If we lose the belief that everyone else is playing by the same rules, we will be on our way down the slippery slope to becoming a nation of tax cheats like Greece or Italy. So it is vitally important we believe the IRS has the wherewithal and expertise to enforce a level playing field. That’s what the threat of audits does. The system trusts, but it also verifies.

In the past three years, the IRS budget has been cut from $12.1 billion in 2010 to $11.1 billion in fiscal 2014. It now has 8,000 fewer employees. Employee training was cut from $172 million in 2010 to $22 million in 2013. Meanwhile, the workload got bigger. The total number of tax returns increased by more than 11 percent from 2004 to 2013.

The tax code hasn’t gotten any less complicated during this period, so obviously there are consequences. The IRS admits it conducted 18 percent fewer audits of major corporations last year. Audits of individual returns have also plummeted, and don’t think a lot of high-income taxpayers with expert advisers

haven’t noticed.The 255 to 1 ratio used above is an estimate made by Nina E. Olsen, since 2001 the IRS’s independent National Taxpayer Advocate. Her agency reports directly to Congress annually on IRS problems it identifies.

Of course it is possible her estimate of lost revenue is too high. Maybe the IRS doesn’t collect $255 for every dollar appropriated to it. But even if she is off by 50 percent, the fact remains that radically slashing the IRS budget is insane by any rational standards if the objective is to help balance the budget.

The consequences of slashing the IRS budget go beyond lost revenue. Last year, you will recall the “IRS scandal” involving a local office that allegedly targeted conservative political groups applying for tax-exempt status. The office had identified groups with terms such as “Tea Party

”in their names for scrutiny. As it turned out, they also targeted liberal groups using words like “Occupy” in their names. There is no question it was ham handed, but the IRS’s explanation has at least until now held up.Employees were overwhelmed by the sudden growth in the number of groups claiming very complicated 501©(4) status, and resorted to shortcuts that helped them save

time.Would they have taken those shortcuts if the IRS had been staffed at 2010 levels? We’ll never know, but anyone who has ever had an inbox knows that when it becomes unmanageable, something has to give.

Let’s talk about balancing the budget. I think most of those in Congress who advocate radical cuts in government spending on social programs, regulatory agencies and just about everything else (except national defense), sincerely believe the cuts are necessary to balance the budget. But there are also some whose objective is not so much to balance the budget but to (in Grover Norquist’s famous words) “shrink government down to the size where we can drown it in the bathtub.” They want to take the federal government back to what it was before 1913 –before the income tax, Social Security, Medicare and regulatory agencies.

If you reject that agenda, as voters at the national level have always done, you will probably agree with me that the only way to balance our federal budget is to do what Presidents George H.W. Bush and Bill Clinton did to generate large surpluses –use a smart mix of spending cuts and modest revenue increases.

If that’s the goal, you don’t get there by cutting the budget of the agency responsible for collecting your revenues.

Ted Kaufman is a former U.S. senator from Delaware.