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Why You Don’t Need to Fear the Taxman

It’s time to defend—not defund—the IRS.

Katrina vanden Heuvel

January 19, 2023

House majority whip Tom Emmer takes questions from reporters during a press conference at the US Capitol on January 10, 2023.(Kent Nishimura / Los Angeles Times via Getty Images)

House Republicans’ first official act—or 16th, if you include all the failed votes for Speaker Kevin McCarthy—was to introduce legislation that would cut new IRS funding allocated by the Inflation Reduction Act.

The bill is unlikely to get through the Senate or past the president’s desk. But this could be a rare issue where Republicans have public opinion on their side. The agency is historically unpopular, with only a third of Americans giving it a favorable review.

Republicans are exploiting Americans’ preternatural fear of the taxman by falsely claiming that the funding will create a “new army of 87,000 new IRS agents.” The truth is that number represents all of the new full-time positions that would be created within the agency—including customer service and IT staff—to make it run more smoothly.

That Republicans are targeting the IRS should come as no surprise: The agency has the authority to hold the wealthy accountable. Democrats ought to make sure it has the funding to do so.

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If Democrats could reclaim the narrative on tax policy, they could remind voters that rebuilding the IRS is critical, both to ensure tax compliance for the wealthy and to help small business owners get refunds backlogged by the beleaguered agency.

House Republicans’ so-called Family and Small Business Taxpayer Protection Act hits the trifecta of right-wing politics: It would enrich wealthy Americans under the guise of protecting the middle class; it would increase the deficit; and it is driven by a disinformation campaign suggesting that “Biden’s shadow army” of IRS agents will soon be banging down doors across middle America.

In reality, it is precisely the prolonged underfunding of the IRS that has made the agency more likely to audit low- and middle-income Americans. Hampered by computer systems from the 1960s and limited staff, the agency relies on cheaper automated audits that disproportionately hit everyday taxpayers—even though corporations and wealthy individuals are far more likely to underreport income and underpay their taxes.

With the top 1 percent of earners evading as much as $163 billion in taxes annually, giving the IRS the tools to investigate those making over $400,000 a year could yield $1 trillion over the next decade.

In contrast, the Congressional Budget Office estimated that passage of the Republican bill would increase the deficit by $114.4 billion by encouraging tax cheating and growing the “tax gap”—the almost $500 billion a year that is owed but never paid to the government.

Permitting that gap—which primarily comes from the wealthiest Americans’ outgunning the IRS—also undermines American democracy. Tax policy expert Vanessa Williamson has found in her research that Americans “see taxpaying as an important civic duty,” but two-thirds say the belief that some are not paying their share undermines their faith in the system. (Take, for instance, former president Trump paying just $750 in federal taxes in 2016 and 2017.)

If we want a healthy democracy—one where, as Williamson says, citizens feel a sense of pride when they invest in infrastructure, schools, and parks—we must fight for a tax system that demands accountability from the corporations and individuals who have evaded it for too long.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

Inadequate funding means interminable wait times for people calling for help and long delays for refunds. Making the IRS more effective for the middle class and small-business owners—those who can’t afford shadow armies of tax evasion specialists—means giving it enough resources to do its job.

Of course, increasing the IRS’s funding would simply make it more effective at implementing existing policy. There is also certainly room to close billions of dollars in tax loopholes, eliminate carried-interest deductions (where well-paid private “equiteers” get a tax break on investment income), and implement a wealth tax on households worth $100 million—all of which would impact billionaires and hedge fund managers a whole lot more than the typical taxpayer.

It also wouldn’t hurt the IRS’s reputation to make filing taxes easier to begin with—as Senator Elizabeth Warren and Representative Katie Porter, among dozens of others, called for with the Tax Filing Simplification Act of 2022. The bill would direct the IRS to create an online service making it easier for taxpayers to file taxes directly with the federal government—cutting down on the “13 hours and $240 every year” that the average American spends on the process.

Democrats would be smart to champion the IRS as they did the Postal Service, another agency unfairly demonized by Republicans for inefficiency after they gutted it. It’s not the flashiest issue—I don’t expect we’ll see any Hollywood blockbusters about hard-boiled IRS agents saving the global economy from villainous tax cheats anytime soon—but if you can associate the IRS less with stressful paperwork, and more with the universal benefits it makes possible, it could go a long way toward repairing Americans’ perception of the agency’s work.

It’s one of the best tools we have to hold the wealthy accountable, and one that can ensure they pay their fair share.

Katrina vanden HeuvelTwitterKatrina vanden Heuvel is editorial director and publisher of The Nation, America’s leading source of progressive politics and culture. She served as editor of the magazine from 1995 to 2019.


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