Skip to main content
Home Working together to build your tomorrow

Forty years ago, I owned an interest in a local bar that immediately showed indications of getting ripped off by the manager and employees. I hired a moonlighting IRS agent whose day job involved hanging out in restaurants and bars to determine how much cash was not being declared for income tax purposes. After hanging out in my bar for just two nights, he reported that there were five different ways money was being stolen. The bar closed anyway soon after opening when someone got stabbed outside, but that’s not the point.

Today, most of these talented IRS sleuths are gone. As cited by the New York Times editorial board, the country loses $450 billion in otherwise collectible income taxes — per year. It amounts to 16 percent of what should have been collected to support the needs of this country’s patriotic citizens.

Unfortunately, many career agents like the one I hired are no longer working for our government, because 21,000 agent jobs have been cut — about 25 percent of the workforce, including an audit staff reduced by one third. This happens in a unique government entity that generates $6 of revenue (otherwise unpaid taxes) for every $1 we spend on its operations. The result is almost a trillion dollars now going uncollected every two years.

Since 2010, Republican congressmen have worked successfully to slash the IRS budget by 18 percent while the number of tax returns has increased by 10 million. Tax cheating is accomplished primarily by people with incomes above $200,000, so we’re not talking about illegal exploitation of some “loophole by the little guy.” It’s primarily fraud on the part of corporations and wealthy individuals.

Former President Barack Obama tried to increase the IRS budget by $1.2 billion, but he hit the brick wall of congressmen at the time like Jason Chaffetz of Utah’s 3rd congressional district, who thinks the agency should be “abolished” because it represents “big government.” Because of that line of reasoning, along with thoughtless harassment like an attempt to impeach John Koskinen, the recent IRS commissioner, audits are at their lowest number in 14 years.

Compounding this toxic fiscal brew, we now have a sweeping new rush job of a tax law that results from political pressure rather than any consideration of its countless unintended consequences — a colander of opportunity for multiple “toeholds of rationale” many will use to interpret the law to their own advantage. How can I blame them, and who’s to stop them if they’ve guessed wrong?

Blatant non-reporting of income is one thing, but professionals buying buildings or office space so they can overcharge (and then pay) themselves tax-sheltered rent will be just the beginning of revenue seepage. Others will become independent contractors to enjoy lower taxable “pass-through” income with a 20 percent tax deduction up front — an advantage that excludes some professions like doctors, accountants and financial advisers, but not architects or engineers. A decimated IRS can hardly be expected to police this random motion. But this could be a deliberate intention.

If there’s a method to this madness, we need look no further than the larger picture outlined by the Republican “Way Forward.” Since tax reform passed, leadership has not been shy about claiming that the stage is now set for decreasing government spending on services — specifically government foundations like Social Security and health care.

But here again, when a highly qualified candidate for the director of Medicare was turned down a few years ago, he was on record at the time claiming that one-third of Medicare bills were fraudulent. I personally experienced examples of this firsthand with my own father’s treatment in the last few years of his life. Why have we not unleashed an army of agents to fight fraud in these massive programs?

It’s clear that our leaders aren’t interested in beefing up fraud prevention in government services — either in the IRS or the “entitlements.” In a war against these bulwarks of society, one has to believe that fraud is another arrow in the quiver for doing away with the services themselves. They’ve effectively said as much.