Last week I wrote about how Republicans are completely wrong in advocating for a return to the gold standard. A similarly bad idea is to abolish the Internal Revenue Service.
For Republicans, the IRS is everything worth hating: a government agency, a big government agency, a government agency involved with taxes, a government agency that enforces parts of Obamacare, and a government agency that uses more than a single-sided napkin to do its business. It is hard to dream up anything more inherently objectionable to Republican ideology.
Besides the IRS collecting taxes, though, the conservative hatred for the IRS is to some degree a mystery. The IRS is a huge job creator, and employs nearly ninety-thousand workers. These workers may be working in the sphere of governmental bureaucracy, but IRS employees try their hardest to cut down on the number of people who cheat the American tax system. And Republicans love busting cheaters!
Several Republican presidential candidates, Ted Cruz, Ben Carson, Rand Paul and Mike Huckabee, have campaigned vehemently with demands that this agency not just be reformed, but that it should be outright abolished. As usual with Republican economic ideas, this is a proposal ignorant of how the nation really works.
Ironically, the IRS is particularly important for Republican economic policies revolving around big tax cuts because, if the government passes a huge tax cut and stops taking in a huge percentage of tax money, it better be sure it is getting all the money still coming to it.
Equally deserving of Republican praise, the IRS is an impressively efficient governmental agency. For every $100 that the IRS collects, it spends only 38 cents. That is a very economic ratio of cost and profit that amounts to very cost-effective governance. Which is probably why Republicans hate the IRS so much: it proves that the government is not as incompetent or wasteful as they claim.
Now it is one thing to scale back the IRS’ operation a little and streamline it, but Republicans have really gone out on a limb in calling for a complete dismantling of the IRS. It is a huge government agency only because it has to be. In 2014 the IRS processed about 240 million tax returns, and collected nearly $3.1 trillion. The IRS also issued hundreds of millions of refunds back to the American people—a statistic that tax-hating Republicans should appreciate—and, generally, the IRS is tasked with enforcing the ridiculously complicated tax code that Republican members of Congress themselves helped create and have for decades refused to simplify despite eternal campaign pledges.
No matter what Republicans might say on the campaign trail, the GOP has done very little in the name of tax code reformation over the last several decades. This may be because Republicans want to continue appeasing the loophole-loving corporate and private interests that fund their political campaigns at the expense of the public interest of the American people, but, whatever their motive, the tax code is only getting more complex.
As a result, the US government is going to continue to need the IRS if it wishes to collect tax money and process the sheer volume of tax returns, refunds, and audits. Ted Cruz’s promise to axe the IRS and simplify taxation with a postcard-sized tax form is politically irresponsible when his supporters start to believe that the IRS abolitionist movement is either rational or good for America.
For the sake of the argument, though, let’s say that Ted Cruz wins Election 2016 and actually sticks to his word in abolishing the IRS. How will taxes work then? After eliminating the IRS is Ted Cruz going to round up a few friends and try to process the 240 million tax returns himself? Will Ted Cruz personally count all the tax money to make sure that all $3.1 trillion dollars are there? Even if Cruz were to dramatically cut taxes by one-third, there would still be $2 TRILLION to count.
The reason that the IRS has almost 90,000 employees is because it takes a lot of people to count trillions of dollars. Perhaps, when a conservatively understaffed, IRS-less Cruz Administration finishes processing 2016’s 240 million tax returns (hopefully within the next thousand years) we can ask if they can try and be quicker on the 2017 returns. Because good, honest taxpayers are waiting for their refunds, right?
But imagine that Congress does not even go along with Cruz’s tax code simplification. Congress hasn’t yet acted on that idea, and even Ted Cruz, who is a sitting senator fully capable of beginning the legislative process toward simplification right this moment, is doing nothing to finally simplify the tax code. So if president, would Cruz still want to abolish the IRS and re-format tax forms onto a postcard even if the tax code continues to only get more complicated? That would obviously result in a taxation clusterfuck, and it suggests that Ted Cruz, like with his proposed return to the gold standard, does not know what he’s talking about.
It does beg the question, though, does Cruz have real economic advisers? Is he simply misinformed by persuasive, ideological crackpots, or is he just saying dumb things to attract the attention and support of people who do not know any better?
I simply report the news, you decide.