The ink is barely dry on the recently enacted Inflation Reduction Act, which allocates $80 billion over 10 years to help modernize IRS technology systems and provide more effective tax enforcement and collection. Yet already, Republican critics like Sen. John Thune of South Dakota are complaining that the needed funds will do little more than allow the IRS to “spend more time harassing taxpayers around this country.”
Given that between $500 billion and $1 trillion a year in taxes goes uncollected, perhaps some American individuals and corporations deserve to be harassed a little. Especially when you consider that, where middle class American wage-earners have a 95% reliability rate for paying their fair share of taxes, the top 1% of wealthy Americans consistently fail to report (and are very good at hiding) 20% of their income.
For years, Republicans as well as Democrats in Congress have blocked giving the IRS the resources it needs to update its computer systems and prevent the steady erosion of its enforcement capabilities. As noted by Charles Rettig, a Trump appointee and IRS commissioner, the “areas of challenge for the agency [are] large corporate and global high-net-worth taxpayers,” not the middle-income Americans that Senator Thune pretends to be protecting.
The payoff in all this could be the recovery of $400 to $800 billion in lost revenue over 10 years, a five- to tenfold return on what we’d invest to modernize the IRS.
Regardless of what these funds are used for — paying down the national debt, modernizing America’s decaying physical infrastructure or providing greater access to day care and community college education — making sure that all American individuals and businesses pay their fair share of taxes is the right thing to do.
And it’s something we’ve done before, in far more difficult circumstances, and by Republicans no less.
In the summer of 1862, with the Union war effort going badly, Abraham Lincoln appointed George S. Boutwell, a former governor of Massachusetts (and a distant cousin of mine), to be the first Commissioner of Internal Revenue. With only three clerks and a small office in the Treasury building, Boutwell faced the herculean task of interpreting the recently passed Revenue Act that provided for a wide range of duties on products and services and a (progressive) tax on incomes for the first time in the country’s history. He also had to oversee the hiring of hundreds of Treasury clerks in Washington and thousands of tax assessors and collectors throughout the northern states.
Over the next eight months, working “without interruption of Sabbaths or evenings,” Boutwell successfully managed the collection of more than $2.3 billion in today’s dollars for the Union war effort. Meticulous Yankee that he was, Boutwell was proud that few of the bureau’s tax decisions were ever overturned by the courts. He was also satisfied that Americans were complying in paying their new taxes, noting that “the people of this country have accepted it … with no serious complaint in its administration.”
Now, more than 160 years later, the Internal Revenue Service is by far the most maligned branch of the federal government. Having been starved of needed resources, the IRS is hypocritically denounced both for its inability to perform needed, complex audits of wealthy individuals and provide basic telephone information for ordinary taxpayers. What is never mentioned by critics is that Americans wouldn’t enjoy all the trappings of a modern society if it weren’t for the quite remarkable voluntary tax system that is a critical foundation of our democracy.
Repairing the damage done to an IRS suffering from repeated budget cuts and failures to modernize its computer systems won’t be easy. But it’s necessary and should be a bipartisan objective.
After he left the bureau to become a congressman from Massachusetts, George Boutwell became one of the principal architects of the Fourteenth Amendment to the Constitution, a central tenet of which is “equal protection of the laws.” With less scapegoating and increased bipartisan support for this most critical agency of our government, the IRS could once again deliver the tax fairness and equity that Americans deserve.
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ABOUT THE WRITER
Jeffrey Boutwell (www.jeffreyboutwell.com) is a writer and historian living in Columbia, Maryland. He is the author of the forthcoming book “Redeeming America’s Promise: George S. Boutwell and the Politics of Race, Money and Power, 1818-1905.”
