Sidebar: Mr. Speaker

Before we get all gaga over the Republican caucus coming together and electing Rep. Kevin McCarthy as their Speaker, it's important to remember that this is still the Republican caucus, and we know who they are. 

Lest we forget, they're happy to remind us at every turn, as McCarthy did in Saturday's wee hours. As I noted in my Mr. Speaker post, he told us

I know the night is late, but when we come back, our very first bill will repeal the funding for 87,000 IRS agents. You see, we believe government should be to help you, not go after you.

Their first order of business is worse than a solution in search of a problem - it's a solution in service to a lie.

There are no plans to hire 87,000 IRS agents to "go after you" or to go after anyone else. There are plans to hire additional staff for the IRS, according to Time.

The Inflation Reduction Act... includes roughly $78 billion for the IRS to be phased in over 10 years. A Treasury Department report from May 2021 estimated that such an investment would enable the agency to hire roughly 87,000 employees by 2031. But most of those hires would not be Internal Revenue agents, and wouldn’t be new positions. (All emphasis throughout the post I've added.)

There are many good reasons for the funding, which will bring on IT staff and customer service folks - the government employees "who should help you," as McCarthy said. And yes, there will be auditors, who "would be largely tasked with cracking down on corporate and high-income tax evaders." According to folks at Treasury, 

It is wholly inaccurate to describe any of these resources as being about increasing audit scrutiny of the middle class or small businesses.  

So, what is accurate?

There's a big wave of attrition that's coming and a lot of these resources are just about filling those positions.

More than half of current IRS employees are retirement-eligible, and expected to leave in the next few years. The new funding might lead to a net employee gain of 20,000 - 30,000 people. That will bring staffing back to levels last seen over a decade ago.

The IRS currently has roughly 78,000 employees. According to John Koskinen, who served as IRS commissioner from 2013 to 2017, that’s down from around 100,000 when he first started. By the time he resigned four years later, he said, it was clear that the agency was in the grip of a systematic attempt by the GOP to weaken it. 

When the GOP took control of the House after the 2010 election, Koskinen says, they "immediately instituted a series of crippling cuts..." Overall funding has "fallen further, by more than 20%" since then. And enforcement funding? That's dropped by 31%, making it easier now for "high-net-worth tax cheats and major corporations" to avoid paying their fair share, costing us billions.

Audit rates on the largest companies dropped from nearly 100% to 50%; audits on the wealthiest individuals dropped from 8.4% to 2.4% from 2010 to 2019, according to Janet Holtzblatt of the Urban-Brookings Tax Policy Center.

All of us agree a non-responsive government is a bad thing.

McCarthy's right - government should help us. But how can they do that on something as important as the income taxes we pay, if there's no one to answer the phone or process our tax returns? Or if the IT systems are so out-of-date, they can't find qualified folks to work on them, making it necessary to use manual processes instead? 

Back in August, about the same time the Rs started threatening us with the 87,000 auditors lie, the Washington Post Opinion page shared an eye-opening piece, with photos, on why the IRS needed this funding. It showed the cafeteria at the IRS center in Austin, jam-packed with paper files as far as the eye can see.

 It’s part of what the IRS calls the “Pipeline”: a 1970s-era assembly line used to process tax returns at several locations around the country. And it might give you a sense of why Congress is on the verge of handing the agency $80 billion through the Inflation Reduction Act — not only for more enforcement but also for tech modernization.

There's a massive backlog - over 10 million individual returns as of last July, partly from the pandemic, but also from

the agency’s embarrassingly outdated, paper-based system, which leaves stacks and stacks of returns cluttering shelves, hallways and even the cafeteria. 

On the Pipeline, paper tax returns aren’t scanned into computers; instead, IRS employees manually keystroke the numbers from each document into the system, digit by digit.

All of this happens - the lack of audits on the people who have the most to lose if they get caught cheating, the lack of access to taxpayer assistance, the old technology and the mess of paper - all of this happens

despite the agency receiving evermore responsibilities: stimulus checks, child tax credit payments, Obamacare enforcement, foreign bank account tracking and, lately, hunting down Russian yachts. Without reliable, long-term funding guarantees, the IRS has struggled to upgrade its systems.

What will the service, technology, and audit programs be able to do if the funding is maintained? The Congressional Budget Office estimates the IRS will "increase revenue by $204B over the next decade." That money will help pay for all the programs the government creates - programs championed by Democrats and Republicans alike. 

One more thing.

Should you be angry because the IRS is going to be able to better perform all aspects of its job, if it gets the funding? Nope.

I used to say there’s no Democratic or Republican way to run the IRS,” Koskinen says. “The people who are significantly disadvantaged are the average taxpayers who have a simple question and can’t get through. Those are Republicans as well as independents and Democrats.” 

McCarthy's starting his tenure with a lie; I'll end this post with a truth. In a December 15, 2022 report, the Government Accountability Office said the IRS

... addressed its backlog of 2021 paper returns. However, as of late September 2022, IRS had about 12.4 million returns to process, resulting in refund delays for millions of taxpayers. 

That's a two-million-plus increase in the backlog - since last July. It's only going to get worse if this funding is cancelled. 

TGIF 10/7/22

Here are your good week/bad week honorees for the week.

I've been a fan of the Boston Red Sox since I was a kid. There's a picture of Ted Williams and Carl Yastrzemski in our foyer - my husband's favorite player of all time, and mine. This wasn't a good year for us, but it was a good year for a couple of players

• Aaron Judge, of the hated New York Yankees, became the first player in the American League to hit 62 home runs in a single season. He beat fellow Yankee Roger Maris's record of 61, which lasted that many years. 
• And, over the National League, Albert Pujols of the St. Louis Cardinals, joined the 700-home run club, and finished the season with 704 in his career, fourth on the all-time list. Before the season started, Pujols said this would be his last year. As he got closer to the milestone, reporters pestered him on whether he'd really retire if he didn't make it. I'm glad he didn't need to worry about it at the end. 

Major news was breaking in my neck of the woods this week, as Micron announced intentions to build not one, not two, not three, but four chip fab plants in Onondaga County, in Central New York. (Yes, there are places in New York more specific than 'upstate'.) The 20-year, potentially $100B with a B project is the result of a local, regional, state, and federal collaboration, and has the opportunity to be transformative not just for us, but for the state and for the country.

President Biden made news this week when he announced pardons for people convicted of federal crimes for simple marijuana possession, and he's encouraging governors to do the same for folks convicted in their states. In addition, and perhaps more important that the pardons, he's directing his team to review how pot is classified under the law. Right now, it's in the same bucket as heroin, which is (and always has been) ridiculous.

Speaking of President Biden, his administration's getting a lot of letters asking for infrastructure money from House and Senate Republicans, including some who were big critics of the bills that include the funds. Notably, none of the letters mention the authors' criticism of the bills, or their votes against them.

None cite “socialism” or “radical spending.” No one included a paragraph about House Minority Leader Kevin McCarthy calling the law “rushed and irresponsible,” or Georgia Rep. Marjorie Taylor Greene calling the Republicans who voted for it “traitors.” Often, the letters signed by members of the House and Senate appeal using the same terms that they derided Democrats for using, from “economic growth” to “sustainability” benefits.

This is not uncommon, but it's fun - especially since some of these folks are running against the very spending they're so willing to bring home to their district.

And finally, let's close out the list with the abject failure of the IRS to monitor applications of charities for tax-exempt status. How bad is it? One man, a convicted criminal, got approval for 76 charities himself, often using the name of well-known organizations such as the United Way and the American Cancer Society. It's mind-boggling. 

All of this was made possible by stripping down processes a few years ago, at a time of budget and staffing cuts. Which makes all the political handwringing about the Biden administration's funding additional IRS staff to backfill vacancies, provide customer service to taxpayers, and yes, to do the vetting that would prevent this kind of things all the more absurd. 

How was your week? Got any nominations for either of the lists? Drop a comment.

Cheating is Cheating

Some of you may remember that New York State is facing an unexpected budget deficit, to the tune of some $2.3 billion.

The shortfall is tied to lower-than-projected tax collections towards the end of last year, and in the first few weeks of this year, we were told - and that in part stems from the changes to the federal tax code that limited the deductibility of state and local taxes, or SALT, in the vernacular. Both Tom DiNapoli, the comptroller, and Andrew Cuomo, our Sonofa Gov, made that declaration when they told us about the problem.

Cuomo even went off to Washington to talk the president about doing something about the SALT limits, without success; if I remember correctly, each time Cuomo said SALT, Trump said abortion, so it wasn't a resounding success.

And even though things have been getting better, Cuomo told us, wealthy people are leaving New York to go to states where the tax situation is more palatable for them.  You know - states like Florida and others in the south and out west that don't have an income tax, and/or that have significantly lower property taxes.

Now, how many people really did that because of the changes in the tax code, vs. the people who age out of NY (the ones who are tired of dealing with winter and retire to warmer places, either fully or who live as snowbirds, we may never know.  But the state tax department is aggressively pursuing rich people who leave, to make sure they're really not New Yorkers anymore, and to make sure they're not cheating on their taxes. And that, of course, has people all riled up.