The Tax Man Should Cometh

Article excerpt

Byline: Ezra Klein

How I learned to stop worrying and love audits.

I come not to bury IRS agents but to praise them. That's not a popular argument coming so soon after tax day. In fact, it's not a popular argument in American politics, period. But I'm not here to win friends. I just want to pay less in taxes.

You can generally judge exactly how unpopular something is by a political party's desire to tie the opposition to it. So it's telling that the GOP is now attacking Obama's health-care law because it will -- create jobs at the IRS (and I thought they were worried about unemployment?). "You can't run," warned the grim announcer on a recent RNC advertisement. "There is no place to hide. Over the next few years, IRS agents will begin to multiply." Newt Gingrich was kind enough to offer up numbers. "One of the things in the health bill is 16,000 additional IRS agents," he warned.

As exhaustively showed, that's not "one of the things in the health bill." Actually, there's virtually nothing in Gingrich's statement that's true. The bill does not say the IRS should hire 16,000 new agents. That's from a press release from the Republican staff on the House Ways and Means Committee that was a misleading extrapolation from a Congressional Budget Office report. The CBO report said that the IRS would need $5 billion to $10 billion to administer the bill. Republicans took $10 billion, divided by the cost of an agent's salary, and said the bill would employ that many agents. Apparently, none of these people need desks. Or office space. Or special IRS badges.

In reality, the bill won't require hiring many new agents. Most of the new work will be administering tax credits to low-income individuals and small businesses. That's a job done by IRS employees, not "agents." But misleading math aside, it's worth challenging our apparent consensus that IRS agents should be viewed with the same fearful contempt we normally reserve for bookies and investment bankers.

Every year the IRS collects data on "the tax gap." The tax gap is the difference between the taxes the agency knows it's owed and the taxes the agency has actually been paid. In fiscal year 2008, the tax gap was $345 billion. …