IRS Advisory Council: Disgusted Taxpayers Will Stop Paying

The Internal Revenue Service Advisory Council Public Report is out. Aren’t you thrilled?

The report begins, like so many of these IRS oversight reports from the strangely many IRS oversight bodies, with a yet-more-strident plea that Congress stop slashing the IRS budget, and with yet-more-dire predictions of how such cuts, by degrading the ability of the agency to do its job competently, will cause taxpayers to turn away in disgust. For example:

[W]hile much of the lower collections will be attributable to the relatively small percentage of taxpayers who have traditionally ignored their responsibilities, a growing amount may be attributable to the effects of increasing cynicism of taxpayers about the fairness and integrity of the tax system. Thus, previously honest and diligent taxpayers who would otherwise end up paying more to subsidize noncompliance by others could themselves be tempted into noncompliance.

More broadly, any reduction in voluntary compliance and the VCR will increase the cost of enforcing the tax law. Whatever the costs of running the current system, those costs are orders of magnitude less than what would be necessary if taxes were in fact forcibly exacted rather than paid by honest citizens striving to voluntarily comply with their obligations, and who would want to live in such a system.