, I took a look at the
IRS
enforcement numbers over the last several years.
TIGTA
has now released its own analysis.
They note increased levies, liens, and seizures during the past several years,
leading to an increase in the total revenue collected. But they also say that
“the total dollar amount of uncollected liabilities increased to the 10‑year
high of $290 billion. In addition, the gap between new delinquent account
receipts and closures had widened by almost 63 percent by the end of
.
[T]he number of taxpayers (866,777) and the amount owed ($34.9 billion) on
accounts in the Queue were each at a 10‑year high. One reason for the increase
in the Queue this year is a rise in the number of compliance assessments.
While the Queue is a source of work for Collection function employees, a
significant number of accounts in the Queue might never be worked. In
addition, in , the
IRS
removed almost 7.6 million accounts with balance-due amounts totaling almost
$31.2 billion from Collection function inventory. These accounts might never
be worked.
Here are their numbers (which are mostly the same as the numbers I found,
except that they go back a couple of years more):
Another choice quote:
More TDAs were received than closed, and the gap between TDA receipts and TDA closures had widened by almost 63 percent (to 1,914,508 accounts) as of . This is the largest year-end gap in the 10‑year period. … The Collection function is unable to work all of the existing accounts in the Queue with current staffing, and the number of TDA receipts is outpacing closures.
It’s all about how the psychology of taxpayer compliance works, with a goal of
learning ways of exploiting people’s psychology as a way to mold them into
compliant taxpayers. Says Kornhauser:
Research shows that tax compliance is affected by (social and personal) norms
such as those regarding procedural justice, trust, belief in the legitimacy
of the government, reciprocity, altruism, and identification with the group.
Cognitive processes, such as prospect theory, also influence an individual’s
reaction to tax issues. Studies also indicate that certain demographic
factors such as age, gender and education correlate with tax morale.
…[A]n external agent, such as the
IRS,
can… activate compliance norms in a variety of ways including education,
properly framing communications, fair procedures, and a regulatory framework
that incorporates current and future findings of tax morale research into its
operations and dealings with taxpayers.
Of course, those of us eager to discourage compliance with the tax
laws can find plenty of meat to chew on here as well. And anyone who likes a
good horror story will appreciate the spectre of an
IRS
Behavioral Science Taskforce.
Here’s an interesting side note from the article that confirms something I’d
suspected might be the case:
In one experiment, subjects received $18. Half the group was told that $2 had
been given to a charity of their choice; the other half was told that they
had been given $20 but the government had taken $2 in taxes which was then
given to the charity of their choice. When asked if they wanted to make
additional charitable contributions, those that had been “taxed” did not, but
those subjects who had simply been told $2 had gone to charity contributed
more. Although neither group had a choice whether to give the initial $2,
the “tax” situation highlighted the compulsory aspect (or alternatively
framed the situation as a loss situation since $2 of their money had been
taken from them). This crowded out the voluntary charitable behavior.
And here’s one of the author’ proposals, for a marketing campaign:
The IRS
should conduct an extensive media campaign regarding taxes in order to reach
the widest number of the public.… The campaign’s goal should be to encourage
values and norms that enhance tax compliance, not simply to convey tax
information. The campaign should seek to develop those values and norms,
discussed in the literature review, that are connected with high compliance
including trust in the government and a sense of civic duty to pay taxes. It
should also stress the competency of the
IRS.
Many taxpayers may not question the honesty of
IRS
officials, but they may doubt the efficiency and/or ability of
IRS
personnel.
The danger of a media campaign, like the danger of an education campaign, is
that it could backfire. It might cause taxpayers to feel manipulated, which
would increase cynicism and potentially more non-compliance. In order to
prevent (or minimize) these negative consequences the
IRS
must move cautiously and with the aid of outside experts.
Kornhauser’s paper makes much of “framing” — whereby people can be manipulated
to have different attitudes to the same basic issues based on how those issues
are presented.
In , the Nobel Prize-winning
economist Thomas Schelling used to put some questions to his students at
Harvard when he wanted to show how people’s ethical preferences on public
policy can be turned around. Suppose, he said, that you were designing a tax
code and wanted to provide a credit — a rebate, in effect — for couples with
children. (I’m simplifying a bit.) In a progressive tax system such as ours,
we try to ease the burden on the less well off, so it might make sense to
adjust the child credit accordingly. Would it be fair, do you think, to give
poor parents a bigger credit than rich parents? Schelling’s students were
inclined to think so. If the credit was going to vary with income, it seemed
fair to award struggling families the bigger tax break. It would certainly be
unfair, they agreed, for richer families to get a bigger one.
Then Schelling asked his students to think about things in a different way.
Instead of giving families with children a credit, you’d impose a surcharge
on couples with no children. Now then: Would it be fair to make the childless
rich pay a bigger surcharge than the childless poor? Schelling’s students
thought so.
But — hang on a sec — a bonus for those who have a child amounts to
a penalty for those who don’t have one. (Saying that those with
children should be taxed less than the childless is another way of saying
that the childless should be taxed more than those with children.) So when
poor parents receive a smaller credit than rich ones, that is, in effect, the
same as the childless poor paying a smaller surcharge than the childless
rich. To many, the first deal sounds unfair and the second sounds fair — but
they’re the very same tax scheme.
I tend to cringe when I hear talk of “framing” because it usually sounds to me
like a polite word for “lying.” There are lots of rhetorical and statistical
tricks that you can use to make people agree to things that aren’t in their
best interests by making them believe they’re agreeing to something else.
These generally aren’t admirable, even if, afterwards, you can claim with a
straight face that your deceptions didn’t involve any actual explicit untruths.
On the other hand, there are often many ways to present the very same data or
the very same argument, even after having narrowed down the choices by aiming
for accuracy, precision, clarity, and honesty. Some are more persuasive, and
it’s probably a good idea to know which ones they are. Also, it’s good to be
aware of the “framing” thing so you learn to identify when someone you’re
arguing with or trying to persuade is operating within a deceptive frame so
that you can try to apply some appropriate remedies rather than beginning your
own argument from an unfairly disadvantaged position.
