WASHINGTON - Every dollar the Internal Revenue Service spends for audits, liens and seizing property from tax cheats brings in more than $10, a rate of return so good the Obama administration wants to boost the agency's budget.
House Republicans, seeing the heavy hand of a too-big government, beg to differ. They've already voted to cut the IRS budget by $600 million this year and want bigger cuts in 2012.
The IRS has dramatically increased its pursuit of tax cheats in the past decade: Audits are up, property liens are up and asset seizures are way up. President Barack Obama and Democrats in Congress see stepped-up enforcement as a good way to narrow the nation's staggering budget deficit without raising tax rates or cutting popular spending programs.
IRS Commissioner Doug Shulman told the committee yesterday that the $600 million cut in this year's budget would result in the IRS collecting $4 billion less through tax enforcement programs. The Democrat-controlled Senate is unlikely to pass a budget cut that big. But given the political climate on Capitol Hill, Obama's plan to increase IRS spending is unlikely to pass, either.
Obama has already increased the IRS budget by 10 percent since he took office, to nearly $12.5 billion. The president's budget proposal for 2012 would increase IRS spending by an additional 9 percent.
Republicans, however, view the IRS as an ideal target in their promise to reduce government spending, in part because the agency will play a big role in implementing Obama's new health care law. If the law survives court challenges, the IRS will administer tax credits for businesses that provide health insurance to employees, as well as credits to help individuals pay for coverage.