To understand why the IRS is under attack, follow the money.
It’s no secret that House Republicans don’t like the Internal Revenue Service.
They’ve once again proposed cutting the agency’s already beleaguered funding, and they recently held a hearing to impeach its commissioner, John Koskinen. Koskinen’s alleged misdeeds stem from the now four-year-old allegations that the agency singled out conservative groups’ tax-exemption applications for scrutiny.
While an exhaustive investigation of the “scandal” did show mismanagement — for which the former chief, Lois Lerner, eventually stepped down — it turned up no evidence at all that the IRS targeted conservative groups for political reasons. And Koskinen himself didn’t even work for the IRS at the time.
In all likelihood, Koskinen’s persecution is part of a larger push by House conservatives to discredit the tax collection agency and pare down its funding.
A recent report from the Center on Budget and Policy Priorities shows IRS funding has been cut 17 percent since 2010, with disastrous impacts on the agency’s staffing levels.
These cuts haven’t just hurt the agency’s customer service, as anyone who tried to call the IRS last year could have told you. It’s made it much harder for the federal government to collect the money it needs to function.
So what’s behind all the animosity?
The current effort to demonize the IRS has two main backers: conservative ideologues who wish to undermine the government’s ability to collect taxes for ideological reasons, and wealthy elites who wish to do the same thing for personal financial reasons.
Some, like Rep. Darryl Issa (R-CA) — who’s both the wealthiest member of Congress and a leading member of the impeachment effort — fit into both camps.
The financial argument is perhaps the simplest to understand: A weak IRS helps the wealthy avoid paying taxes.
A New York Times story late last year outlined how the richest Americans have spent millions shaping the tax code in their favor. Underfunding the IRS makes it easier for their accountants and lawyers to exploit loopholes and tax havens to ensure they don’t pay the full tax rate the law requires.
And it’s paid off. In the past 20 years, the Times reported, the wealthiest 400 families have seen their average effective tax bill drop by over a third.
These financial interests stand behind — and often sponsor — the ideological push to undermine the IRS for its own sake. Hedge fund titans like Daniel Loeb, Louis Bacon, and Steven Cohen have all both benefited from the weak tax enforcement, and invested in it through their political and charitable donations.
Grover Norquist, the tax-hating president of Americans for Tax Reform, has for decades led an effort to — in his words — “shrink government to where I can drag it into the bathroom and drown it in the bathtub.” And the most effective method for shrinking government is to starve it of the necessary revenue to fund public programs.
This anti-tax faction, once a fringe movement, now makes up the mainstream of the Republican Party.
One telling sign: Nearly 1,400 elected officials — including nearly all the Republicans in Congress — have signed Norquist’s pledge to oppose any increase in taxes. They’ve won significant victories, not least of which has been to demonize the IRS to the point that it’s consistently ranked among the least popular federal agencies.
The impeachment effort against Koskinen is dead on arrival in the Senate, and the bill to strip more IRS funding won’t survive a veto if it makes it to President Obama’s desk. But the bigger fight over taxes — and the agency tasked with collecting them — appears here to stay.
As Norquist put it, “You win on the tax issue, you win all issues.”
Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies. Distributed by www.OtherWords.org.