In effect, the American tax code is so immensely confusing that no one really understands it in its entirety, meaning that no one really knows how much any individual American taxpayer actually owes. The IRS has publicly addressed this issue and has made a great deal of noise about its efforts to streamline the tax code and simplify filing procedures. Don’t believe a word of it. If you have come to even the most basic understanding of government, you know that the bureaucrats and politicians running the show are not your friends. They
like the idea that they can nail anyone any day for violating any of a multitude of silly laws. Having not paid your dues to society is a perennial favorite of governments around the world. Nothing stirs up the public quite as much as a well publicized tax case against a wealthy defendant.
Instead of streamlining legislation and making life easier for all of us, politicians and bureaucrats focus their attention on getting their greedy claws on more of your money. They may say nice things about lowering taxes or simplifying legislation, but their actions always uncover their private agenda. Secretly they have been rallying their internal police force. Between 1981 and 1991, the amount of money handed over to the IRS to do its dirty work has soared by more than 50 per cent. Similarly, the amount of agents in its employ has increased by nearly 40 per cent. Before leaving office, President Bush approved a total outlay of US $7.1 billion for the agency. Yet another US $6.5 billion has been approved so that the agency can update its computer systems. Not to be daunted, President Clinton joined the bandwagon and in 1993 added another US $148 million to the US $563 million already set aside for this task, that’s all for one year alone.
How much more money can this agency possibly need? A lot, at least according to the bureaucrats. In 1992, the IRS estimated the US tax gap to be US $114 billion, that’s the difference between the money it feels it is owed and what it actually managed to collect. Politicians like the sound of that big juicy number. It means that rather than trying to balance the budget or cut spending, they can rake in more dough without even having to go through the bother of raising taxes. What will it cost to please the bureaucrats and make everyone happy? One study estimates that in order to seriously reduce the tax gap, the IRS would have to receive three times its annual US $5 billion budget and increase its staff from 120,000 to nearly 300,000.
Naturally what bureaucrats want bureaucrats get, although perhaps not to quite the extent that they would like. Each year the IRS hires an extra 2500 agents on average. This extra manpower has had a tremendous impact on the number of taxpayers audited each year. As of June 30th 1995, more than 1.4 million Americans had already been audited for the current tax year. This figure is about equal to the total number audited in all of 1994 and exceeds the total number of audits performed in 1993. Result, these increased measures brought in an extra US $183.2 million to the government piggy bank, far in excess of the expected US $100 million. In short, we can only expect yet more and ever far reaching increases in government fire power.
Just consider the amount of money and manpower poured into the agency’s computer systems in recent years. In 1993, almost 14 million Americans filed their tax returns electronically, a figure that must put a smile on almost any politician’s face. Computer processing of returns is more than fifty times more cost effective, not to mention the fact that computers are far more likely to ferret out that most evil member of the populace, the small time tax evader. Overall, the agency is making rapid strides towards eliminating paper returns all together. In the meantime, the agency makes do by implementing ever more stringent policies. One program that will come into effect in 1996 will start to randomly select individual returns to be audited. That is regardless of whether or not the agency suspects that anything is actually wrong with the returns in question. Yes, one day, In the not loo distant future, the IRS will undoubtedly attain its ultimate goal, that of auditing each and every tax payer each and every year.