U.S. Tax Army to Expand

The Inflation Reduction Act being considered by Congress would vastly expand the Internal Revenue Service. The IRS currently has 82,000 employees, and the legislation would boost the number by roughly 87,000, according to a related Treasury estimate (Table 3).Of the $80 billion increased IRS funding in the Act, $46 billion would go to enforcement. That expansion promises to damage small‐ and medium‐​sized businesses and undermine civil liberties. Politicians complain about tax cheats, but noncompliance is low in the United States compared to other countries.All those new IRS employees would undermine GDP rather than producing it. But that would be only part of the waste. Another cost would be the increased time and energy needed by taxpayers, lawyers, and accountants to defend against a more aggressive IRS.