One hopeful patch in an otherwise drearily partisan political landscape was the apparent recognition by both parties this year that the federal government is collecting many billions of dollars less in revenue than it is entitled to under current law, and that it should make some effort to eliminate this “tax gap.”
Democrats had generally been supportive, and in April the ranking GOP member of the Senate Finance Committee, Mike Crapo, R-Idaho, expressed fresh interest in working with them on the issue. President Donald Trump’s appointee as commissioner of internal revenue, Charles Rettig, estimated the gap at $1 trillion per year and called for stepped-up funding for the Internal Revenue Service to help cut it. In June came the really significant breakthrough: Eleven Republican senators, enough to help Democrats break a possible filibuster, committed in principle to beef up IRS enforcement as a way to reduce the tax gap and help cover the cost of a bipartisan $1 trillion infrastructure package.
Well, so much for that: The Republican negotiators have announced that they are no longer willing to accept trimming the tax gap as one of the measure’s “pay-fors.” The plan was to raise about $100 billion through a combination of more funding and wider powers for the IRS, but for the moment, at least, it’s not clear whether the Senate can move an infrastructure bill forward on Majority Leader Chuck Schumer’s, D-N.Y., schedule — which called for a first procedural vote on Wednesday.
GOP senators apparently retreated in the face of resistance from their own tax-phobic political base, which sees the IRS as a menace, rather than what it is: a perhaps unpleasant but absolutely necessary agency of a government that regularly spends several percentage points’ worth of gross domestic product more than it takes in — per the instructions Congress gives it on behalf of the people. To be sure, it did not inspire trust when private tax returns were disclosed to ProPublica earlier this year. Nor is it certain that the agency would have realized the most ambitious goals for enhanced revenue collection even with a lot more funding and legal authority.
Nevertheless, the revenue increase would have been substantial, and Senate Republicans are reversing course on a plan that would have raised funds for purposes they support, without violating their policy against tax-rate increases. The majority of the money would have been collected from upper-income Americans. Bipartisan support for a stronger IRS would have given that agency a firmer political footing, as opposed to the one-party support it may still get if Democrats enact tax enforcement as a revenue source for their separate $3.5 trillion spending plan — which seems likely. We would say this is disappointing, except it’s more like Republicans simply reverting to type after a brief flirtation with common sense.
— The Washington Post