The Biden administration's expensive efforts at beefing up the IRS' ability to target wealthier Americans with unpaid federal taxes have finally netted $1 billion in additional revenue.
Or, to put it another way, the yearlong campaign has generated enough cash to fund the federal government for…about 90 minutes.
Do the math. The United States spent about $6.1 trillion last year. That translates to roughly $16.7 billion per day or about $700 million per hour. Against the federal government's insatiable appetite for spending, even unfathomably large figures like $1 billion are reduced to mere rounding errors.
That $1 billion was the result of what the IRS calls "stepped up activity" targeting about 1,600 individuals with incomes of over $1 million and who owed over $250,000 in known tax debt. The $1 billion in new revenue comes from payments made by about 1,200 individuals, according to the IRS.
"Our increased work in this area means these past-due tax bills from high-end taxpayers are no longer being left on the table, like they were too often in the past," IRS Commissioner Danny Werfel said in a press release.
Of course, everyone should pay the amount of tax that they legally owe—and not one penny more. And, yes, $1 billion in additional revenue brings the federal books marginally closer to balancing.
But this announcement mostly serves to underscore the size of America's fiscal problems and the utter inability to solve them by closing the so-called "tax gap." The federal government is on pace to run a deficit of $2 trillion this year and a cumulative deficit of over $20 trillion in the next decade. Closing that gap will require a complete overhaul of the federal budget and a rethinking of the role of government.
Indeed, the fact that this $1 billion came from wealthy taxpayers with known tax debts means that it was the lowest of low-hanging fruits. And the government will chew through all of it in less time than it takes to watch Jaws.
Harvesting that extra revenue wasn't cheap, either. Taxpayers ponied up an additional $60 billion in new revenue for the IRS in recent years, of which about $5.7 billion has already been spent, according to The New York Times. (The agency was given $80 billion in new funding as part of the Inflation Reduction Act, but Congress later clawed back $20 billion as part of last year's debt ceiling deal.)
The Biden administration originally said the additional enforcement funding for the IRS would pay for itself by squeezing $316 billion in additional revenue out of American taxpayers. Separately, the Congressional Budget Office estimated that increased IRS enforcement would generate about $200 billion. It's probably right to be skeptical of that claim. One should also wonder if the country would be better off if that money remained in the hands of productive people rather than being swallowed up by the federal government.
Sending the IRS to dig through the proverbial couch cushions of the wealthy—and probably a lot of less-than-wealthy folks too—will only create a lot of headaches for Americans who almost certainly didn't intend to underpay their tax bills and give the IRS the occasional opportunity to issue press releases bragging about how well it is doing its job.
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