IRS Can’t Seem To Get It Right

As tax season begins to rear its ugly head again, taxpayers across the nation are reminded of the out-of-control spending habits in Washington. Even more depressing is the fact that this type of spending is no longer merely a habit; it has become a way of life for many of our elected officials.  The Internal Revenue Service (IRS), one of the most feared agencies, has shown that they just can’t seem to get it right.  On one hand, the IRS’s Inspector General just released an audit report that showed that $6 million was wasted on technology. On the other end of the scale, the IRS announced it would eliminate one of its most useful programs, IRS’s Migration Flow data program.

According to a February 19, 2013 Washington Post article, “It said that in 2011 the IRS spent about $8.5 million on 35,000 aircards, which provide mobile Internet access to laptops, paying maintenance fees that range up to $30 a month per aircard even if they are not used. In addition, the IRS spent $2.9 million on 4,400 BlackBerrys that incur automatic monthly access fees of up to $63.  The devices generally are provided based on the employee’s job category rather than on a proven need to have them, the report said. About $1.1 million was spent on aircards and BlackBerrys that were not used for at least three months, and 45 of the former and 68 of the latter were not used at all during the year, it said.”

In an editorial last December, the Washington Examiner explained that despite the long list of shortcomings of the IRS, “…it does at least provide other useful services. It also collects massive amounts of data that, after being scrubbed of any personal information, can be very useful to policymakers and concerned citizens.  Unfortunately, it appears that the IRS has decided to end one of its best data programs.”

The Examiner editorial points to a Manhattan Institute report, “The Great California Exodus,” which explains how “over the last decade, millions of middle-class families have fled high-tax California for low-tax jurisdictions like Texas.”  The report continues, “Most of the destination states favored by Californians have lower taxes…States that have gained the most at California’s expense are rated as having better business climates. The data suggest that many cost drivers — taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power and high labor costs — are prompting businesses to locate outside California, thus helping to drive the exodus.”

And just what data did the Manhattan Institute use to make these discoveries? Data from the IRS’ Migration Flow data program, which just so happens to be “…one of the few data sets in existence showing where Americans are moving to and from each year.”  And the Migration Flow data program also just so happens to be one the IRS has decided to axe.

Hitting closer to home, the Washington Examiner also noted that a nonprofit organization, Change Maryland, released a report similar to the Manhattan Institute one.  In its research, Change Maryland found that “between 2007 and 2012, thousands of higher-income Marylanders fled Gov. Martin O’Malley’s tax hikes, changing their place of residence to nearby Virginia.”  While this may not seem like news to the over-taxed citizens of Maryland, it does reveal an alarming trend.  Unfortunately because the IRS ended the data program that provided these figures, it will be difficult to measure how long that trend continues.

When the Washington Examiner received confirmation that the IRS Migration Flow program was in fact cancelled, the IRS suggested that “Americans could rely on the Census Bureau’s Geographical Mobility data.”  The Examiner editorial goes on to note a major problem with this unhelpful suggestion from the IRS.  In short, “the census data is derived from American Community Survey and the Current Population Survey which are both, as their names suggest, just surveys. It would be as if the federal government cancelled elections and the counting of actual votes and told us to use opinion polls to pick our leaders instead.”  A pretty ludicrous proposal, but not if your objective is to conceal information.  Perhaps even worst of all, “…the Change Maryland report’s most interesting number — the amount of tax revenue that Maryland lost due to outmigration — will no longer be collected at all.”

This information –or perhaps more accurately the now lack of information – is not only frustrating, it provides one more example of the way this administration in particular has gone out of its way to reduce transparency in government.  Despite Obama’s promise to make his administration the “most open and transparent” in history,  his day-to-day actions and decisions to eliminate programs such as this uncharacteristically useful IRS one demonstrates what’s really the most important for his administration.  In this case, it appears to be eliminating any data that reveals how detrimental high taxes and high spending are to businesses and citizens.