HOW DOES THIS MATH WORK? Exactly how much funding to give the IRS has been a big battle in Washington this last decade or so. And it probably shouldn't come as much surprise that the incoming Biden administration is likely on the side of giving the tax collector a boost. Ben Harris, who a top economic adviser to President-elect Joe Biden's campaign , said at an Economic Strategy Group event last week that improved tax compliance would be a slam-dunk way to battle income inequality, and suggested that the U.S. could raise well over $1 trillion over a decade with more robust enforcement out of the IRS. (Hat tip to Bloomberg Tax's Lydia O'Neal on those comments, and it should be noted that Harris wasn't speaking on behalf of the Biden team at that moment.) That's roughly in line with an estimate from former IRS Commissioner Charles Rossotti, former Treasury Secretary Larry Summers and Natasha Sarin, a University of Pennsylvania law professor, who found that even short of $100 billion in funding for the IRS could generate as much as $1.4 trillion in new revenue over a decade. For its part, the Congressional Budget Office recently road tested a more modest proposal , and found that increasing the IRS budget by $20 billion over a decade would bring in an extra $60 billion — a net of $40 billion in deficit reduction. And here's the catch: The current federal budget rules actually would score an increase in IRS funding as costing money, instead of raising revenue — as both CBO and Rossotti, Sarin and Summers all noted. (In other words: CBO counts the spending increase, but doesn't find any resulting revenues from that new funding.) "Perversely, this means that investments in the IRS will show up as costing the government money, even though by conservative estimates $1 spent on IRS enforcement returns $12 in additional tax revenue collected," the trio wrote in a Tax Notes piece. How might policymakers change that? Well, it would require CBO, the Office of Management and Budget and both the House and Senate Budget committees to all agree to that switch — so far from impossible, but also a pretty broad consensus to reach. And yet, there is still lots of interest on the left in increasing IRS funding, even if it doesn't score as well as they'd like. As Harris' comments suggest, it's also an issue of fairness to progressives, who complain that recipients of the Earned Income Tax Credit can be more likely to be audited than wealthy taxpayers whose returns are more complex and costly to examine. "We do not doubt that significant revenue will be raised in reality from the approach we outline," as Sarin put it to Morning Tax in an email. "To be sure, as a matter of equity and efficiency these reforms are desirable even if the revenue potential were more limited." Also keep in mind: Congressional Republicans have battled to actually decrease IRS funding for much of the last decade, especially in the wake of the tea party controversy that erupted in 2013. Treasury Secretary Steven Mnuchin, with his business background, has been far more open to the idea that increased IRS funding can be good for the government's bottom line. He's not alone within the GOP, either — Sen. Rob Portman (R-Ohio) said recently he's interested in more robust funding for the tax collector, too. But let's be real: It's at the very least an open question whether there will be broad support for significantly increased IRS funding under a President Biden, for a variety of reasons — including some long memories over the scrutiny given to tea party groups and a general distrust for the agency. | 
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