Asking Americans every year to cope, under threat of criminal sanction, with a 10,000 page IRS code that nobody fully understands is an outrageous burden that free citizens should not have to endure. This year, the IRS made the burden even heavier by staging a kind of work slowdown. In an attempt to get more money from Congress, the IRS bureaucrats are faking a budget crisis by deliberately devoting fewer resources to customer service. Just another day at the office for America’s devoted public servants.
During the 2015 tax-filing season, the IRS provided what its own Commissioner described as “abysmal” customer service, blaming skyrocketing wait times for telephone and in-person assistance on agency budget cuts. The IRS even called budget cuts “a tax cut for tax cheats.” But a close review of the agency’s spending shows the IRS deliberately cut $134 million in funding for customer service to pay for other activities. Spending decisions entirely under the IRS’s control led to 16 million fewer taxpayers receiving IRS assistance this filling season. Other spending choices, including prioritizing employee bonuses and union activity on the taxpayer’s dime, used up resources that otherwise could have been used to assist another 10 million taxpayers.
Lessee. Assisting 10 million taxpayers, or bonuses and union activity. For the bureaucrats, that choice is a no-brainer.
The IRS’s spending choices and mismanagement of resources raise serious questions about the nature and extent of the agency’s self-described budget crisis and its commitment to serving the taxpayer.
We personally don’t believe very much uncertainty exists regarding the answers to those questions.
The behavior of the IRS is actually typical of large bureaucracies. Those bureaucracies have incentives almost diametrically opposed to a profit-seeking business firm. A firm will seek to earn profit by both keeping down costs and keeping customers happy by providing good service.
A bureau, however, has a totally different objective. The bureau seeks not to maximize profit, but its budget. The bureau therefore has the incentive to increase costs in order to argue for a larger budget allocation from Congress. The bureau also has the incentive to provide poor customer service so that the public will back a larger budget in the hope that more money will improve service. The incentives are perverse, and almost diametrically opposed to those of a for-profit business.
If you want lower costs and good service, privatize.
If you want higher costs and poor service, bureaucratize.
When people crowd into McDonald’s at lunch hour, employees open up more registers and start moving faster.
When at certain times people crowd into a U.S. Post Office, the employees keep open the same number of registers and keep moving at the same speed as the queue grows longer and longer.
If you consider objectively the poor service typically provided by large bureaucracies, you’d have to be nuts to put a large bureaucracy in charge of anything important. Like, say, healthcare. If you believe that relying on a large bureaucracy to provide you with treatment for ‘free’ would be a great deal, the first treatment you should seek is to have your head examined.