America's system of voluntary tax compliance works in large measure by keeping up the public's trust in government. Through wages, investment income and fuel taxes, taxpayers contribute a sizable share of their hard-earned money to finance government services for the public good.
A century ago, three-fourths of the states ratified the 16th Amendment, giving a constitutional green light to the federal government to raise revenue via an income tax. So starting in 1913, the beginnings of the Internal Revenue Code and Internal Revenue Service were born. Fast forward 100 years, and public opinion would suggest the agency is more beleaguered than beloved.
Arguably, the IRS likely will never rank among the most popular services of government. But it doesn't help that the agency keeps hurting itself. Most recently, the self-inflicted wounds hit bone-deep resentment among taxpayers when news broke that the IRS allegedly targeted groups solely for perceived political affiliation and spent $49 million on conferences in three years.
Public trust in government already was low before the IRS debacles. Now Washington must work even harder to prevent further erosion of trust, especially in the IRS, to protect our system of voluntary tax compliance. We can't afford to give tax cheats a reason to skirt their tax obligations. Tax cheats make chumps out of those who "pay" by the rules.
I worked over the years to reform the federal tax-collecting agency. Through leadership on the Senate Finance Committee, which has legislative and oversight jurisdiction over the IRS, I sought to help remind the agency that "service" defines its most basic duty to the taxpaying public.
As a member of the National IRS Restructuring Commission in 1998, I worked with policymakers, IRS officials and the taxpaying public to identify and improve the effectiveness of the IRS. At the time, congressional hearings exposed the agency's heavy-handed enforcement techniques that left taxpayers, especially small businesses, at an extreme and unfair disadvantage. Congress adopted many of the commission's recommendations, enacting the IRS Restructuring and Reform Act of 1998, including 71 new taxpayer rights, and reorganized the agency to improve governance, accessibility and accountability, strengthen customer service and carry out effective, fair enforcement of the nation's tax laws.
Some 15 years later, the IRS finds itself in hot water for squandering $4.1 million tax dollars in 2010 on a single conference in Anaheim, California. That's the same year in which the General Services Administration wasted $822,000 on a retreat in Las Vegas. In Southern California, IRS conference organizers booked three hotels, spent more than $50,000 on videos, including a "Star Trek" parody, and allowed 45 employees who lived near the event to also stay at the hotels and receive daily spending allowances.
The conference took place near Disneyland, widely known as the "happiest place on earth." With the $4.1 million IRS event on the taxpayer's dime now exposed by an audit of Treasury's inspector general for tax administration, something tells me the American taxpayers are not feeling happy.
That especially holds true for witnesses who testified before Congress in June about politically motivated delays and questioning by IRS officials. During their testimony, witnesses - including an Iowan from Cedar Rapids -- described being singled out and mistreated by the IRS solely because of their political affiliation.
Thank goodness our system of checks and balances requires Congress to keep a close eye on the executive and judicial branches of government. Lawmakers and the independent watchdogs within the federal government have their work cut out for them to keep the IRS and others from committing more self-inflicted wounds. Decision-makers at the IRS are getting a clear message. Borrowing from "Star Trek," the agency must boldly go where it has not gone before and dedicate itself more than ever to gaining public trust.