Increasing budget deficits by cutting spending

The last few rounds of budget cuts at the Federal level have been fairly indiscriminate, affecting the budget of pretty much every agency and department. The main objective behind those cuts has been to try to reduce the budget deficits at the Federal level.

At least, that's the theory. One of the cuts has actually been specially significant, as it contributed to increase the deficit, not reduce it: a $300 million dollar cut to  the Internal Revenue Service's budget.

According to an internal report from the agency (via WaPo) the IRS estimates that every dollar spent in tax enforcements returns $4 to $5 in extra revenue. The cuts reduced this line item in the budget by $193 million, meaning that the Federal government will lose from $760 million to a billion dollars in revenue from this mess.

All in all, a remarkably short-sighted deficit reducing measure. At least for anyone that is not trying to commit tax fraud.

 

Be the first to comment

Please check your e-mail for a link to activate your account.

get updates