Originally created 05/28/03

Don't privatize IRS



Certain chores can be done better and more economically by the private sector than the public sector, which is why it's good policy to encourage government to contract out some of its services instead of doing them all in-house.

But among the services that should not be contracted out are tax collections.

This issue has come up in Congress since the Internal Revenue Service testified earlier this month that a whopping $13 billion in unpaid taxes are still out there because there aren't enough agents available to collect them all.

The suggested solution: hire private bill collectors to do the job and cut them in on up to 25 percent of the take.

What an awful idea. Bill collectors are obnoxious enough as it is - Congress and state legislatures have to keep reining in their abuses - without putting the power of government behind them to hound people for their taxes.

Even more important is the matter of privacy. Tax returns are supposed to be kept confidential, yet there have been instances of IRS agents spying on some taxpayers and "leaking" their returns.

Imagine how much worse these privacy violations might become when driven by commissions and profits. Bill collectors are the last people in the world taxpayers would want to see their returns.

Despite the problems IRS has with collections, most Americans still pay their taxes voluntarily and on time - and they expect the public servants in the government to act accordingly. If bill collectors start dunning them, they might feel that this public trust has been broken.

Now, there's just what we need: more cynicism toward the tax collector!

In other words, contracting out to the private sector could actually exacerbate, rather than ameliorate, tax-collection problems. If there aren't enough IRS agents to collect all the taxes owed the government, then Congress should simply grant the agency the funds to hire more.

The math is pretty straightforward: If new agents can collect more money in outstanding taxes than they'll cost the government in wages and benefits, then hiring them is a good investment.

There aren't too many questions for which the answer is "another bureaucrat." But in this case, that's just the ticket.