The Internal Revenue Service has been a political football for years. Democrats jacked up funding for the agency in 2022. Republicans repealed a chunk of that increase in 2025. Stories about massive backlogs, decrepit technology and poor customer service have dominated the agency’s public image — which wasn’t stellar to begin with, on account of the inherent unpopularity of its basic mission.
This week, the Trump administration unveiled its latest efforts to improve the agency. These include adopting new technology systems, overhauling how performance is measured and outsourcing some paper processing to contractors.
These are all good ideas that miss the forest for the trees: The IRS stinks because its job is too complicated.
Congress has written the tax code such that the IRS is required to not only be the nation’s tax collector, and enforce compliance, but also a welfare distributor. Numerous tax expenditures and credits, which include welfare for the poor and the rich, are complicated to administer and poorly understood by taxpayers and policymakers alike.
Decades of politicians’ tinkering with the code have resulted in a monstrosity that no individual could possibly comprehend. Tax attorneys and accountants, who sometimes earn seven figures a year to understand the thing, often find themselves at loggerheads about the rules.
It’s one thing to say the IRS should have better customer service. It’s another to say it shouldn’t need to have much customer service at all, because it should be easy for taxpayers to know exactly what they owe.
The biggest step in a generation toward a simpler tax code for most Americans came in the Tax Cuts and Jobs Act during President Donald Trump’s first term. Because of that law, roughly 90 percent of taxpayers now take the standard deduction, saving them the headaches of itemizing.
Rather than build on that success in his second term, Trump took a step backward by introducing all sorts of complicated new deductions and credits as part of the tax bill he signed last July. Many of these are deductions that even taxpayers who don’t itemize now need to figure out, such as “no tax” on tips, overtime and car loan interest. Taxpayers should not need to care what the IRS’s phone call response time is, because they shouldn’t have to call the IRS.
The perennial champion of the Tax Foundation’s international tax ranking is Estonia, in part because of its system’s simplicity. The flat income tax is collected almost entirely digitally, and it takes under five minutes for individuals to file. Rather than taxing corporate profits and then creating carveouts and credits to benefit certain sectors and encourage certain business decisions, as the U.S. does, Estonia waits to tax profits until they are distributed and then does so at a flat rate.
The Estonian tax collection agency is highly regarded by Estonians, and the country has one of the smallest tax gaps in Europe, which is the difference between how much is owed and how much is paid. It’s not because taxes are any more fun there or that Estonians want to cheat less than Americans do. It’s because their system is easy to administer and understand.
The tax code’s purpose should be to raise revenue to pay for essential government functions, not to engineer human behavior. If Congress made tax policy with the proper goals in mind, the federal government would be able to erase many of the technology and service problems that have plagued the IRS for years. No agency, no matter how much funding or technology it received, could possibly figure out the mess of a tax code Congress has forced the IRS to administer.
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