The Lasting Impact of the IRS Scandal

The IRS scandal that is still dogging the Obama administration may or may not do lasting damage to the president, however the impact of these events and decisions by part of the IRS will go beyond the political fortunes of a popular and surprisingly Teflon-seeming president. The IRS has never been the most beloved of government organizations. For most Americans, all they want from the IRS is to be left alone. Paying income tax is not great fun even for those who understand that a modern state needs to generate revenue from somewhere. Being investigated or audited by the IRS is, in the best case scenario, a minor inconvenience, but frequently can cost a great deal of money and time. In many cases, of course, the person being investigated has either made serious mistakes in their taxes or even violated the tax code, but the IRS also makes mistakes and creates real problems for people who have not done anything wrong.

While the IRS is not beloved, it is probably best understood as a necessary evil. Revenue has to be collected; and laws and regulations regarding taxes need to be enforced. As part of this mission, the IRS needs to investigate or audit some people every year. Making these audits political or using this as a tactic to harass political opponents is an abuse of this function, but the function itself is still important for our revenue collecting system to be effective.

The problem this latest scandal has created is that now every time a conservative is investigated, they will see it as a political attack. More importantly, right-wing politicians, media figures and hucksters will encourage these views. The sense of victimhood on the far right is now acute and a significant part of the politics of movements like the Tea Party. Beginning now, any investigation from the IRS will exponentially increase that sense.

The IRS audits thousands of people every year. Naturally these people include Democrats, Republicans, people who do not support one of the major parties, people who give to progressive causes and people who give to conservative causes. This is the basic arithmetic of enforcing tax codes. Nonetheless, the thousands of conservatives who get audited for whatever reason will now see themselves as being singled out by the Obama administration -- or any insufficiently conservative administration that follows it. The progressives who get audited will probably not draw this conclusion, but they are less relevant here.

Thus, the Obama administration, through incompetency, pettiness, venality or something else, has unwittingly badly damaged the IRS. Some on the right may celebrate this, but a tax agency that cannot enforce regulations or laws is a major problem in a modern state.

Throughout his presidency, Obama has not hesitated to remind his supporters of the difficulties presented by conservative Republicans in congress who seek, in many cases successfully, to thwart or weaken, his legislative agenda. These Republicans represent a formidable foe for the president. This is why unforced errors like this one are so damaging and frustrating to progressives. Inevitably, given their implacable and not quite rational hatred of taxes, conservatives were going to sharpen their attacks on the IRS. Nothing the conservatives could have would have made those attacks as powerful as recent events by the Obama administration have.

The IRS scandal is not Watergate. Nor is it an impeachable offense, but it was a clumsy and costly mistake. The real victims of this scandal will not be the organizations who fell under greater scrutiny from the IRS, but the IRS itself. The IRS has given its many opponents another reason to doubt and question their work. In doing that, the Obama administration has inadvertently created yet another obstacle to competent governance.

The right-wing and anti-tax movements have a weakness for overly simple solutions to the complex problems of generating revenue. Flat taxes, sales taxes, various regressive tax schemes often disguised as efforts to "simplify" the tax code are just a few of these. This latest scandal will strengthen the demand for these kinds of tax policies. It also will put the Democrats in the unfortunate position of defending the IRS, which is difficult even when the IRS is not overstepping its bounds and misusing its power.

The best way for the Democrats to limit the damage of this issue, and to limit the rancor against the IRS is to begin a dialog about why some groups have tax exempt status. Organizations on the left or right which are dedicated solely to changing the outcomes of political campaigns, and who face not restrictions on how much money they can take, or from whom they can take it, probably should pay taxes. Most Americans would agree with that.