The voices of Tax Policy Center's researchers and staff
A few weeks back, my colleague Renu Zaretsky wrote about the IRS’s brain drain. As many experienced employees retire or prepare to do so, the IRS may be becoming less efficient. Good experienced workers recognize and know how to fix problems. And the very best anticipate and prevent problems before they even occur.
Carolyn Tavenner was one of the very best at the IRS. Last Friday, she retired from the IRS after nearly fifty years of public service. You may never have heard of her, but wise commissioners depended on Carolyn. Like many Treasury and congressional staffers, the commissioners relied on her extensive institutional knowledge and thoughtful advice about how to implement proposed and newly-enacted tax laws.
To those who wonder how someone can stay at any job—let alone, the oft-maligned IRS—for nearly five decades, Carolyn had an answer. In January, she told Tax Notes that she delayed her retirement to help implement the Tax Cuts and Jobs Act (TCJA): “All you have to do is tell me there’s going to be a new program, or a new piece of legislation, and it kind of recharges me.”
Carolyn did the practical and largely anonymous work of implementing many major tax laws. I will try not to read meaning into the fact that she is leaving the IRS just after the agency scrapped the 1040-EZ—that wonderfully simple short tax form she helped design in the early 1980s.
But that was far from her only achievement. In the 1980s, she helped lead the effort to update tax forms following the enactment of the Tax Reform Act of 1986. In the 1990s, she served as a bridge between impatient Treasury officials and skeptical IRS staff during tough discussions over improving tax compliance while maintaining taxpayer rights. And before turning to the TCJA, she was the Director of the Affordable Care Act Office—another hugely challenging implementation effort.
I was one of those Treasury staffers who came to rely on Carolyn. After spending several years developing proposals for earned income tax credit (EITC) legislation, I suddenly realized that I needed to talk to someone with real experience administering the tax law. We first spoke on the phone—icy conditions and a broken heater kept her home that day. That call lasted ninety minutes, and I recall shivering in empathy for a woman sitting inside her ice-cold house patiently explaining how the IRS got EITC checks to deserving families and the challenges of preventing payments to ineligible claimants. We met often afterwards—usually under warmer conditions.
Carolyn taught me—and countless others—the power of tax administration. Way too often, policy wonks evaluate legislation through only two lenses: What is its impact on efficiency and does it make the revenue code more fair? The third goal is tax simplicity, but frequently we wave our hands and tell ourselves the IRS will work it out. And when we make that presumption, the third goal of tax policy becomes its third rail. No policy can be efficient or fair if it is too complicated to be administered or too burdensome for taxpayers.
Carolyn taught me to ask questions like these before legislation was proposed and enacted. And these questions apply equally to all kinds of tax legislation, whether, for example, the proposal is an expansion of the EITC or the creation of a wealth tax.
- What will the tax form look like?
- How quickly can the IRS update its forms and computer programs to reflect the new law?
- Will taxpayers understand the changes on their own? For answers to their questions, will they try to reach someone at the already-busy IRS call centers or will they turn to their accountants and tax lawyers?
- What information does the IRS need to verify the information reported on taxpayers’ tax returns?
- Is that information available from third parties and easily accessible by the IRS?
- Will the IRS have that information before the filing season begins so it can detect errors before it can process returns and pay refunds? If not then, when?
- Will the IRS require additional authority or funding to implement the new law?
Along with Diane Grant (another long-time IRS employee and often her companion at meetings), Carolyn reminded us that the IRS had limited resources to respond to changes in the law. I would suggest something, and they would sigh in chorus “Janet, money.” And yet, in a perverse way they may have made it harder for the IRS to get additional resources— not because they were ineffective but because people like Carolyn and Diane often found a way to work it out and implement changes, without a bigger budget for the IRS.
It will take years for the IRS to address its ongoing brain drain and replace the expertise of people like Carolyn. Until it does, all of us taxpayers will be worse off for it.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Susan Walsh, File/AP Photo