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A Taxing Institution

Here’s a letter to the D.C.-based WTOP Radio:

You report that the IRS is cutting back on “customer service.”  Pleading poverty because of the budget cuts it must endure as a result of Congressional displeasure with its recent mistreatment of many of its ‘customers,’ the IRS moans that it simply has too few resources now to adequately man its customer-service phone lines.  The IRS’s message to its ‘customers’ is clear: tell your representatives to increase our funding or we’ll make your lives even more miserable than we already do.

There’s a key, if familiar, lesson here: when private firms in competitive markets seek more revenue they considerately offer customers the carrot of better service; in contrast, when government agencies seek more revenue they angrily whack ‘customers’ with the stick of worsened service.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

Of course, there’s a real upside to this particular instance of bureaucratic greed: also predicted to fall in number are IRS audits.