Week in Insights: Why IRS Funding Matters for Tax Morale

The most impactful tax element to arise from the debt limit deal is the reported $21 billion hit to the $80 billion capital infusion for the IRS. Republicans have hailed this as a win, and Democrats—including the White House—have mostly tried to downplay the significance of the cut.

This spin is problematic.

The US tax system relies on voluntary submission of income data, or withholding of taxes owed, and remission of payment. Tax morale is a precarious thing. The risk of audit is lower than most would guess, and the reward of tax evasion is immediate. The recipe for widespread ...