Obamacare will not be fully implemented for another three years, but the Internal Revenue Service is already requesting money for the legion of bureaucrats required to oversee its implementation. The IRS has requested funds for an additional 1,054 employees in 2012 alone, hirings that would cost taxpayers $359 million.
According to the budget proposal recently submitted by the IRS, Obamacare represents the largest bureaucratic hurdle the agency has faced for some time. The law "presents a major challenge to the IRS," according to the proposal, and "represents the largest set of tax law changes in more than 20 years, with more than 40 provisions that amend the tax laws."
The tax code and the health care system are two extremely complex institutions. The IRS's proposed budget suggests that Obamacare will exacerbate both. The new staffers for which the IRS requested additional funding will mostly serve to improve the IRS's ability to relay information to American citizens. So the increase in funding reflects the increasing complexity of both the health care system and the tax code under the new law.
One of the chief concerns at the IRS is that Obamacare is so confusing, current resources will be inadequate to handle the volume of questions from taxpayers expected to arise. To address this shortfall, the IRS has requested:
- $22.2 million to help taxpayers understand specific Obamacare provisions, including more than $13 million for a "Customer Service Representative",
- $15.3 million to upgrade IRS call centers "to prepare for a number of ACA provisions coming into effect in 2014", and
- $13.8 million for new IRS call center infrastructure "to ensure adequate space and technology to support ACA-related service inquiries."
A large chunk of the Obamacare-related funding increases will go towards implementing and enforcing the many punitive provisions of the law. The IRS requested:
- $11.5 million to "promote compliance" with the new tax on tanning salons,
- $29.3 million to "administer new fees" on pharmaceutical and health insurance companies,
- $9.9 million to "strengthen oversight" of hospitals exempted from Obamacare regulations, and
- $15 million to "update existing IT systems" to account for changes in the tax code.
As with any direct change to the tax code, Obamacare's inclusion of tax credits for small businesses and low-income Americans inevitably swells the bureaucracy to oversee the new loopholes. The president has touted the need to simplify the tax code of late, but his signature legislation will do the opposite. The IRS has requested $213 million to aid in tax credit compliance, including:
- $175.7 million to improve its technological infrastructure,
- $24 million to "provide coverage" for the new tax credits, and
- $13.8 million to "provide facilities and infrastructure" for the new staff.
The IRS is also charged with overseeing the onerous new 1099 reporting requirements the law levies on small businesses. The budget proposal requests $23.3 million to fund the implementation of that requirement. There is a shake consensus in congress that that element of the law should be repealed, but so far the two parties have been unable to reach a deal on the measure. In any case, the IRS's request with respect to the 1099 provisions still speaks to the law's bureaucrat-centric approach.
You'll find the full IRS budget request at the link above.
Paul Bedard of U.S. News thinks the message sent by the IRS budget proposal will advantage GOP efforts to repeal the healthc are law.
Wyoming Sen. John Barrasso, who's become a point man in the budget battle, told Whispers, "The president's irresponsible budget empowers the IRS to begin to audit Americans' healthcare. As the IRS says, Obamacare represents the largest set of tax changes in more than 20 years. Adding hundreds of new jobs and millions of dollars to the IRS isn't going to make care better or more available for anyone. I will continue to fight to repeal and replace Obamacare with patient centered reforms that help the private sector—not the IRS—create more jobs."
The Treasury Department, which oversees the IRS said: "The Affordable Care Act includes important tax credits that help small businesses provide health insurance for their employees and partially cover the cost of health insurance for Americans who do not have access to affordable coverage, and Treasury's Budget includes funding for the IRS to administer these tax provisions. The vast majority of this funding will be used to develop information technology systems and other support to implement the law and help taxpayers claim these important credits."
But of course those credits are only necessary due to the burden Obamacare would otherwise place on small businesses. The law imposes the costs of that relief - the "vast majority" of the increase in proposed IRS funding, as Treasury noted - on American taxpayers.
So one lesson of this this budget is that every attempt to manage the largest sector of the American economy will inevitably create bureaucracies that impose a hidden, dipersed cost on American taxpayers.