Cutting Their Own (Tax) Throats

Not all budget cuts should be created equally. Case in point would be the many, many states that are facing what seem to be never-ending declines in tax revenues. A partial solution is budget cutbacks for state agencies. But if you cut certain positions in the Department of Revenue, don’t you risk collecting even smaller amounts?

Seems to make sense. But that logic didn’t hold for Western neighbors Arizona and California (and undoubtedly others).

In Arizona, a leading Department of Revenue official warned that "if we lost auditors and collectors, there would be less auditing and less collecting." More than 200 positions were eliminated, but the lost revenue was estimated to be as high as $100 million. It was also suggested that each auditor and collector brings in $400,000 and $800,000, respectively each year — far more than they are paid.

California furloughed workers that were part of the Franchise Tax Board despite a state Senate report that the furloughs are costing the state $7 for every $1 saved in payroll.

So that strategy results in the state suffering and those not paying their fair share receiving the benefits. There’s something wrong with that scenario.

One thought on “Cutting Their Own (Tax) Throats

  1. Wow! I’m no accountant (just married to one) but I’m pretty sure those managing/bringing in the money should be the last to go in any organization. Way to take one step forward and seven steps back.

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