You guys know that I support cutting spending in the public sector. But cutting the IRS budget is a mistake. Giving managers better tools for deploying compensation dollars more effectively makes a great deal of sense. Cutting the overall IRS budget does not. I would cut the budget of pretty much every other federal agency first.

We definitely need a saner, more growth-friendly tax code. We also need to reduce the extraordinary administrative burdens we’ve layered on top of the IRS in recent years, most recently under PPACA but also through a panoply of tax expenditures. Yet almost every imaginable tax regime, whether it’s David Bradford’s X tax or Michael Graetz’s Competitive Tax Plan, depends on an honest accounting of business cash flow. And though the vast majority of taxpayers are scrupulous, a small number of bad apples can badly undermine confidence in the fairness and efficacy of the system.

If we really do manage to eliminate all tax expenditures, as in the Bowles-Simpson “Zero Plan,” by all means we should reduce the IRS budget after a successful transition. But to do so before then would be seriously premature.

P.S. Some of my liberal friends have congratulated me on this post. I have to say, I think this post isn’t particularly special. It reflects part of a larger worldview, which is that government should do the relatively small number of things that it can do better than people freely working together, and it should do those things as well and as inexpensively as possible. The IRS is best understood as a funding mechanism for the government as a whole rather than as a discrete entity. Whether we continue with the shambolic disaster that is the current tax code or embrace the Zero Plan, we have to protect the interests of scrupulous taxpayers against those who try to bend the rules and, for now at least, that requires manpower.

Conservatives tend to praise egalitarian liberals when they embrace what strike us as conservative or libertarian positions — I praise them when they embrace congestion pricing and when they all for the relaxation of building restrictions, for example — and liberals praise conservatives when they embrace what strike them as liberal positions — support for same-sex marriage or a defense of civil liberties agains the national security bureaucracy. But it’s important to keep in mind why we take these positions, and how they’re embedded in a larger framework. I’d suggest that liberals shouldn’t be excited by my mild defense of the IRS, because it is part and parcel of a belief system that holds that public sector workers should be evaluated on the basis of cost-effectiveness.