Earlier this year, I spoke at a symposium on the impact of budget cuts on tax administration. Hosted by the Tax Policy Center, the event brought together academics, policy makers, IRS officials and the National Taxpayer Advocate to discuss how the IRS can function in an era of limited funding.
The current budget constraints with which the IRS is coping, certainly pose challenges. But I’d argue that, no matter what resources are available, the IRS can and should markedly improve tax administration by leveraging the private sector.
There is a long history of partnership been government and the private sector when it comes to delivering traditional benefits (e.g. Medicaid) and other types of government programs (e.g. workforce retraining programs). And today, the reality is that new policy initiatives are often implemented through the tax code (ACA is a prime example). As a result, the IRS is administering much of the nation’s education, health, savings and other policies – but with a very different system that has been past practice.
I suggest we consider how that long-standing government and private sector partnership could be an asset to tax administration. Under increasing budget pressures the IRS, like most government agencies, seeks technological solutions to administer the tax code and to deliver basic services. In fact, the IRS strategic plan released this year relies heavily on technology and, interestingly, partnership with the private sector to achieve its goals.
One IRS goal is for taxpayers to interact with it online, potentially saving time and money and improving service. But to motivate online activity, the IRS experience will have to meet taxpayers’ expectations – expectations that are formed in their daily interactions online. Those interactions occur with a wide variety of companies with ever evolving and improving web sites and mobile experiences that are changing at a frighteningly quick pace – daily and sometimes even hourly. Simply put, government cannot and probably should not function at this pace.
How then, can the IRS and other government agencies make the transition to administering government online? The answer, simply put, is by partnering with private industry to get the best thinking and best innovation possible.
Indeed, the private sector has a lot to offer – particularly when it comes to innovation and technology. Nimble, adaptive, and iterative private sector entities often outpace government technology efforts that are, of necessity, large scale and conservative.
If this sounds a little too easy, that’s because it is. Government and industry have different roles and responsibilities. Their interests are not always aligned. But the places where those interests overlap offer the best opportunities for a partnership in which government leverages private sector innovation and learning to improve service to citizens.
In my next post, I’ll explore examples of existing partnerships and propose principles for how government and industry should operate to achieve the best outcomes for taxpayers.