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Trump budget cuts IRS funding despite Mnuchin's staffing concerns

 (Susan Walsh / Associated Press)
(Susan Walsh / Associated Press)

President Trump's initial spending plan calls for a $239-million cut to the Internal Revenue Service despite Treasury Secretary Steven Mnuchin's public support for boosting the staff of the beleaguered tax-collection agency.

The administration's budget blueprint released Wednesday said the 2018 funding "preserves key operations" of the IRS. But the plan calls for "diverting resources from antiquated operations that are still reliant on paper-based review in the era of electronic tax filing" to produce "significant savings."

The proposed 2018 spending would be about 2% less than this year's $11.2 billion, a modest reduction given earlier reports of a possible 14% cut.

The IRS, never popular among Republicans, has been in the party's cross-hairs after the 2015 controversy over the agency's handling of applications for tax-exempt status by conservative tea party groups.

Trump's proposed 2018 cut is similar to a $236-million spending reduction approved by the House last summer.

During his Senate confirmation hearing, Mnuchin said he was concerned about low staffing levels at the IRS and wanted to increase hiring. 

"I was particularly surprised ... that the IRS headcount has gone down quite dramatically, almost 30% over the last number of years," he said at the Jan. 19 hearing. "I don't think there's any other government agency that has gone down 30%, and especially for an agency that collects revenues, this is something that I'm concerned about."

Some lawmakers have complained that low staffing levels have made it difficult for the IRS to enforce tax laws and make sure all Americans are paying what they owe.

Despite a federal hiring freeze, Mnuchin said he thought he could make the case to Trump that adding more IRS workers would pay for itself.

"I can assure you that the president-elect understands the concept of when we add people, we make money," Mnuchin said at the hearing the day before Trump's inauguration. "He’ll get that completely. That's a very quick conversation with Donald Trump."

Rep. Richard Neal (D-Mass.) called Trump’s budget "a step backward for the Internal Revenue Service and the American people it serves."

"Congressional Republicans have been saying they want the IRS to be more focused on customer service, but slashing funding for the agency by hundreds of millions of dollars would result in the exact opposite outcome," said Neal, the top Democrat on the House Ways and Means Committee.

Overall, Treasury's budget would be reduced by 4.4% in 2018, one of the smallest cuts among Cabinet departments.

11:25 a.m.: This article has been updated with comments from Rep. Richard Neal.

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