IRS creates new jobs! Really!

First the good news: "President Obama's proposed 2011 budget includes funding for 100 additional federal staffers [within the IRS]. . .

Who says this country isn't creating new jobs?  Well, look at that!  Yes, it's true! The IRS is creating new jobs: 100 jobs IS 100 jobs that can be added to the labor statistics. 

The bad news?  These newly-minted feds will "pursue" . . .  small and midsize companies that rely too much [in the opinion of the IRs] on free-lancers and sub-contractors"


"The moves come amid what some researchers say is closer overall scrutiny of small and midsize businesses by the IRS. Over the past five years the agency has increased by 30% the hours spent auditing companies with less than $10 million in assets while decreasing by a third the time spent on large-company audits, according to the Transactional Records Access Clearinghouse, a research center at Syracuse University. While the IRS disputes that study's methodology and says it isn't targeting small business, some tax experts say such a strategy would make sense. The IRS believes smaller businesses are more likely to evade taxes, says Dean A. Zerbe, a managing director of alliantgroup, a Houston tax consultancy. "It's also easier and quicker to audit smaller businesses."

"When small companies are scrutinized by the IRS or other agencies, they have a hard time mounting a challenge to any penalties they might face. Last June, Paula Routly, co-owner of Seven Days, an alternative weekly in Burlington, Vt., got a $317 bill from the Vermont Labor Dept. The agency said she hadn't paid unemployment insurance for one of the paper's 14 freelance delivery drivers. Though Routly insists she didn't break any rules and is appealing the assessment, her attorney told her "it might be cheaper to give in than to pay the legal fees it would cost to fight," she says.

(Emphasis added).

I mean, that makes good sense, doesn't it? The gummit needs the money more than those small businesses do, right?  And bureaucrats can spend those dollars a lot smarter.

Besides, 100 new IRS jobs is 100 new jobs to add to the total of "jobs created." (Unfortunately, those small businesses won't be able to afford to add any jobs to their IRS-defense staffs; that time will just have to come out of the time that would otherwise be spent on building new business and creating new products.)

Source:  Bloomberg BusinessWeek

A contrary view, by Tom Friedman in the NY Times: "Good-paying jobs don't come from bailouts. They come from start-ups.

Far be it from me to put words in Mr. Friedman's computer, but the gist of that article would seem also to imply, "Good-paying jobs don't come from new IRS agents and bureaucratic oversight. They STILL come from start-ups."

  cited that Friedman article in this blog  back in April.  The points Friedman made then still  apply:

my fun fact for the day, provided courtesy of Robert Litan, who
directs research at the Kauffman Foundation, which specializes in
innovation in America: “Between 1980 and 2005, virtually all net new
created in the U.S. were created by firms that were 5 years old or
less,” said
Litan. “That is about 40 million jobs. That means the established firms
no new net jobs during that period.”

"Message: If we want to bring down unemployment in a sustainable
way, neither
rescuing General Motors nor funding more road construction will do it.
We need
to create a big bushel of new companies — fast." 

to that Tom Friedman article, "Start-ups, not bail-outs"