You may remember that in September 2007 I told you that the IRS had contracted with private debt collectors to do the hard work of collecting taxes from the American public. I said, and for that matter many people said, that this would be a tremendous mistake. Now Democratic lawmakers seem to be in agreement with me, it has been a bad idea.In probably the only instance that I will ever agree with Democratic Congressman Charles Rangel, I agree that the IRS should not be seeking to renew the private debt collector’s contract for next year. Truth be told, the IRS is much more effective at collecting taxes than the private debt collectors and it’s cheaper to the US taxpayer to have the IRS collect the money than to give 24% of it to private industry. Statistically speaking, the IRS is much more effective at collecting taxes than the private debt collectors have been. On average, an IRS employee collects $14 for $1 spent on salary. For the private debt collectors, they have collected only $4 for every $1 spent on the program. Not a great return on investment. I rarely believe that bigger government is the answer to any problem. In this case, I just can’t seem to understand the concept of farming out the purely governmental function of collecting taxes to private industry. Do we outsource national defense and local police to private industry? It’s a rhetorical question but the answer is no.
Additionally, I have grave concerns regarding privacy and identity theft as historically those who work for debt collectors have not been the most savory of characters themselves. These folks are calling taxpayers and refusing to identify THEMSELVES until the taxpayer verifies their name and Social Security Number. Who in there right mind would provide their Social Security number to a stranger on the telephone who refuses to identify themself? The program makes no sense and should be killed immediately. That way good, hardworking taxpayers can get the IRS help they need without worrying about private debt collectors violating their rights.
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