Tag Archives: taxes

The IRS as Political Tool

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It’s not the tax collection agency it’s made out to be. We all recall, for instance, the IRS’ Lois Lerner-run Exempt Organizations Unit targeting Conservative tax-exempt organizations, slow-walking or outright denying those organizations tax-exempt status purely for political reasons, without consideration of how well they met statutory criteria for the status.

It’s also been well-publicized that the IRS has been funded for next year to hire 87,000 agents for the ostensible purpose of increasing audits of the Evil Rich, and the agency is buying ammunition and hiring agents who are willing to use lethal force in the course of their “duties.”

This is not unique to the Progressive-Democrat administrations of ex-President Barack Obama and current President Joe Biden. As far back as Lyndon Johnson’s (D) and Richard Nixon’s (R) administrations, the IRS was used to interfere with government-disapproved organizations and citizens.

Today’s IRS is just as bad across a range of…matters.

  • The IRS has disproportionately audited poorer Americans in recent years
  • IRS auditing of wealthier Americans has been declining
  • Nonpartisan projections have found increased audits under the Biden plan will heavily impact middle- and working-class Americans
  • IRS customer service has been declining, and was rated “horrendous” by its own internal watchdog
  • IRS employees have egregiously leaked or failed to protect the privacy of taxpayers’ data
  • Amid backlogs and leaks, IRS paid tax relief to dead taxpayer, prisoners on death row

The solution to this isn’t more legislation for the IRS to ignore, with or without the tacit approval of the administration then in power. IRS history and current behavior means the agency needs to be vastly shrunk.

But shrinking the IRS would be difficult as a practical matter with the current byzantine and heavily biased against some economic strata Federal tax code. IRS size and performance, then, is an argument for greatly simplifying our tax code.

Eliminate the business revenue-centric taxes. Businesses don’t pay much of those taxes, anyway; their customers pay the taxes in the form of higher prices and reduced innovation rates, and business employees and potential employees pay the taxes in the form of slower wage increases and lessened hirings.

Eliminate the personal income tax as currently constructed and have only a single, flat tax rate charged on all income from any source. Do away with subsidies, credits, exemptions, social engineering gerrymandering altogether. The new 1040 could be reduced to the current taxpayer identifying information, a line for totting up all income and reporting the total, a line for calculating the [10%] tax on that total as the total tax due, and a line for the taxpayer’s [sic] signature.

That could fit on a postcard, but with the personally identifying and income data present, I wouldn’t recommend anything less than a sealed envelope. Such a tax regime, though, would allow an IRS-like function to exist with about 14 employees (I exaggerate, but not by much).

Tough to be a political tool with that reduced function and personnel complement, too.

Arizona Has a Chance to Lead the Way

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This fall, the good citizens of Arizona will be voting on, among other things, a State constitutional amendment that would make it more difficult to increase State taxes.

If passed it would amend the state constitution to require a 60% majority to raise taxes through any future referendum. Current law requires a two-thirds majority to raise taxes through legislation but only a simple majority to do so by plebiscite.

State Representative Tim Dunn (R), who led the effort to get this onto November’s ballot:

When you have something that you can’t change without going back to the voters, I think we should have overwhelming support.

Yewbetcha.

As The Wall Street Journal put it,

A 60% threshold ensures broad consensus before rates can be raised by referendum.
…
The point is to make it harder for Arizona to join states that raise taxes as a first fiscal resort rather than examine spending.

Windfall Taxes

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With rising (finally) interest rates in Europe, European governments are starting to hatch what they’re pleased to call windfall tax plans.

European banks have started to reap higher profits from rising interest rates—and governments are already starting to clamp down on them.
In Spain, the government has laid out plans to tax lenders on their rising income and use the money to alleviate higher living costs for the population. Hungary has imposed a similar measure, and the Czech Republic, where inflation is above 17%, is also considering such a move. In Poland, where mortgages carry variable rates that are quickly rising, the government placed a moratorium on repayments to help borrowers.

Nor is this tax hatch limited to banks.

In other areas too, European governments are acting quickly when judging companies to be earning abnormally large profits. The UK has said it would introduce a windfall tax on energy companies, and Spain is imposing a similar levy as well as the new tax on banks.

Usw.

As usual, I have questions.

Define “windfall.” No glittering generalities, what constitutes a windfall profit, and based on what economic theory?

When does a windfall profit stop being windfall and becomes the normal level of profit? Again, no glittering generalities; be specific.

Related to that: discriminate between the new, reasonably steady state level of profit and “excess profit.” To do this discrimination it is, of course, necessary to define “excess profit,” with that definition devoid of glittering generalities and supported by clearly identified economic theory.

Back to windfall profit becoming the normal profit level. Does that recognition necessarily mean the prior “windfall” assessment was mistaken? If so, would that mean that the money collected as windfall taxes were mistakenly collected and a refund owed?

And finally, how many politicians will confront those questions? How many of those actually will offer concrete, measurable answers?

Just the News Has a Question

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The news outlet ran a poll over the weekend. The question was this:

How concerned are you that additional IRS funding through the Inflation Reduction Act will lead to more audits for typical taxpayers?

As of Sunday morning, the enormously unscientific poll—consisting solely of JtN readers—was running 96% Extremely concerned.

Keep in mind that the IRS has been targeting Conservatives and conservative organizations at least since early in the Obama administration (if not sooner; that’s just when it became exposed).

Keep in mind, too, that Progressive-Democratic Party politicians, since Obama’s first Presidential campaign, have characterized typical taxpayers as merely bitter Bible- and gun-clinging denizens of flyover country, as irredeemable and deplorable, as 15% of us being just no good.

How is this even a question?

Chamber of Commerce and the Progressive-Democratic Party

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The US Chamber of Commerce decided in 2020 to endorse a number of first-term Progressive-Democratic Party Congressmen on the theory that Party would control Congress after the elections and in the expectation, tacitly agreed to if only by their silence, by those Party endorsees. Fifteen of those twenty-three first-termer endorsees were reelected.

So, how’d they do regarding Chamber of Commerce wishes and expectations?

Every one of the 15 voted for the $1.9 trillion spending bill in March 2020, despite Chamber opposition to sweeping jobless benefits that stoked labor shortages and stimulus checks that fed inflation. They also voted for the PRO Act, a radical pro-union rewrite of labor law.

That’s no-for-two, so far.

Now comes President Joe Biden’s (D) Build Reduced Back Act, just passed by the Party-controlled Senate and tossed over to the House, which likely will vote on it by the end of this week—that’s tomorrow, or maybe (unlikely) Saturday.

The chance of Democratic defections is slim. Despite aggressive Chamber lobbying, all 15 rolled over for the $3.5 trillion Build Back Better bill last year, so they are unlikely to oppose something that has Senator Joe Manchin’s (D, WV) approval.

Did the Chamber miss? No, those folks knew what they would be getting.

…most of the Chamber Democrats had a voting record of hostility to business.
Twenty had voted in the previous Congress for a bill to abolish right-to-work states. Eighteen voted for a $15-an-hour federal minimum wage. Nearly all had publicly expressed support for scrapping the 2017 corporate tax reform, and for new climate, banking and healthcare regulations.

This is what anyone can expect from a Party politician. And from a political power-driven weather vane Chamber of Commerce, which has shown through its incompetence that it is no friend of American business or businesses.