Categories
tax policy

End the IRS?

Every day: more revelations, more questions.

Was the IRS’s repressive targeting of Tea Party and similar groups seeking tax-​exempt status “accidental”? Were only a few rogue or harried clerks responsible for the repressive targeting? Did anybody in the White House know about the repressive targeting as it happened? What does the frequency of IRS commissioners’ visits to the Obama White House tell us? What about the IRS union chief’s visit with Obama just before the repressive targeting began?

And that’s not all. How similar is the latest IRS repressive targeting of the enemies of those in power to previous IRS repressive targeting of the enemies of those in power? What about all the other forms of riding roughshod over individuals’ rights that the IRS routinely perpetrates?

And then there’s the practical question: What do we do about the mess?

Well, we could try to curtail the allegedly “unusual” abuses of government power and rights violations.

But what if the problem runs deeper?

Former presidential candidate Ron Paul argues that the problem lies “in the extraordinary power the tax system grants the IRS.” He very plausibly puts the current scandals in the context of the bureau’s central mandate: “The very purpose of the IRS is to transfer wealth from one group to another while violating our liberties in the process. Thus the only way Congress can protect our freedoms is to repeal the income tax and shutter the doors of the IRS once and for all.”

Hard? Yes. Doable? Yes — but only if such ideas catch on with more leaders than just the indefatigable Ron Paul.

This is Common Sense. I’m Paul Jacob.

Categories
ideological culture tax policy too much government

Customer Service?

It was no fun to watch Acting IRS head Steve Miller testify before the House Ways and Means Committee last week. Miller simply had no real explanation for the troubling actions at IRS.

Even his terminology induced cringes. Miller’s mea culpa was for “horrific customer service.”

Customer service? That’s a stretch.

A customer holds a position of honor in a free society. Businesses spend billions on advertising — just to gain our favor. We have the power to make a business succeed or fail according to our decisions.

We don’t have to be well connected or part of the political or social elite to share this power. The most ordinary of customers can have a powerful impact. When I was a kid, customers in my state helped build a small business, Wal-​Mart, into the envy of the retail world.  In 1956, ordinary bus riders in Montgomery, Alabama, used their “buying power” to help change the world.

As customers, we make demands. We make sure we’re satisfied. Sometimes we negotiate price; when no negotiation is possible and we don’t like the deal, we walk away. We have a choice. We decide.

Does this same type of empowerment exist when dealing with folks at the IRS?

Not so much. They tell us the price. We submit or go to jail. That’s no customer.

Cowering serf might sadly serve as the more apt moniker.

As the IRS grows bigger and more intrusive each year, and as its agents shake us down for ever larger sums, we should at least be able to keep the word “customer” away from them.

This is Common Sense. I’m Paul Jacob.

Categories
government transparency tax policy

The Block Stops Here

We were initially told that the IRS had apologized to Tea Party and patriot groups for blocking them from non-​profit tax status.

But there has been no apology.

Instead, last Friday, Lois Lerner, the head of the tax-​exempt division of the Internal Revenue Service, confided to a group of tax attorneys at an American Bar Association conference in Washington. She admitted that the IRS had indeed been guilty of unfairly delaying and blocking Tea Party and conservative groups from establishing tax-​exempt organizations, as these dissident groups had been complaining about for years.

Who was to blame? Only mere “low-​level employees” — no senior management, heaven forfend.

Then it was disclosed that senior IRS muckety-​mucks actually knew in 2011 — well before the IRS commissioner assured Congress that the agency wasn’t doing precisely what it was doing. Now, latest disclosures put the beginning of the political bias policy all the way back to 2010.

Of course, the IRS vehemently denies that politics played any role.

And what about Barack “buck-​stops-​here” Obama?

“I first learned about it from the same news reports that I think most people learned about this,” the president said in response to a question, adding, “I think it was on Friday.”

In denial, the president spun, “If, in fact, IRS personnel engaged in the kind of practices that had been reported on and were intentionally targeting conservative groups” and “if you’ve got the IRS operating in anything less than a neutral and non-​partisan way, then … it is contrary to our traditions.”

Well, if these ifs weren’t so (traditionally?) evasive, we might take the prez seriously.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets tax policy

Denmark to Citizens: Drop Dead!

That might as well have been the headline of the Spiegel Online article. What else could Der Spiegel mean by the words “Health Be Damned: Denmark Hopes Cheaper Soda Will Boost Economy” except that Denmark’s government is endangering the lives of citizens merely to promote their prosperity and to respect their rights to life, liberty and the pursuit of happiness?

Letting individuals again govern their own beverage intake, unimpeded! How is that not tantamount to shoving them over a cliff?

On the other hand, if you live in Denmark, enjoy soda, and dislike being harassed for doing so — thank goodness for tax competition.

Steep new taxes on drinks like beer and soda have been sending Danes across the border for these items. They have long shopped in Germany anyway, but the “sinful drink” taxes have inspired an increase in the international jaunts. Research by a Danish grocers’ association suggests that over the past year, members of some 57 percent of Danish households have zipped over to Germany to buy beverages onerously taxed at home. Denmark officials therefore plan to phase out the new taxes.

The government has already abandoned a notorious “fat tax” on foods with saturated fats. It seemed that Danes disliked the higher prices and unemployment caused by the tubby tax.

At least for now, then, Denmark officials have declared defeat on key fronts in the paternalistic war on soda, fats and liberty.

So, take heart, victims of America’s nanny state! The incursions are reversible.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets tax policy

The “Fair” Tax That Wasn’t

Talk of tax “fairness” may be all the rage today, but it takes me back to 1980 and Jimmy Carter’s “windfall profits tax.”

In the previous year, then-​President Carter had delivered his infamous “Malaise Speech,” in which he had addressed concerns about the energy crisis, going on and on about this program and that, and the need for “energy independence,” but not mentioning the one good thing done during his administration regarding energy: the beginning of energy market deregulation.

Carter’s Democratic Party was, like today’s Democrats, concerned about “fairness.” Because of the deregulation, they expected energy companies to reap “windfall profits.” Which those businesses somehow didn’t “deserve.”

Arguable, that.

But skip morality for a moment, and look at it from an economic point of view. The new, extra profits from a deregulated market would have enticed more investment into the areas where the “windfalls” were being made, thus increasing production, reducing prices. To the benefit of all.

Instead, Congress enacted the tax, and Carter signed it 33 years ago yesterday. And for six years, domestic production of oil produced “negative” profits. All Congress really did was delay and diminish the economic recovery to be expected from deregulation.

Congress also got much less revenue from the tax than projected.

The Crude Oil Windfall Profits Tax was repealed in 1988, and we experienced great growth in the 1990s.

A word of caution, I think, to those who bandy about “fairness” to the exclusion of sense, or worry overmuch about energy company profits, today.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets tax policy

Impossible, They Say

Modern economics takes a long, circuitous route to the old wisdom of classical political economy: Laissez faire is best.

This ideal of free markets was pretty clearly established by Adam Smith, J.B. Say, David Ricardo, and others long ago. Frédéric Bastiat explained it best in layman’s terms.

But modern economic theory, with lots of math I don’t pretend to follow, often backs it up, too. Sure, sure: Much of modern theory sort of assumes unlimited government as the alternative to “market failure.” But the more you look (and look critically) at that theory — and increasing numbers of economists are doing just that — the more the case for government involvement falls flat.

This struck me as I was reading economist Garett Jones:

There’s an old story about a mathematician asking Paul Samuelson for one idea in economics that was simultaneously true and not obvious. Samuelson’s answer [was the Law of Comparative Advantage].  Today, I’ve got another: The Chamley-​Judd Redistribution Impossibility Theorem.

Chamley and Judd separately came to the same discovery: In the long run, capital taxes are far more distorting tha[n] most economists had thought, so distorting that the optimal tax rate on capital is zero.  If you’ve got a fixed tax bill it’s better to have the workers pay it.

Jones goes on:

Under standard, pretty flexible assumptions, it’s impossible to tax capitalists, give the money to workers, and raise the total long-​run income of workers.

Not, hard, not inefficient, not socially wasteful, not immoral: Impossible. 

Hard as policy wonks and their patrons, the politicians, may try, any redistribution from the owners of capital to workers will make workers worse off.

Jones discusses some of the niceties of the theory.

But I confess: to me it’s all déjà vu. Or, to conjure up another French term, laissez faire all over again.

This is Common Sense. I’m Paul Jacob.