Category: tax policy

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Accountability national politics & policies tax policy

Won’t Come A-Knockin’

IRS, audit, tax, taxes

The Internal Revenue Service says it will end “most” surprise visits to homes, like the one an agent made to the home of journalist Matt Taibbi the day he was telling Congress about governmental use of social media to censor people.

According to IRS Commissioner Danny Werfel, the many surprise visits each year looked bad, and “making this change is a common-sense step.” (The IRS wants to still be able to surprise-visit taxpayers whose assets it is seizing. . . .)

Let’s hope that the reform, even if partial and inadequate, is for real. It’s long overdue.

But can we trust these “revenuers”?

The agency periodically says that it will now respect taxpayer rights, now be nicer, etc., usually soon after publicity about awful IRS abuses. As a result of such attention, some IRS personnel are then probably nicer in some ways to some taxpayers sometimes.

And things could always be worse.

Indeed, they may be getting worse. Our Congress recently moved to expand IRS funding by $80 billion over the next ten years (part of the laughably named Inflation Reduction Act). Over the last few years, the IRS has spent millions on “weaponry and gear.” And the question of what to do about the latest bad-looking IRS abuses of the taxpayer never seems to go away.

It will probably never be realistic to expect the IRS to always play nice and in strict accordance with all pertinent legalities and constitutional rights.

But if the Congress that funds the IRS actually represented us, the American people, maybe these issues would’ve been solved a long time ago. 

This is Common Sense. I’m Paul Jacob.

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crime and punishment deficits and debt tax policy

Just Say NO to the IRS

taxes, Bernie Sanders, Nancy Pelosi, Congress, audit, IRS

The IRS wants to do your tax returns. Should we let it?

On this question, the agency has stacked the deck in its favor by commissioning an “independent” review by a left-wing think tank, New America, already on record in support of giving IRS officials authority to do this.

Basically, the IRS handed $15 million (of taxpayer money) to New America to say “Yes, based on our very independent review, we agree with you and ourselves about thus expanding your power over taxpayers.”

Under the proposed IRS Direct File program — already being tested in a pilot program — taxpayers would use government software to let IRS crunch the tax numbers.

Mark Tapscott’s report for Epoch Times cites many objections to the scheme.

Among the most pertinent is voiced by David Williams, president of Taxpayers Protection Alliance. He notes that when individuals and private tax preparers fill out tax forms, they’re typically trying to keep the tax take to a minimum. But the IRS won’t have the same incentive to maximize deductions and refunds.

Moreover, “There is no reason to trust the IRS with even more sensitive financial information. . . .”

Participation in the IRS Direct File program would not be mandatory, at least not initially.

Once established, though, the program would make it easier to mandate participation for at least some categories of tax returns. 

And let us not pretend that such a development would be surprising. Governments tend to use precedents of newly granted power to expand that power.

This is Common Sense. I’m Paul Jacob.

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deficits and debt tax policy

Deadbeat California

Gavin Newsom, California

The injustices pile up so thick and fast that one can’t really keep track. Some state governments are especially prolific in producing them. Governments like the Deadbeat State, formerly known as the Golden State.

Now businesses in California must pay the price for the state government’s profligacy during the pandemic, when it borrowed $20 billion from the federales to help pay unemployment benefits. California is refusing to repay.

In the budget proposal for 2023-2024, $750 million had originally been set aside to begin repaying this debt. But Governor Gavin Newsom killed the provision. So, in accordance with federal regulations, businesses must take up the slack. Starting in 2023, the unemployment tax rate that businesses will pay, which had been 0.6 percent, is being increased by 0.3 percent until the loan is repaid.

“California is just not really an employer-friendly state,” says Marc Joffe of the Cato Institute. “This one thing will not be a difference between a business remaining open or closing, but it’s just another burden on top of the many burdens the state puts on employers.”

A major contributor to the size of this debt is the state’s failure to act to prevent massive fraud in filings for unemployment benefits. LexisNexis estimates that fraudulent payments amount to more than $32 billion.

California taxpayers must pay for this unsalutary neglect one way or another. But what Newsom has done ends up penalizing businesses in particular. 

Yet another reason to avoid doing business in the state.

This is Common Sense. I’m Paul Jacob.

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media and media people national politics & policies tax policy

Decreases & Increases & Krugman

Paul Krugman, taxes, Social Security

Social Security was never designed for sustainability. The “Ponzi” element was there at the beginning: early recipients received HUGE benefits over their contributions, but as the population matured, that ratio of what working taxpayers put in compared to what they received in benefits decreased. 

Further, because there never was a “lock box” much less any investment of funds — it was always a transfer scheme — as the system matured it hit the point of financial default. Back in the 80s this was fixed by raising the taxes on working people.

And then the kicker: with the rate of reproduction in the U.S. falling like Sisyphus’s rolling stone, the ratio of taxpayers to subsidized retirees went in the wrong direction. The folks assigned to keep track of the system’s finances predict that a major insolvency moment occurs about a decade from now, a few years ahead of earlier predictions.

So what does Nobel-winning economist Paul Krugman, of The New York Times opinion page, advise?

While we fret about the devastation that benefit cuts and tax hikes would cause, Reason’s Eric Boehm notes that Krugman doesn’t think the cuts are necessary. “First, Krugman says the CBO’s projections about future costs in Social Security and Medicare might be wrong. Second, he speculates that they might be wrong because life expectancy won’t continue to increase. Finally, if those first two things turn out to be at least partially true, then it’s possible that cost growth will be limited to only about 3 percent of gross domestic product (GDP) over the next three decades and we’ll just raise taxes to cover that.”

Hope over reason! And the progressive’s blithe acceptance of always-increasing tax burdens.

Serious people should confront facts . . . and avoid Krugman.

This is Common Sense. I’m Paul Jacob.

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crime and punishment general freedom tax policy

Voting for Audits

IRS, tax audit, taxes

Eighty-seven thousand new IRS agents!

What could possibly go wrong?

In a bill passed and signed last August, “$80 billion worth of new funding over the next decade” was shoveled at the Internal Revenue Service “so it could” — as a recent Reason article summarizes — “hire 87,000 new workers, purportedly to better target millionaire and billionaire scofflaws.”

The assurance that the new investment in personnel would not be directed towards “those making under $400,000 annually” was, as Reason’s Liz Wolfe makes clear, “not provided within the text of the actual bill.”

Ah — political promise over actual law and all bureaucratic experience. The IRS, you see, prefers to focus its audits on the lowest income earners, who were audited more often than millionaires.

Why? Well, the key is one feature of the tax code: the earned income credit. Which, it just so happens, is easy to get wrong. And upon which lower-income workers have come to rely.

The other reason is even more basic: “given a dearth of experienced auditors not likely to be fixed soon, the agency would rely on the easiest and least time-consuming types of audits.” Which are conducted through the mail. Easy. Cheap. And annoying.

Even with more IRS auditors with more experience, this path of least resistance — these earned income credit audits — will likely get the most use.

The reasons behind the reasons? Why were Democrats so eager to increase the ranks of tax collectors? Sure, Democrats love taxes. But like most tax hikers, they promote the idea that others will pay all those taxes; they promise to stick it to the rich . . . while ever-so consistently missing the mark and whacking the poor and middle classes.

This is Common Sense. I’m Paul Jacob.

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Fourth Amendment rights general freedom tax policy

Not Inadvertent

political donations, IRS, government surveillance, privacy

Maybe we can put a stop to the assault on the privacy of donors to political causes.

By “we” I mean The Buckeye Institute and the Institute for Free Speech, who have teamed up to challenge “a decades-old law that forces the IRS to demand that nonprofit charities hand over the private information of their largest donors every year.”

The IRS itself admits that collecting this personal data “poses a risk of inadvertent disclosure.”

Also a risk of fully advertent disclosure. 

The IRS has often been used to harass the political enemies of federal officials in a position to tell the agency what to do.

Buckeye Institute President Robert Alt reports the Institute’s own experience as Exhibit A. In 2013, soon after it had urged Ohio to reject Obamacare-inspired efforts to expand Medicaid, the Institute was subjected to an IRS harassment-audit.

The specter of this investigation was a scary one for the Institute’s major donors, who reasonably assumed that the audit was retaliatory. They worried that if their own names came up during the audit, they too would be subject to IRS attention. Many donors drastically scaled back their giving so they’d be less of a target; others stopped donating altogether.

Prospects for the Institutes’ litigation are good. The U.S. Supreme Court determined in a 2021 ruling that the government must at least consider “the potential for First Amendment harms before requiring that organizations reveal sensitive information about their members and supporters.”

Anonymity in political activism has a long American history — from the start, actually.

It’s what democracy looks like.

This is Common Sense. I’m Paul Jacob.

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tax policy too much government

For a Thousand Years

government, monster, politics

Time for a gas-tax holiday. 

When the people lie prostrate, when the people groan under heavy burdens, when the people just can’t take it anymore — and when an election is coming up — that is the time for politicians to relieve everyone’s burden.

A bit.

Treasury Secretary Janet Yellen favors considering a temporary gas-tax holiday to emulate some of the states. Reviving the Keystone oil pipeline — no, not something to consider, she says. But she’s okay with a brief gas-tax break.

Let’s do better.

I propose a millennium-long gas-tax holiday, government-barriers-to-drilling holiday, regulation-of-all-industries holiday. Under my plan, government gets all the way out of the way of all markets so we can all be as prosperous as possible, whether or not a big economic crisis is underway.

But would there be any such crises — long-term and intractable economy-wide crises, I mean — if my plan were enacted?

When government does everything possible to injure the economy and prevent recovery, it takes a long time for markets to bounce back from shocks. If ever.

Un-fetter the markets, though, and economic actors would be able more rapidly to adjust to major jolts. If gas imported from overseas plummets, producers could then quickly adapt by expanding production. They cannot readily do so now because government imposes so many barriers.

The politicians’ preference for modest, namby-pamby reprieves are not only substantially weak, they send the wrong signals. They get doled out as if government were doing us a special favor . . . by not beating us up so badly for a very little while.

We need freedom. On an ongoing basis.

This is Common Sense. I’m Paul Jacob.

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Accountability privacy tax policy

Stay On Call 

facial recognition, taxes, privacy, freedom

Backlash can be good. Against lousy ideas, for example. Sometimes, the response to the backlash is to relinquish the lousy idea, at least temporarily.

We must hope for more than a moment of reprieve from the Internal Revenue Service’s plan to require facial ID recognition of persons who use certain functions of its website.

Both Republican and Democratic congressmen, among many others, were outraged.

It’s good that many congressmen regard some forms of surveillance as beyond the pale. (Meanwhile, legislation to promote scanning of everybody’s online messages at will, Lindsey Graham’s EARN IT Act, is back in Congress. Bipartisan Backlash, can you take a look at this?)

The IRS said that it wanted to use facial recognition technology to help prevent scammers from posing as taxpayers.

But a database of such facial info would itself pose a huge security risk. For decades now, we have been inundated with stories about major databases being hacked.

Nor would legal access have been restricted to the less-than-trustworthy IRS. A third-party vendor would have been involved.

So the IRS has retreated, saying they grasp “the concerns that have been raised” and pledging to pursue “short-term options that do not involve facial recognition.”

The Biden administration has also proposed expanding IRS staff by 80,000+ personnel and permitting minute governmental monitoring of the bank accounts of millions of Americans — notions now in abeyance but undead. And who knows what other innovations in overseeing us are coming up?

Stay on call, Bipartisan Backlash.

This is Common Sense. I’m Paul Jacob.

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Fourth Amendment rights privacy tax policy too much government

A Closer IRS

IRS, privacy, banking, audit

Congressman Jared Golden, a Democrat in a Trump district, may be feeling heat.

“First, Nancy Pelosi said she’d raise taxes. Now, she’s coming for what’s left,” warns an American Action Network television advertisement airing in Golden’s Maine district. 

“To help pay for trillions in new spending, Pelosi wants the government to spy on nearly every American bank account, looking for new money to spend,” the spot continues. “Your deposits, payments, bank balance . . . under Pelosi’s plan, the government monitors them. 

“Call Jared Golden and tell him to . . . keep the government out of your bank account.”

Fact-checking the spot, News Center Maine determined that, “yes, as part of that plan, banks would be required to give two additional pieces of information to the IRS: how much money went into certain bank accounts over the course of the year and how much came out.”

Those “certain” accounts started out being those with $600 going in or out. After the public uproar, the plan hiked the amount to $10,000. 

Same principle, though.

“The only way to ensure that upper-income taxpayers pay what they owe,” explained a U.S. Treasury press release, “is by giving the IRS the resources and information required to close the tax gap.”

But does our system work that way? Not according to the Fourth Amendment.

We do not keep “a closer eye” on people making a certain amount; it is un-American to require all such “suspects” be put through the wringer the better to find a few guilty of something.

This is Common Sense. I’m Paul Jacob.

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national politics & policies partisanship tax policy

Billionaires Backed Better

billionaire, Democrat, taxes

It’s a cliché of politics that the Republican Party is The Party of the Rich while the Democrats serve the Poor and Downtrodden.

But were that true, why so many Democratic billionaires?

And why is President Biden’s Build Back Better legislation offering the top income quintile a tax cut worth billions and billions?

At issue is a “$285 billion tax cut that would almost exclusively benefit high-income households over the next five years,” write Alyssa Fowers and Simon Ducroquet in the pages of The Washington Post. “The measure would allow households to increase their deduction from state and local taxes from $10,000 to $80,000 through 2026, and then impose a new deduction cap through 2031.”

“It’s the second-most expensive item” — when figured in budgeting terms, not merely in outlays.

True to form, Democrats promise that it would raise revenue, actually — eventually. In time-honored procrastination fashion, the legislation jiggers with the deduction cap over time, decreasing the cap in the future. A typical (and easy to re-jigger) politicians’ ploy.

What this is all about is subsidizing the rich in high-tax “blue states” — politically protecting Democrats in California and New York, to name the most obvious two, allowing them to pretend to “soak the rich” and “help the poor,” and decreasing the incentive in those states for the rich to leave for lower-tax environments, like Texas and Florida.

Arguably, these “SALT” caps are the worst sort of tax break possible, since they are regional (affecting different states differently) and even partisan. Not to mention regressive.

Instead of “Build Back Better,” the Biden plan should be dubbed the “Failed State Bailout.”

This is Common Sense. I’m Paul Jacob.

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