Free Markets, Free People

Servant, or Master?

Reprinted from Medium.

Forget your politics for a minute. Lose the whole Democrat vs. Republican, liberal vs. conservative thing. Because this doesn’t really have anything to do with that. We’ve heard a lot this week about some IRS people improperly handling tax applications for some conservative and, oddly, Jewish groups.

If so, this shouldn’t a surprise, because it’s happened before. There were certainly allegations of it as far back as the Kennedy and Johnson Administrations, and it comprised one of the impeachment articles against Richard Nixon. Until the IRS is staffed by benevolent philosopher-kings, rather than, you know, people, IRS power abuses will continue to recur.

Even if they didn’t, ordinary run-of-the-mill IRS incompetence should be bad enough. But put aside the various GAO and inspector generals’ reports showing, for instance, that the IRS accepted 2,137 tax returns from a single address in Lansing, MI, to which they returned $3.3 million in refunds. Forget the Treasury Department investigation where IRS taxpayer question centers incorrectly answered 43% of the taxpayer questions they received. And don’t even think about poor Rachel Porcaro, the Seattle single mom who filed a tax return for $18,000, only to be told by the IRS that it was impossible to live in Seattle on that little money, whereupon the IRS demanded an additional $16,000 in taxes and penalties.

All you have to think about is how many times you or some member of your family or friends have had some sort of hassle with the IRS. Think about how you feel when you receive an envelope with the IRS eagle in the upper left-hand corner. It’s not a good feeling is it? Because you know, really, that you’re not gonna open it up and find out that you’ve won a cuddly little puppy.

The IRS is a government agency with the power to delve into the deepest minutia of your personal financial life. If they don’t like what they find they can garnish your income, confiscate your property, or jail you. If they decide you owe them more money, you can’t escape paying them. You can’t even discharge a tax bill with bankruptcy. It’s like having Ray Liotta’s character in Goodfellas in charge of taxation. “Your kid got sick? F*** you, pay me. You lost your job? F*** you, pay me.”

Ultimately, though, the problem with the IRS isn’t incompetence or malice. The problem is that we have a system of income taxation in the first place. If you tax income, you inherently give the government the power to inquire into every single aspect of your financial life. Once you’ve done that, then you automatically have a government agency with the power to destroy individuals’ lives.

So…why would you do that? There are plenty of options for governments to raise revenue. There are sales taxes,value-added taxes, excise taxes, tariffs on imports and exports, user fees, and several other methods. So, why would you intentionally create a tax system that gives the government such enormous power over individuals?

There are lots of other reasons to wonder about the efficacy of a system of income taxation, of course. The IRS estimates that simply completing a tax return costs the average taxpayer 25.5 hours and $149. If you own a small business or are self-employed, that rises to more than 97 hours and $752. That’s a lot of time and money to fill out a single form.

Also, it’s nearly impossible to prevent politicians from expanding and complicating the tax code, because an income tax allows politicians to subsidize or penalize all sorts of individual behaviors—and they do. The assumption being, apparently, that 535 people in Washington, DC, can make better decisions than you can about how to spend your money. Do you remember that Congressman from Georgia who asked the Chief of Naval Operations if sending more Marines to Guam would cause the island “to tip over and capsize”? He’s one of the guys who gets to decide how the tax code handles your income, and he’s a dolt.

Ask yourself a simple question: “If I was creating a new tax system from scratch, would I create one that allows the government to take my house, and maybe send me to jail if I make a mistake?”

If you wouldn’t, then why in the world would you want to keep one that already does?

If it’s possible for a presidential administration to use the IRS to cow his political opponents, why would you want to keep the tax system that allows it, no matter who the president is? That’s serious banana republic stuff. And if that power exists, it seems self-evident that it isinevitable that it will be exercised. Indeed, by all accounts it already has been, and more than once.

We could completely liberate ourselves from individual attention from the IRS simply by switching to a system of consumption taxation, rather than income taxation. No more individual tax returns. No more income tax withholding from paychecks. No more letters from the IRS demanding extra taxes and penalties for some minor mistake three years ago. No more giving out the details of our private financial lives to some government busybody. The government would know nothing about how much money you make or how much money you have. They’d get their money when you spent yours.

Sure, there might be some quibbling about precisely what form a consumption tax would take. Maybe we’d argue a bit, too, about how to build some progressivity into it and make it revenue neutral. But both of those things are achievable. A 23% VAT that excluded non-prepared foods, clothing, and rental housing would get us in the ballpark. In return, we’d get the government’s nose out of our personal business, get a bigger chunk of our paychecks to spend each week, and turn April 15 into just another spring day.

The benefits of eliminating the income tax and switching to some sort of consumption tax seem so clear to me. I cannot imagine why anyone, of any political persuasion, would be opposed to it.

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34 Responses to Servant, or Master?

  • In the mind of a prog, everything you call a bug is a feature.

  • From a brief conversation – the progressives LOVE this. They now believe that they’ve finally gotten enough sabots in the gears that they will never lose power. They can use the IRS to destroy anyone who runs against them, they have enough people on the dole to prevent any politician from ever moving away from the progressive line, etc.
    I was told, point blank, that I would never see any liberty minded “right wing nut job” hold the position of president ever again in my life (and he was claiming the Romneys and whatnot were not included in that and that any R taking office would be just as progressive as O) because the full weight of the government can be brought down upon anyone who opposes the left.
    They don’t care about this because they know that what exists now will perpetuate them and if it’s used against them, it will only empower them later as they consume more power to ‘fix’ the problem.
    I’m not confident we have much time left.

    • If so, then liberty-minded people will, inevitably, choose a non-political resolution of their desire to be left alone.

      • Since our Revolution, something new under the Sun evolved (or was defined as never before): civil disobedience.
        I know I say this regularly, but it works every time it is supported sufficiently.

        • Except it won’t be. The takers outnumber the makers. Now what do you got?

          • What happens if enough makers go all Galt?
            We all know the answer there.

          • I think you and I have different answers to your questions Rags. The Free Sh*t Coalition feels entitled to the fruits of production. You think they’d knuckle under and see the light or more likely demand the evil rich be punished?
            The fantasy is that “they’ll miss us when we’re gone” but more likely the reality is that they’ll use force to drag us back.
            You keep primping civil disobedience. You know why it worked in places like India or the US in the 50s? Because the authorities were always going to be too civilized. I have no illusions about modern progressives.
            Rags, how did civil disobedience work out for the poor slobs in Tienamen Square?

          • Not enough Chinese took the route, shark.
            Yes, civil disobedience assumes a certain level of “civil”.
            And if it is tried and met with crushing repression, well, that just points to the next option.
            But think Prohibition, as well as civil rights movement.  Civil disobedience comes in lots of forms.

          • I hope you’re correct because the alternative doesn’t end well for anyone…..short to mid term anyway.

  • I’ve been singing this song for several decades, Dale.
    Maybe now is the time, and this is the catalyst.

  • Because power.
    Even those that profess to care about small government and freedom, want to keep the current code because Congress wouldn’t make a fraction of the election money if Congress had no power through the IRS and tax code.

  • I’m now more in favor of a consumption based tax than ever.

    However, if I start a political non-profit to promote one, I’m going to name it the Free Donuts for IRS Employees Society just to throw them off.

    • Free Green Donuts for IRS Employees Society dude….some of them deserve green donuts.

  • A VAT takes about as much tax compliance, measuring that subjective value, a throwback to Marx’s incoherent “theory of labor”,  as the crap we’ve got now. Europe is good at hiding the VAT inside the selling price (blaming big business for jacking their prices) and jacking it at will. Hasn’t the European VAT nearly doubled since its inception?

    • An end-point consumption tax is not a VAT.  Thank gawd.
      One time, easy, no muss, no fuss, worlds of experience in the states.
      BUT repeal the 16th FIRST.

    • In Taiwan the VAT has stayed 5% for decades. Europe likes taxation of all kinds, not just VAT.

      • I’d like to see an amendment to the Constitution limiting the amount of tax an individual must pay in federal taxes.

        It would be a challenge to write one that would actually restrain creative legislators. It would be necessary to have a limit on all the various taxation routes (income, point of sale, property tax, etc.). I’m thinking 10% on income OR 15% of purchase price on sales-VAT, and prohibit collection of both.

        It would have to set some low limit, perhaps 1%, on property tax. Or prohibit the feds from collecting property tax at all.   

  • Does anyone remember those two IRS from the Minneapolis office in the 90’s who raided a childcare center and held the kids hostage unless their parents coughed up enough to cover the centers back tax bill?
    Of course, they got paid suspensions, IIRC, not the death penalty for kidnapping.

    In the NEW racist America, maybe no black fascist CAN be unpopular…
    But their PARTY sure can be.

  • Glenn Kessler, WaPo’s “fact checker,” has a very detailed examination of the “doctored” narrative.  Kessler almost entirely vindicates Karl and Hayes, and awards the “doctored” narrative three Pinnochios, The White House claim of ‘doctored e-mails… to smear the president’
    Oh, ERP…
    Oh, gosh, forgot.  You are “gone to Italy”…

    • No no, it’s all falling apart, the Republicans are doomed, so are old white guys from the south and their way of life, and let me insert a verbal happy smiley face at the idea that United States is in decline too.

    ONE of the people audited by the IRS, and one who was “chilled” into at least more silence.
    “I never made my concerns public — except with family, friends, and a few of my colleagues and students at King’s College. I did tell the staff at the Catholic Advocate because I decided that it would be best for my family if I did not write for them anymore. It seemed like a more political site than I usually write for, and I decided to stop writing for them because of the audit.”

  • I would consider opposing a consumption form of taxation.  I would not be blanket opposed, but my support would be contingent on extremely high barriers to re-instating income taxes in the future.  If we institute a VAT or sales tax in lieu of income taxes, what is to stop the ever grawing maw of gov’t a few years from now saying “Feed me Seymore” and us ending up with both a consumption and an income tax?  Limits on how the money is raised are meaningless so long as the spending keeps going up and up.  Even the pitiful ‘debt ceiling’ (always seemed more like a near term target than a ‘ceiling’) is now toothless with no actual dollar limit.  The power and reach of the state are, have been, and very likely will continue to grow.  The precise form they exact their tribute from the people is not the key concern, any current limit is changable by them.  They will keep taking more and more until they are stopped.  

    We are not worthy sons to our founding fathers.  We have frittered away and lost what they bequeathed us.  And we as a people are not manly enough to take it back.  We are but serfs on a gov’t farm.       

  • I gather we can do what we want if we can just get mid-level IRS functionaries to come up with new tax policy, after all, that seems to be the answer all the higher ups are giving from the IRS when it comes to policies these days, that they were unaware of these policies and someone down below them implemented them without their say so.
    Seems simple enough.

    Sen. Paul points out that NOBODY in Congress hesitates to minimize their tax liability under the law.
    The “code” is a monstrosity.  The “corporate tax” is nothing but a means to impose a stealth tax on consumers.  It ALSO makes US companies LESS competitive globally.

    Well.  The tornado was not CAUSED by the sequester…just the death toll.

    • Then I suggest Scirotum (did I do that?) write a letter to the guy who manufactured the sequester.   The address is 1600 Pennsylvania Avenue, Washington DC – he can put “Attention: Big Ears” on the front.

  • How would you calculate eligibility for welfare benefits without an income tax?

    • I also suspect many people would be angry because without income tax reporting, how could you measure gini co-efficients or know who’s doing better?

  • I’ve been audited three times. 

    In 1970 in Miami when I was a 1LT I didn’t know the rules.  I took my records and my returns to a Federal Building.  The auditor was sitting with her back toward me.  Abruptly, she swiveled her chair.  Her face had been horribly disfigured in a fire.  It was done for shock value.   I lacked some receipts; it cost me $200 that I could ill afford. 

    In 1975 , we moved from the Philippines to North Carolina.  In the PI, I had been the squadron tax advisor.  It was fun knowing the rules and keeping good records.  The person who was shocked in my second audit, was the auditor.  I actually found several placed where I could claim a larger return.  I made back the $200 and more.  A wife in my squadron, who had been an IRS auditor, told me a secret – auditors work on an industrial funds basis.  They open a work order and charge their audit time and expense.  The IRS expects a net return. 

    The third audit was in 1981, when I returned from El Salvador.  I had a very unusual job and drew combat pay and a $500 exemption because every month we I had taken fire.  I lived in a hotel, bought my own second chance vest, sidearm and ammunition – unusual employee business expenses.  About every six weeks in San Salvador, I took a week to decompress in Panama.  While there, I found a set of “IRS Angles for Special Taxpayers” at the legal office.  I set IRS up, claiming enough to trigger an audit, but much less than they owed me.  The letter was particularly strident even for the IRS.  When I finished my audit, they paid out four figures including $28 in interest.