Questions and Observations

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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Quote of the Day: BOHICA edition

Grab your wallets, this is going to cost you plenty … for zero gain against a made up problem:

“A principal challenge to all of us of life and death proportions is the challenge of climate change…I regret that my own country – and President Obama knows this and is committed to changing it – needs to do more and we are committed to doing more.”–Secretary Kerry

And the apology tour continues.

~McQ

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Observations: The QandO Podcast for 19 May 13

This week, Bruce, Michael, and Dale discuss the week’s scandal updates.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here.

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What is the IRS scandal if not political?

Peggy Noonan makes this statement today:

What happened at the IRS is the government’s essential business. The IRS case deserves and calls out for an independent counsel, fully armed with all that position’s powers. Only then will stables that badly need to be cleaned, be cleaned. Everyone involved in this abuse of power should pay a price, because if they don’t, the politicization of the IRS will continue—forever. If it is not stopped now, it will never stop. And if it isn’t stopped, no one will ever respect or have even minimal faith in the revenue-gathering arm of the U.S. government again.

And it would be shameful and shallow for any Republican operative or operator to make this scandal into a commercial and turn it into a mere partisan arguing point and part of the game. It’s not part of the game. This is not about the usual partisan slugfest. This is about the integrity of our system of government and our ability to trust, which is to say our ability to function.

First paragraph … agree, for the most part.  Where I don’t agree is that there is a “minimal faith” in the revenue gathering arm of the US government.  There’s been little faith in it since it’s inception.  Most people understand that the gun is pointed at them and the prison cell is open and waiting.  They don’t pay taxes because of any “faith” or respect for the IRS or government.  They do it out of fear.

As for the second paragraph, that’s total horse hockey.  Total.

The entire point of the scandal was it targeted “political” organizations.  How does one not politicize it?  It took place under a Democratic administration and the opponents of that party were the target of the IRS.

Hello?

And what do we get from Noonan? “Hey, let’s take a knife to a gun fight”.

Noonan’s advice is, by far, the stupidest advice one could give.

Yes, this is about the integrity of the system. And, like it or not, that is directly linked to those who administer and govern.

Ms. Noonan, who is that right now? And how, if they were doing an effective job, would this have been going on for two years. Oh, and speaking of trust, how are you with the whole AP scandal? My guess is you’re wanting some heads over that.

Well, I want some heads of this. And Benghazi. And Fast and Furious.

Instead we get shrinking violets like you advising everyone to back off and not make this “political”.

BS.

~McQ

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Economic Statistics for 16 May 13

Here are today’s statistics on the state of the economy:

The Consumer Price Index fell -0.4% in April, but rose 0.1% ex-food and -energy. On a year-over-year basis, the headline CPI is up 1.1% and the core is up 1.7%.

April housing starts fell -16.5% to a 0.853 million annual rate. Housing permits, conversely, jumped 14.3% to a 1.017 million annual rate.

Initial jobless claims rose 32,000 to 360,000, and the 4-week average rose 1,250 to 339,250. Continuing claims fell 4,000 to 3.009 million.

The Bloomberg Consumer Comfort Index slipped half a point to -30.2 in the latest week.

The Philadelphia Fed Survey slipped into negative territory in May, falling from 1.3 to -5.2.

~
Dale Franks
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Is anyone in our government in charge?

So Ed Morrissey points out that the IRS thing has been going on since 2011 and it’s just a “couple of agents” in a single per the official line.  Well, maybe four.

Except the agents in question are claiming only to have done what their bosses wanted.  And their bosses?  We don’t know.  We don’t know who they are.  After all, it was only a couple of letters to a couple of right of center organizations.

But again, per Morrissey, these two – or four – agents were busy little people in that one office.

Did I say 300 organizations? According to the report, Reps. Jim Jordan and Darrell Issa now put that number closer to 500.  If it was just these four agents, they’d have to have been rather, er, productive.

Yeah.  And they did it all over the US and all by themselves for two years.

Is anyone in charge up there?  Does anyone even know what’s going on?  And, if someone is in charge, are we ever going to hold them accountable?

Trust in government?

What trust?

~McQ

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Economic Statistics for 15 May 13

Here are today’s statistics on the state of the economy:

The MBA reports that mortgage applications fell a sharp -7.3%. Purchases fell -4.0% while re-fis fell -8.0%.

The Producer Price Index fell -0.7% in April, but the core rate—less food and energy—rose 0.1%. On a year-over year basis, the PPI 0.1% while the care rate rose 1.7%.

The Empire State Manufacturing Survey fell more than 4 points to -1.43 in April.

The Treasury reports that the net outflow of capital from the US was $-13.5 billion in March. Foreign accounts bought a net $15.3 billion of US securities, while US accounts bought $28.8 billion of foreign securities.

The Fed reports that Industrial Production fell -0.5% in April, as capacity utilization in the nation’s factories fell to 77.8%.

The Housing Market Index rose 2 points to 44 in May.

E-Commerce sales rose 2.7% in the 1st Quarter of 2013, down from 4.4% in the 4th Quarter of 2012.

~
Dale Franks
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President Obama attends less than 50% of his intel briefings

Besides improving his golf game, you have to wonder what we pay this guy for:

A report by the Government Accountability Institute found that in his first 1,225 days in office, Obama only attended 43.8% of his daily intelligence briefings.

And in the days leading up to Benghazi, well, he had more important things to do than sit in on what should be the first thing he does everyday:

As Breitbart News exclusively reported the day after the September 11, 2012 terrorist attack, Obama did not attend his intelligence briefings (known officially as the presidential daily brief, or PDB) for the week leading up to the attacks.

Hard to lead when you don’t know wtf is going on, isn’t it?

~McQ

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