Harboring Criminals at the IRS

This should outrage everyone that we have officials at a powerful agency illegally leaking confidential information.

My daughter’s dogs even registered their disapproval during the interview (I’m dog sitting for a few days).

We don’t know how many IRS bureaucrats were involved, and we also don’t know whether the motive was money, ideology, or partisanship.

Maybe all three.

This is very reminiscent of what happened about a dozen years ago when other IRS bureaucrats stifled Tea Party groups in order to boost President Obama’s reelection prospects.

Despicable then, and despicable now.

A few months ago, the Wall Street Journaleditorialized about this latest scandal.

Democrats want to give $80 billion to the Internal Revenue Service to audit millions of Americans each year. Yet…after the progressive website ProPublica first published the secret tax information of rich Americans, the tax agency still can’t explain what happened.…IRS Commissioner Charles Rettig…promised when the leak occurred…to find out what happened, but in September he told Senators, “We do not yet have any information concerning the source.” Since then it’s been crickets. …The leak is a crime, but tracing it isn’t merely a matter of criminal enforcement. The breach highlights the general failure of the IRS to protect taxpayer data.  …As troubling is the limp response by the IRS. A separate GAO report this May found that the tax agency failed even to enforce its own authentication protocols, which would help to detect breaches when they occur. …The new money for the IRS is harmful on its own terms, but it’s all the worse when it is provided without strings to an agency that has no idea who is stealing private tax data.

Amen.

Hopefully Republicans won’t be stupid (again) and go along with big budget increases for the corrupt IRS bureaucracy.

By the way, ProPublica this morning published a new story based on their stolen data.

Written by Paul Kiel, it claims rich people pay a very low tax rate.

If your company’s stock shoots up and you grow $1 billion richer, that increase in wealth is real. …From 2014 to 2018,the 25 wealthiest Americans grew about $400 billion richer, according to Forbes. To an economist, this was income, but under tax law, it was mere vapor, irrelevant. And so this group, including the likes of Bezos, Elon Musk and Warren Buffett, paid federal income taxes of about 3.4% on the $400 billion, ProPublica reported. We called this the group’s “True Tax Rate.”

There are two points worth making after reading this nonsense.

1. The left generally makes misleading claims about the tax rate on rich people by ignoring the fact that any dividends and capital gains they receive also are subject to the corporate income tax. The bottom line is that Warren Buffet does not pay a lower tax rate than his secretary.
2. The new version of this claim, as illustrated by the ProPublica excerpt, is that the rich have a low tax rate because they aren’t hit with a tax when their assets increase in value. But that’s because an increase in wealth is not an increase in income, just as a decrease in wealth isn’t a loss of income.

If ProPublica wants to add a wealth tax on top of the current income tax, they should be honest and openly make that argument.

Instead, they opted to concoct and disseminate a make-believe tax rate.

The takeaway is that the IRS budget should not be increased, period. And it definitely should not be increased because that would reward criminal bureaucrats.

P.S. Don’t forget that the IRS has embraced a ludicrous claim about a $1 trillion tax gap.

The result of having lots of taxes is the mean IRS.

The IRS: Even Worse Than You Think

Posted by Daniel J. Mitchell

Since it is tax-filing season and we all want to honor our wonderful tax system, let’sgo into the archives and show this video from last year about the onerous compliance costs of the internal revenue code.

Narrated by Hiwa Alaghebandian of the American Enterprise Institute, the mini-documentary explains how needless complexity creates an added burden – sort of like a hidden tax that we pay for the supposed privilege of paying taxes.

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The Onerous Compliance Cost of the Internal Revenue Code

Uploaded by CFPEcon101 on Apr 12, 2010

Two things from the video are worth highlighting.

First, we should make sure to put most of the blame on Congress. As Ms. Alaghebandian notes, the IRS is in the unenviable position of trying to enforce Byzantine tax laws. Yes, there are examples of grotesque IRS abuse, but even the most angelic group of bureaucrats would have a hard time overseeing 70,000-plus pages of laws and regulations (by contrast, the Hong Kong flat tax, which has been in place for more than 60 years, requires less than 200 pages).

Second, we should remember that compliance costs are just the tip of the iceberg. The video also briefly mentions three other costs.

1. 1. The money we send to Washington, which is a direct cost to our pocketbooks and also an indirect cost since the money often is used tofinance counterproductive programs that further damage the economy.
   2. The budgetary burden of the IRS, which is a staggering $12.5 billion. This is the money we spend to employ an army of tax bureaucrats that is larger than the CIA and FBI combined.
   3. The economic burden of the tax system, which measures the lost economic output from a tax system that penalizes productive behavior.

The way to fix this mess, needless to say, is to junk the entire tax code and start all over.

I’ve been a big proponent of the flat tax, which would mean one low tax rate, no double taxation of savings, and no corrupt loopholes. But I’m also a big fan of national sales tax proposals such as the Fair Tax, assuming we can amend the Constitution so that greedy politicians don’t pull a bait and switch and impose both an income tax and a sales tax.

But the most important thing we need to understand is that bloated government is our main problem. If we had a limited federal government, as our Founding Fathers envisioned, it would be almost impossible to have a bad tax system. But if we continue to move in the direction of becoming a European-style welfare state, it will be impossible to have a good tax system.