American companies are hindered by what is arguably the world’s most punitive corporate tax system. The federal corporate rate is 35 percent, which climbs to more than 39 percent when you add state corporate taxes. Among developed nations, only Japan is in the same ballpark, and that country is hardly a role model of economic dynamism.
On the other hand, if the government forces companies to overstate their income with policies such as worldwide taxation and depreciation, then the statutory tax rate understates the actual tax burden.
The U.S. tax system, as the chart suggests, is riddled with both types of provisions.
This information is important because there are good and not-so-good ways of lowering tax rates as part of corporate tax reform. If politicians decide to “pay for” lower rates by eliminating loopholes, that creates a win-win situation for the economy since the penalty on productive behavior is reduced and a tax preference that distorts economic choices is removed.
The good news is that he reduces the tax rate on companies from 35 percent to 28 percent (still more than 32 percent when state corporate taxes are added to the mix).
The bad news is that he exacerbates the tax burden on new investment and increases the second layer of taxation imposed on American companies competing for market share overseas.
In other words, to paraphrase the Bible, the President giveth and the President taketh away.
This doesn’t mean the proposal would be a step in the wrong direction. There are some loopholes, properly understood, that are scaled back.
But when you add up all the pieces, it is largely a kiss-your-sister package. Some companies would come out ahead and others would lose.
Unfortunately, that’s not enough to measurably improve incomes for American workers. In a competitive global economy, where even Europe’s welfare states recognize reality and have lowered their corporate tax rates, on average, to 23 percent, the President’s proposal at best is a tiny step in the right direction.
Perhaps I’m a little sensitive from having spent 7 years working in the Senate (rather than just using the Senate as a stepping stone), but when Obama makes statements in his State of the Union like:
Some of what’s broken has to do with the way Congress does its business these days. A simple majority is no longer enough to get anything – even routine business – passed through the Senate. Neither party has been blameless in these tactics. Now both parties should put an end to it. For starters, I ask the Senate to pass a rule that all judicial and public service nominations receive a simple up or down vote within 90 days.
I have to wonder if he even has the slightest clue what he is talking about. First, what’s with the “no longer”, the fact is that the Senate has operated under super-majority rules since before Obama was born. The vast majority of bills and nominations pass by unanimous consent, meaning that 100 votes are needed. As I’ve mentioned elsewhere, 95% of the nominations sent to the Senate in 2011 were confirmed.
And the rules aren’t to blame for “routine business” not getting done. It’s been over 1000 days since Senate Democrats passed a budget, but then you have to assemble one to pass one. In 2011 the Senate passed over 400 pieces of legislation, only about 20% below the average of the last 20 years. As someone who’d like to see government come to a halt, let me assure you, this isn’t it.
Setting aside the offensive nature of a President suggesting changes in the Senate rules (ever hear of the separation of powers?) the fact is that his proposal wouldn’t have matter in the case of his recent “recess” nominations. First, Cordray was given a vote, with a required 60 for moving to consideration. He didn’t get 60. There’s nothing in the Constitution that defines Senate “consent” as a simple majority. Obama’s unconstitutional NRLB nominations weren’t even in the Senate for 90 days (his apparent standard).
Our founding fathers purposely created a system that made it hard, not easy, to legislate. The very existence of both a House and Senate is evidence they rejected simple majority rules for legislating. One of the many things I learned from working in the Senate, and having spent more time on the Senate floor than Obama, is that dealing in good faith can almost always get you to an broad agreement. If Obama feels his legislative agenda has come to a halt, he has himself to blame, not the Senate rules.
It appears that you are ignoring the Constitution according the article above.
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
In the short film above you can see that it was the kindness of the two “haves” to the other “havenots” that allowed everyone to eat. However, the article below shows that the best way to help people is give them a job instead of a one time gift.
Surprisingly, there is one thing that Mr. Jobs is not, at least not yet: a prominent philanthropist. Despite accumulating an estimated $8.3 billion fortune through his holdings in Apple and a 7.4 percent stake in Disney (through the sale of Pixar), there is no public record of Mr. Jobs giving money to charity. He is not a member of the Giving Pledge, the organization founded by Warren E. Buffett and Bill Gates to persuade the nation’s wealthiest families to pledge to give away at least half their fortunes. (He declined to participate, according to people briefed on the matter.) Nor is there a hospital wing or an academic building with his name on it. …the lack of public philanthropy by Mr. Jobs — long whispered about, but rarely said aloud — raises some important questions about the way the public views business and business people at a time when some “millionaires and billionaires” are criticized for not giving back enough… In 2006, in a scathing column in Wired, Leander Kahney, author of “Inside Steve’s Brain,” wrote: “Yes, he has great charisma and his presentations are good theater. But his absence from public discourse makes him a cipher. People project their values onto him, and he skates away from the responsibilities that come with great wealth and power.”
But why, to address Leander Kahney’s criticism, should we assume that Mr. Jobs has done nothing for the poor? He’s built a $360 billion company. That presumably means at least $352 billion of wealth in the hands of people other than himself. And that doesn’t even begin to count how consumers have benefited from his products, the jobs he has created, and the indirect positive impact of his company on suppliers and retailers.
To give credit where credit is due, the article does present this counterargument. It reports that Mr. Jobs told friends, “that he could do more good focusing his energy on continuing to expand Apple than on philanthropy.”
This is a critical point. Do we want highly talented entrepreneurs and investors dropping out of the private sector and giving their money away after they’ve reached a certain point, say $5 billion? Or do we want them to focus on creating more wealth and prosperity?
Interestingly, Warren Buffett used to understand this point (before he started arguing that politicians could more effectively spend his money). And Carlos Slim Helu still does:
Mr. Jobs, 56 years old, is not alone in his single-minded focus on work over philanthropy. It wasn’t until Mr. Buffett turned 75 that he turned his attention to charity, saying that he was better off spending his time allocating capital at Berkshire Hathaway — where he believed he could create even greater wealth to give away — than he would ever be at devoting his energies toward running a foundation. And last year, Carlos Slim Helú, the Mexican telecommunications billionaire, defended his lack of charity and his refusal to sign the Giving Pledge. “What we need to do as businessmen is to help to solve the problems, the social problems,” he said in an interview on CNBC. “To fight poverty, but not by charity.”
None of this is to say that charitable giving is wrong. I’m proud to say that my employer, the Cato Institute, refuses to accept money from government. This means we are completely dependent on private philanthropy.
But those of us who work at Cato understand that creating wealth—maximizing the size of the economic pie—is the most important priority. And if the pie is big, generous people then have more ability to make contributions to worthy causes such as school choice scholarship funds, the Salvation Army, or (ahem) America’s best think tank.
This Economics 101 video from the Center for Freedom and Prosperity gives seven reasons why the political elite are wrong to push for more taxes. If allowed to succeed, the hopelessly misguided pushing to raise taxes would only worsen our fiscal mess while harming the economy.
The seven reasons provided by the video against this approach are as follows:
1) Tax increases are not needed;
2) Tax increases encourage more spending;
3) Tax increases harm economic performance;
4) Tax increases foment social discord;
5) Tax increases almost never raise as much revenue as projected;
6) Tax increases encourage more loopholes; and,
7) Tax increases undermine competitiveness
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Raising the taxes on the rich may sound good in a class warfare strategy but it doesn’t work out like people would think. Here goes France again.
Francois Hollande is a man on a mission—to increase the top rate of tax on income to 75 percent. The Socialist candidate, who is poised to beat Nicolas Sarkozy in the French presidential election, said, “Above 1m euros [£847,000; $1.3m], the tax rate should be 75% because it’s not possible to have that level of income.”
Hollande’s “unassailable” logic aside, the measure would remind those who are too young to remember the 1970s of what happens when the rapacious state makes work really unprofitable. I can just see the Whitehall mandarins wring their hands with joy as thousands of French high-earners, from actors to businessmen, pour across the English Channel to London. If anything, the disastrous effect of the French tax will be greater than four decades ago—the world, after all, has become even more competitive and the cost of relocation has fallen appreciably. Karl Marx is supposed to have said that “history repeats itself, first as tragedy, second as farce.” Hollande may well prove him right.
Newt Gingrich defeated communism, someone hacked Anthony Wiener’s Twitter account, and President Obama saved the U.S. automobile industry. Grandiosity, denial, and revisionism are all noted indulgences of the political breed. That’s why we should always be skeptical of their words and pity the partisan lemmings who mindlessly parrot their rhetoric.
In his SOTU speech last night, the president claimed credit for rescuing the auto industry:
On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen. In exchange for help, we demanded responsibility. We got workers and automakers to settle their differences. We got the industry to retool and restructure. Today, General Motors is back on top as the world’s number one automaker. Chrysler has grown faster in the U.S.than any major car company. Ford is investing billions in U.S.plants and factories. And together, the entire industry added nearly 160,000 jobs.
We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back.
This is a claim that is likely to be repeated as the president campaigns across the country this year, so it may be worthwhile to examine its merits. (Who knows, maybe an effective debate moderator or Sunday news show host might find his way to asking the right questions of the president or members of his administration.)
Closer analysis reveals that President Obama (enabled by President Bush’s complicity) bailed out specific stakeholders at two auto companies at great cost to U.S.taxpayers and at great expense to important U.S. institutions.
The assertion – or implication – that he saved the auto industry is bogus. The auto industry was never on the verge of collapse. GM and Chrysler were in deep trouble, but Ford, Honda, Toyota, Nissan, Mazda, Kia, Hyundai, BMW and Mercedes Benz (to name some U.S. producers) were fine. Yes, in 2008-2009 the economy was in recession and automobile demand had tanked. The companies that had been the most profligate, the most reckless, and the least disciplined were exposed, but talk of industry collapse was the product of a Detroit public relations campaign that featured the claim that 2 to 3 million jobs could be lost if the government didn’t funnel huge sums of cash to the Big Three. (Details here.)
I have shouted from the rooftops about this issue for over three years. So rather than present all the facts and reconstruct all the arguments, let me economize with reference to this congressional testimony, given seven month ago. It pretty well sums up everything that’s wrong or misleading about the president’s narrative.
As I wrote last year:
The objection to the auto bailout was not that the federal government wouldn’t be able to marshal adequate resources to help GM. The most serious concerns were about the consequences of that intervention — the undermining of the rule of law, the property confiscations, the politically driven decisions and the distortion of market signals.
Any verdict on the auto bailouts must take into account, among other things, the illegal diversion of TARP funds, the forced transfer of assets from shareholders and debt-holders to pensioners and their union; the higher-risk premiums consequently built into U.S. corporate debt; the costs of denying Ford and the other more worthy automakers the spoils of competition; the costs of insulating irresponsible actors, such as the autoworkers’ union, from the outcomes of an apolitical bankruptcy proceeding; the diminution of U.S. moral authority to counsel foreign governments against market interventions; and the lingering uncertainty about policy that pervades the business environment to this day.
GM’s recent profits speak only to the fact that politicians committed more than $50 billion to the task of rescuing those companies and the United Auto Workers. With debts expunged, cash infused, inefficiencies severed, ownership reconstituted, sales rebates underwritten and political obstacles steamrolled — all in the midst of a recovery in U.S.auto demand — only the most incompetent operations could fail to make profits.
But taxpayers are still short at least $10 billion to $20 billion (depending on the price that the government’s 500 million shares of GM will fetch), and there is still significant overcapacity in the auto industry.
The administration should divest as soon as possible, without regard to the stock price. Keeping the government’s tentacles around a large firm in an important industry will keep the door open wider to industrial policy and will deter market-driven decision-making throughout the industry, possibly keeping the brakes on the recovery. Yes, there will be a significant loss to taxpayers. But the right lesson to learn from this chapter in history is that government interventions carry real economic costs — only some of which are readily measurable.
You don’t understand the free market and the fact that GM was in trouble does not mean the government needs to rush in and take them over. If GM had gone out of business then it may have helped us get more jobs in the long run by helping other car companies benefit. You need to check out Milton Friedman’s film series “Free to Choose.”
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.
Shortly after President Obama was elected, NBC News interviewed a young woman from Detroit named Peggy Joseph. She explained that she was excited about Obama’s election because “I won’t have to worry about putting the gas in my car. I won’t have to worry about paying my mortgage.”
In the three years since, President Obama may not have actually paid her mortgage or filled up her tank, but judging from last night’s State of the Union address, he’s still trying.
The president’s address — more campaign speech than policy platform — was long on calls for “fairness” and “opportunity,” but it really boiled down to the president’s vision of a society where government does everything for everyone — financed, of course, by higher taxes on “the rich,” who need to pay “their fair share.”
The president’s argument ignores the fact that the rich already pay a disproportionate share of federal income taxes. In fact, the much-reviled 1 percent earns 16 percent of all income in this country, but pays 36.7 percent of all federal income taxes. One might conclude that this group is already paying its fair share.
[W]e know that the best way to create wealth is not through government action, but through the power of the free market.
Take, for example, the president’s renewed push for a so-called “Buffett rule,” based on the idea, in Obama’s oft-cited formulation, that investors such as Warren Buffett should not pay a lower effective tax rate than their secretaries. He even had Buffett’s secretary, Debbie Bosanek, sitting in the presidential box.
Buffett makes most of his money from investment income (capital gains and interest), and he pays a capital-gains tax rate on that money. That tax rate could theoretically be lower than the tax rate that Ms. Bosanek pays on her wage-based income, although only if Ms. Bosanek’s income is fairly high and she took few deductions. However, the president’s narrative ignores the fact that Buffett’s income had already been taxed at the corporate level. When the effect of both taxes is combined, the real effective tax rate is closer to 45 percent. That is quite a high rate on an inherently risky activity — investing — that our tax code should encourage.
And significantly, note that the president’s solution to this supposed problem is not to reduce taxes on Ms. Bosanek, but to raise them on Mr. Buffett.
That is because the president sees the Buffett rule and his complaints about other tax loopholes as simply a tactic, the camel’s nose under the tent, in his desire for more money for the federal government. That is why his actual tax proposals, hidden behind rhetoric about “millionaires and billionaires” and the “wealthiest 1 percent,” would actually raise taxes on people earning as little as $200,000 per year, as well as many small businesses. And many of his proposals will probably hit people with incomes even lower.
And he wants that money so that he can spend it.
The president might have given lip service to the need to reduce deficits and the debt, but most of his speech was a laundry list of government programs to spend more money doing more things for more people. From health care to housing, from worker education to industrial policy, from “green energy” to college loans, the president sees the government as both the engine of our prosperity and the guarantor of fairness.
The president’s vision of the state of the union is a zero-sum one in which, if some people get rich, it must make other people poor. If Warren Buffett makes money, then Peggy Joseph won’t have gas for her car. The only alternative is for the government to step in and make Mr. Buffett pay for Ms. Joseph’s gas.
Of course there is another option.
We all seek a society in which every American can reach his or her full potential, in which as few people as possible live in poverty, and in which no one must go without the basic necessities of life. More important, we want a society in which every person can live a fulfilling life. But the evidence is now inescapable that the best way to achieve that goal is not through welfare-state redistribution of wealth, but through the creation of more wealth. We should judge the success of our efforts not by how much charity we provide to the poor, but by how few people need such charity.
Would it not be a better America if we could make it possible for Ms. Joseph to get a better job so that she could afford her mortgage and her gas? For that matter, wouldn’t we like a country where she could afford a bigger house and a second car? Nothing that the president has proposed would help bring that about.
Poverty, after all, is the natural condition of man. Indeed, throughout most of human history, man has existed in the most meager of conditions. Prosperity, on the other hand, is something that is created. And we know that the best way to create wealth is not through government action, but through the power of the free market. Last night, President Obama said, “This nation is great because we worked as a team [and] have each other’s backs.” Others might suggest that this nation is great because we are free.
We will probably spend the next year debating these two visions. Last night’s speech was the start.
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Economic freedom is the key and your answers of excessive government spending and taking over the healthcare system takes away a lot of our freedoms.
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
One of the best analysts of economic mobility and the income distribution in Washington today, Scott Winship at the liberal Brookings Institution, found little evidence to support the argument that changes in the income distribution has hurt the ability of Americans to move up the economic ladder. The President made this argument several times over the past several weeks and tonight in the State of the Union speech.
Rather, this wonderful country is nearly as mobile today as it was two generations ago when our fathers were working. True, we’re challenged today by a rapidly changing economic world…one that’s much more global and service based that in Dad’s days. And, true: the future of economic mobility is greatly threatened by growing debt that shows no sign of decreasing. Even so, the promise of American life remains alive for nearly everyone who lives and works here.
“Routine Business”? How About Passing A Budget? – Emily Goff
The President called on Congress to change the way it does its business, making mention of how difficult it is to conduct “routine business” in the Senate. Passing a budgeting comes to mind as something that should be routine. Yet in the past 1,000 days, the Senate has failed to pass a single budget.
A Failure to Understand Fundamental Rights – Hans von Spakovsky
President Obama showed once again that he does not understand the First Amendment or understand his obligation as the executive to help protect the rights of Americans to engage in political activity and political speech, as well as to “petition the Government for a redress of grievances,” i.e., lobby the government. In his state of the union speech, Obama proposed that “people who bundle campaign contributions for Congress” should be barred from lobbying Congress and vice versa. This would be a restriction of fundamental political rights that could not be implemented by Congress without a constitutional amendment. It is shameful that the President, who swears an oath to defend the Constitution, has chosen to attack First Amendment rights for a second consecutive State of the Union address.
Do Teacher Pay Recommendations Make Sense? – Jason Richwine
Deciding how much to pay teachers is properly a matter for state and local governments, not Congress. But federalism issues aside, do the president’s recommendations on teacher pay make sense? He calls for rewarding the best teachers with higher pay and for removing ineffective teachers from the classroom. This kind of merit-based system would be ideal, but the president also says that teacher pay is currently “modest,” and he implies that schools do not have the resources to reward high-quality teachers.
Public school teachers are, in fact, very well compensated. They receive more compensation, particularly in the form of pension and health benefits, than they would receive in the private sector. Before increasing spending on teacher salaries, public school districts should use their existing resources more efficiently. Unfortunately, union rules often severely limit payroll flexibility-stipulating, among other senseless things, that gym teachers must be on the same pay scale as math teachers.
The president also repeats a misleading argument about job security for teachers. He notes that thousands have recently been laid off, but he does not mention that the unemployment rate for public school teachers has been considerably lower than that of comparable white collar occupations.
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Slinging Arrows at Non-Bank Businesses – Diane Katz
In a single sentence, the president dismissed as corrupt an entire industry of financial services that serves tens of millions of people annually. While the CFPB has yet to undertake a single examination of the non-bank industry, and its director has pledged to give the industry a fair hearing, the administration obviously has concluded that all nonbank businesses can’t be trusted and consumers are too stupid to decide for themselves what types of services suit their needs. What consumers really ought to be worried about is the absence of accountability that marks the administration’s new consumer bureau. To the extent the bureau excessively constrains financial services, consumers will be the big losers.
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The economic ladder is still alive and well in the USA. The answer is the free market and not more government spending. You need to check out the film series “Free to Choose” by Milton Friedman. The first episode is the best.
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
To justify its job creation proposals, especially in the energy or transportation sectors, the Obama Administration is fond of highlighting individual Americans who were unemployed but now have a job. Tonight the President referenced a worker who once made furniture, was laid off, and then found a job with a wind turbine manufacturer. Keep in mind that the wind energy market, like many other energy markets, is highly subsidized. By the president’s logic, that worker got a job thanks to Washington’s spending, so what is needed is more spending.
It’s convenient to put a camera in front of a few newly-employed persons and then say “job well done, our policies worked”. But unemployment numbers in the aggregate tell another story. The unemployment rate currently stands at 8.5 percent. In December there were 200,000 jobs added, which indeed is encouraging amid the current economic doldrums. However, as The Heritage Foundation’s James Sherk writes, “At that pace, the unemployment rate will not return to normal levels (or 5.2 percent) for four and a half years—not until September 2016.”
It’s time for the President to recognize that the government doesn’t create jobs. The private sector does, and it does it well. Mr. President, help lead in getting Washington out of the way. Let the economy heal and create jobs on its own.
A PR Gesture on Financial Crimes – David John
No one wants financial crimes to go unpunished, but the President’s announced new Financial Crimes Unit is little more than a PR gesture. Almost all of the crimes it will consider ranging from insider trading to fraud to stealing are now crimes and have been for many years. And it is not like the Justice Department has been sitting on its hands since 2008. Late last year, a very high profile insider trader was convicted as have a number of others. Still more trials and indictments are pending. State, local and federal governments have been working together with great success.
The newly announced task force may be worth a few minutes of new TV time, but it is really just doing what hard working professionals have been doing for some time. The implication that it will do even more is an insult to the prosecutors who have been doing the same thing.
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The answer to our problems is encouraging the private market and not more government spending but your answers seem to involve more government spending.
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
Obama’s Policies Have Exacerbated Increases in College Costs – Lindsey Burke
President Obama is right to call on colleges to work to drive down college costs. Unfortunately his administration’s move last year to forgive student loan debt after 20 years was reckless, and won’t help achieve that goal.
Taxpayers who worked hard to pay off their own college debt should not be penalized by having to pay off the loans of those who, irresponsibly, took out more debt than they can handle paying. Moreover, the three-quarters of American taxpayers who did not graduate from college should not be penalized by having to finance the college student who took out $100,000 in loans to pay for a degree of questionable value.
The Success of A Few Not An Excuse for Obama’s Economic Failures – Bill Beach
The President uses the success of a few as excuse for the economic policy failures of his administration. Changes in the distribution of income are due to three well known developments: the recession, failed economic policies of the past eight years, and the aging of the working population. The President has also been badly served by his economists:
If the President’s economists were to account for these three factors, they would find almost no change in the distribution of labor income over the past twenty years.
If these economists would use data from 2008 through 2010 rather than stopping their analysis at 2007, they would find that the hated rich have lost 40 percent of their wealth, thus massively decreasing the differences in income between the bottom and top earners.
Finally, the President’s analyst should remember that population change is still the biggest force in our society. The Baby Boomers (nearly 71 million are still in the labor force) are at their top earning years, which is a major factor why the top 40 percent of the income distribution is wealthier today than 20 years ago.
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Starting a class warfare is not the way to go.
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
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
The tax system is a complicated nightmare that forces taxpayers to devote ever-larger amounts of time, money, energy, and other resources in hopes of complying with the internal revenue code and avoiding IRS persecution. This CF&P Foundation video shows that this corrupt mess is the result of 97 years of social engineering and industrial policy that began almost immediately after that dark day in 1913 that the income tax was created. www.freedomandprosperity.org
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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.
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.
The U.S. tax system, as the chart suggests, is riddled with both types of provisions.
The Daily Hatch 