Great Moments in Tax Enforcement

Townhall.com ^ | February 17, 2014 | Daniel J. Mitchell

[Kaslin]

I’ll be first in line if there’s a contest over who thinks most strongly that politicians are corrupt, or whether they can waste money in creative ways.

But if somebody asserts that politicians are stupid, I’m going to argue on the other side.

This isn’t because I’m a fan of elected officials. Far from it. However, having been a student of public policy for three decades, I have a grudging admiration for their animal cunning. They’ve developed some remarkably clever ways of extracting more and more revenue from taxpayers.

The bureaucrats at the Paris-based Organization for Economic Cooperation and Development are turning an old pact on mutual administrative assistance between governments into something akin to a World Tax Organization that will have the power to penalize nations that don’t impose onerous tax burdens.

Showing amazing capacity for innovation, Pakistan’s tax police hires transgendered people to encourage (presumably homophobic) taxpayers to cough up more money.

The tax police in England have floated a proposal to have all paychecks go directly to the tax authority, which would then decide how much gets forwarded to taxpayers.

And since we’re talking about the United Kingdom, that nation’s despicable political class wants to improve compliance by indoctrinating kids to snitch on their parents.

Speaking of snitches, tax authorities in both the state of New York and the city of Chicago have programs encouraging neighbors to rat our neighbors.

World Bank bureaucrats put together a report card on the tax systems of different nations, and the way to get a high grade is to impose high tax burdens.

Our friends at the Internal Revenue Service have something called the Taxpayer Advocate Service that mostly exists to – get ready for a surprise – push policies to expand the size and power of the IRS.

And who among us isn’t impressed that the German tax authorities have figured out how to levy a prostitute tax using parking meters.

That last example is a good segue into our newest example of great moments in tax enforcement.

The state of New York has won the right to impose a sales tax on lap dances and other…um…services at strip clubs. Here are some excerpts from the Daily News.

The jiggling and gyrating strippers at Larry Flynt’s Hustler Club are selling sexual fantasy — not demonstrating their dance skills — in the private rooms at the Hell’s Kitchen skin palace, an administrative law judge ruled. “The dancing portion of the service is merely ancillary to the performer removing her clothes or creating the sexual fantasy,” Judge Donna Gardiner wrote in a decision released Monday that means the raunchy moves are subject to the state sales tax. …Gardiner said the Hell’s Kitchen jiggle joint will have to pay $2.1 million in sales tax on the $23.8 million worth of scrip, or the club’s in-house currency, that it sold between June 1, 2006 and November 2008.

And don’t think the government didn’t investigate this issue closely before rendering a decision.

After listening to strippers’ testimony and watching the club’s videotapes, Gardiner ruled that some of the strippers’ routines involve dance, choreography and music, but overall, these are not artistic performances.

I wonder if they also read copies of Hustler magazine? This might be a case where government officials went above and beyond the call of duty to study a topic.

Regardless, the strip club didn’t prevail. I guess art, like beauty, is in the eye of the beholder.

I suppose this is the point where I should make some more jokes, but I’m enough of a tax dork that instead I’m going to make a serious point.

The problem in New York is not that the Hustler Club is now being taxed. The problem is that there’s an exemption from the sales tax for “artistic performances.”

Don’t get me wrong. I would prefer that there not be an income tax or sales tax in New York. But if the state is going to impose a sales tax, then all consumption should be treated equally.

This is also my view on the flat tax. I would prefer no income tax, and America did quite well with that approach until 1913. But if there is going to be an income tax, then you minimize corruption and economic damage by having the levy apply equally and neutrally.

At least one Judge in New York seems to have the right perspective on this issue. Here’s another blurb from the Daily News report.

One judge, Robert Smith, criticized the majority, arguing that it was making a distinction based on their preferences. …“Perhaps, for similar reasons I do not read Hustler magazine; I would rather read the New Yorker,” he wrote. “I would be appalled, however, if the state were to exact from Hustler a tax that the New Yorker did not have to pay, on the ground that what appears in Hustler is insufficiently ‘cultural and artistic.’”

Needless to say, I doubt politicians pay much attention to these philosophical and economic arguments for genuine fairness in the tax code.

They simply want more money. And even though I wish they were stupid and incompetent in this regard, they have great talents when it comes time to take our money.

But there is one easy way to avoid heavy taxation. Just drop out of the labor force and live off the government. Millions of your neighbors already have taken this route.

It’s not good for the nation, but it sure is the logical response to perverse government policies that make it less and less attractive to pull that wagon and more and more comfortable to ride in the wagon.

As Henry Payne sarcastically noted, it’s time to party like the Greeks!

[MIchaelTArchangel]

Party like the Greeks?

Does Henry Payne mean we should party like frat boys or that we should party like Prince Phillip’s countrymen?

[Kaslin]

Did you look at the cartoon?

[Vigilanteman]