Posted on 04/23/2015 7:05:16 AM PDT by SeekAndFind
‘Completely unworkable,” “irresponsible,” “happy talk,” “a disservice to the political process.” That’s just a sampling of what tax experts, most of them right of center, told me they think of one of the most popular lines from Ted Cruz’s stump speech, his promise to abolish the Internal Revenue Service.
Senator Cruz has been talking about the idea for a couple of years now, but it got a bit more attention when he mentioned it in the speech he gave at Liberty University to officially launch his presidential campaign. You can expect the idea to get even more popular in light of a new report from the House Ways and Means Committee that the IRS intentionally diverted funds from customer service to other purposes, spends millions on union paperwork, and more.
The basic idea, according to Cruz’s speeches and a conversation I had with a Cruz adviser, is this: If you radically simplify the individual-income-tax code, you can reduce the size of the federal tax-collection bureaucracy so much that you could then get rid of the IRS and disperse its functions across other agencies.
This is a great applause line: Americans hate how complicated their taxes are, and they hate the IRS. It’s such a good line, in fact, that other probable presidential candidates, such as Senator Rand Paul and neurosurgeon Ben Carson, have adopted it too.
The problem: The idea probably isn’t feasible and has almost no merits as a public policy.
There is no doubt that an individual-income-tax code with many fewer deductions and credits — Cruz has suggested, for instance, keeping only the mortgage-interest deduction and an incentive for charitable giving — would be easier to enforce and therefore require fewer IRS agents. (A flat tax per se would not necessarily be easier to administer than a progressive one with many rates but few deductions and credits. Everyone can read tax tables.)
But tax experts say that, while the federal revenue agency could shrink under Cruz’s proposal, it could only get marginally smaller — not nearly small enough to say it’s been “abolished.” “You’d need slightly fewer revenue agents to conduct the same number of audits,” for instance, says Alan Viard, of the American Enterprise Institute. Donald Marron, a Bush-administration veteran and former head of the widely respected Tax Policy Center, says an idea like Cruz’s could make the IRS “smaller, sure. But vastly smaller? Probably not.”That’s partly because the IRS does a lot of things besides just process complicated individual tax returns. Much of its resources, for instance, go into enforcing the corporate tax code, which Cruz’s campaign says he doesn’t have plans for yet. Meanwhile, a lot of IRS agents — quite possibly not enough — are assigned to providing customer service to taxpayers. And while conservatives are rightly wary of the civil-liberties violations that tax enforcers can commit, labor-intensive audits are important. If a lot of income goes unreported or taxes go uncollected, trust in the system breaks down, rates have to be higher, and the economy ails.
Unless we have a different kind of radical tax reform, such as replacing the income tax with a state-administered sales tax (Cruz has flirted with an idea like this but isn’t pushing it now; it has its own problems), the federal government is still going to have a huge tax-collection bureaucracy.
In an interview, though, the Cruz adviser assures me that the senator means what he says: A Cruz administration will dismantle the IRS and distribute the remaining responsibilities across the rest of the federal government. “If [tax reform is] done correctly under a Cruz administration, there would be no need for the IRS,” the adviser says. “The remaining responsibilities for collecting tax revenue would be dispersed throughout existing agencies.”
So the federal government wouldn’t end up with many fewer tax collectors, but they’d be working for different agencies. Can we do that — ditch the IRS itself for a different set of tax collectors, either in a new agency or in existing federal offices? Yes, we can, but it’s not clear why it’s a good idea, except that it sounds great on the stump.
Most explicit on this point is someone who would know best: Mark Everson, who served as IRS commissioner under George W. Bush, and actually happens to be running for president too. The idea of distributing the IRS’s functions across the federal government, he says, “doesn’t reflect any real familiarity with how the tax code works, what the responsibilities of the IRS are, or frankly how to manage the government.” Breaking up the tax agency “makes no sense” and would make tax enforcement nearly impossible, he says, because of how poorly federal agencies work with one another. “It’s hard enough to coordinate within the IRS, let alone if you have different agencies involved,” he says.
In fact, while IRS discrimination under the Obama administration against conservative political nonprofits has only increased the contempt many Americans have for the agency, the IRS does a fairly good job of collecting taxes and has relatively few scandals in its history. (A number of them can be blamed on the White House or the FBI, not the agency itself.) “If you pin down, if you put a lie detector on people who have been critics of the IRS, like [Republican senator] Chuck Grassley, they would admit the IRS is one of the better-performing federal agencies,” says James Wetzler, a left-of-center tax lawyer who spent more than a decade at the Joint Committee on Taxation and served on a commission to reform the IRS in the 1990s. This is not the highest praise; the IRS regularly fails to meet transparency requirements, for instance. But it does manage to do the job it sets out to do at a relatively reasonable cost, Wetzler says, which is enough to outshine other federal bureaucracies.
Not everyone agrees with that positive assessment. Chris Edwards, director of tax studies at the Cato Institute, says the IRS is “a typical bad federal agency.” But there’s definitely some evidence of its efficiency: The United States’ “tax gap,” the difference between taxes owed and taxes collected, compares respectably with those of other countries, and the IRS is well regarded internationally. Congress chose to task the IRS with the implementation of Obamacare, Everson points out, because the other available agencies are considered less capable.
While reports like this week’s House Ways and Means investigation on IRS funding priorities are embarrassing, they’re not evidence that the agency is any more incompetent or corrupt than your average federal agency. Inane bonus structures, incompetent handling of budget cuts, millions of dollars and thousands of hours spent on union purposes via a practice called “official time” — these are standard, if still shameful, federal failures that won’t go away if you move IRS agents to a different office building.
When I spoke with the Cruz campaign, they didn’t even attempt to make a case for abolishing the agency. Cruz is “not going to get rid of one bureaucracy only to create another,” the adviser says (other, existing bureaucracies would have to get bigger, it goes unsaid). When pressed about why dispersing IRS functions across other parts of government would be an improvement, he offered no clear justification. “It will be vastly more efficient to put the people who are doing jobs that still need to be done into agencies that have existing infrastructure” for similar purposes, the adviser said, without offering any reason why that would be “vastly more efficient” than the current situation. I also asked whether the idea is that, in light of the nonprofit-targeting scandal, the agency is so corrupt that it has to be dismantled; I didn’t get an answer.
Many Americans surely do just want to end the IRS, period. They don’t need any convincing. But one would hope for a little more seriousness from a presidential campaign — an explanation of why doing this should be a key priority in the important task of tax reform.
Some moves toward a better, more pro-growth tax system could actually mean more federal employees, not fewer. Republican tax plans, for instance, generally propose moving to what’s called a territorial tax system, ending the taxation of income American citizens and companies earn abroad. That would require new IRS resources, AEI’s Viard says, to make sure that companies don’t exploit this change to evade taxation. Taxing employment benefits such as health insurance just as wages are taxed, usually a conservative priority, could also mean more IRS work, because the value of those benefits has to be assessed. Plenty of ways of making taxes easier to file, such as offering the option of pre-filled tax forms, would free up businesses’ and individuals’ time and money for productive purposes, but would probably require more IRS employees, too.
Tax experts agree that the main problem with America’s tax system is the Congress that wrote it, not the agency that administers it. That is where tax-reform efforts should be focused.
Cruz has months to flesh out his stump speech with a broader policy agenda. The implausibility and unseriousness of one of his favorite campaign promises, though, is not a heartening sign.
— Patrick Brennan is opinion editor of National Review Online
IRS Pushback Ping.
Except Cruz isn’t advocating that type of tax system.
If you eliminated corporate and individual income tax, and also all the programs for corporate and individual welfare tied to taxation, you could eliminate the “department” called the IRS, and disburse some of the workers to other departments.
But there is no realistic way anybody, even winning both the presidency and a majority of seats in both houses of congress, would achieve that type of change in an 8-year period of time. It might not even be desirable to do so, as the disruption to 10s of millions of honest citizens who have structured their lives around the current tax code would suggest providing a phase-in period, to be fair.
What we need is an IRS properly focused on their job, and not one that is attacking citizens for their political views.
If the government can print money, why do they need to tax us?
You can reduce a lot of the complexity by eliminating deductions, but in the end, you'll still have to give up your 4th and 5th amendment rights to file the forms.
The real solution is to pass a constitutional amendment that does 2 things...
Why set the rate in the amendment itself? So it can't be easily changed.
Why 10%? Because God only asks for 10. The government isn't worthy of more support than the Lord.
“””If the government can print money, why do they need to tax us?”””
They want control of you and everybody else.
But that does not solve the problem of the parasites sucking off the govey teat! Every person in this country needs to have skin in the game. No give backs, and no free rides. A minimum tax of at least 3-5,000$ should be paid in by each person who is of a tax-eligible age. Maybe age 21 or older, etc. That way, youngsters who graduated from high school get a 3-year hiatus or start before needing to pay into the system.
And that my friend, is where the IRS still comes into the picture.
Exactly!
How disappointing. I used to enjoy National Review.
“The people directly elect Senators, and they aren’t going to feel the consequences immediately, and it’ll be very indirectly once they do.”
Indirectly? Do you think the people of Detroit felt the consequences of their city’s bankruptcy only indirectly?
“(How many people see the issues with the Federal budget as it is now, and vote accordingly?) “
Well that doesn’t impact them, as the feds stall bankruptcy with currency manipulation, at least for now. If the states can’t pay, they have no similar mechanism to forestall things, the effects would be felt very quickly by the citizens as states default, their credit ratings tank, and the state has to cut services.
Yes, I agree the 17th should be repealed, but even without that, if the states have to foot the bill for the federal budget directly, it would have swift consequences.
Thanks for the ping, TADSLOS.
Senator Cruz has a major problem in that ALL income tax schemes, whether “progressive” or “flat,” will require an abusive and intrusive IRS to intimidate taxpayers and ensure the tax is collected.
He needs to drop whatever income tax “scheme” he currently fancies and go all in for the FairTax! The FairTax is about FReedom, and if Senator Cruz is about FReedom, he cannot support ANY other tax scheme!
A National Retail Sales Tax (FairTax) will NOT require an IRS. It will require state sales tax collection agencies to ensure that retail businesses collect the sales tax and remit it to the government.
Under the FairTax, the IRS will be abolished! It will be replaced by an agency which will monitor and audit each of the state taxing agencies charged with collecting the sales tax.
Bottom line: Under the FairTax, no individual American will have to undergo an audit ever again. NEVER!
Audits will be conducted, to be sure, but on businesses rather than individuals. And by state sales tax collection agencies, not Federal.
We will never again be a FRee people so long as we have an income tax and an IRS!
Find out how you can help us replace the income tax with the FairTax and abolish the IRS at http://www.fairtax.org.
Not only should the IRS be abolished, IT MUST BE ABOLISHED!
America cannot and will not continue as a Republic if income tax is not replaced by the FairTax and the IRS is not abolished!
So long as America has an income tax and an IRS, Americans are slaves!
How much longer are you willing to be a slave?
I take abolishing the IRS to mean ending the current tax code and replacing all with a simple collection agency. If we had only a sales tax, we really would only need a receipts department.
Patrick Brennan is the opinion editor at National Review.
“But that does not solve the problem of the parasites sucking off the govey teat!”
Eh, I’m not too worried about that. Even they seem to have disposable income to buy cigarettes, beer, sneakers, etc., and they would then be paying federal tax on all such items.
“Not only should the IRS be abolished, IT MUST BE ABOLISHED!
America cannot and will not continue as a Republic if income tax is not replaced by the FairTax and the IRS is not abolished!
So long as America has an income tax and an IRS, Americans are slaves!”
How much longer are you willing to be a slave?”
Well said Taxman! And SO very true!
At best, the IRS will be abolished, and a new, Constitutionally proper method of collecting revenue will be established.
At worst, the IRS is forced to move into a small office in a strip-mall, as it no longer needs the former tax-enforcement infrastructure.
Either way, the IRS will no longer be a fear among American people.
Cruz or lose
Thanks, Bigun. America needs to wake up!
LIEberals are intent on taking America down; reducing America to a third world banana republic run by LIEberal despots. The income tax and the IRS are but two of many measures they are using to accomplish their nefarious mission.
When we replace the income tax with the FairTax and abolish the IRS, we will open the floodgates of FReedom!
Americans will be FRee to work, earn, save and invest without the heavy hand of government intruding into every facet of their economic life.
Economic FReedom will beget other FReedoms — use your imagination!
On January 11, 1989, Ronald Reagan gave his farewell address to the nation:
“I’ve spoken of the shining city all my political life…. And how stands the city on this winter night? … After 200 years, two centuries, she still stands strong and true to the granite ridge, and her glow has held no matter what storm. And she’s still a beacon, still a magnet for all who must have freedom, for all the pilgrims from all the lost places who are hurtling through the darkness, toward home.”
FairTax gets America back on track!
There is withholding on all employees both full and part-time. Then there are all the rules on who is an official “employee”. Add to this, determining just exactly what is “income” and there will be thousands of pages of rules on that.
Then add to this the mischief that politicians can do to all those regulations.
Once people wade through all the regulations getting to that magic number of “income” then they can multiply it by a number. By the way, aren't we doing that now?
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