wish World Review June 3, 2013/ 25 Sivan, 5773 Some say the only way to prevent IRS abuses is to get rid of the IRS. Wrong
By Jack Kelly
http://www.JewishWorldReview.com | The Internal Revenue Service demanded of some conservative groups (but not liberal groups) applying for tax-exempt status the names and addresses of their members and donors, and their contacts with journalists and legislators.
"Please detail the content of the members of your organizations' prayers," the IRS asked a pro-life group in Iowa.
Tax collectors have no right to demand such information from Americans. We must find out who is responsible for targeting critics of the Obama administration, and hold them accountable.
But the more important reason for getting to the bottom of this breathtaking abuse of power is so we can keep it from ever happening again.
The drag our mammoth, complex and unfair tax code exerts on our economy is so great we should junk all 71,608 pages of it (in the CCH Standard Federal Tax Reporter) and replace it with a flat tax along the lines proposed by Benjamin Carson, I argued in an earlier column.
Americans spend about 6 billion hours each year preparing tax returns, estimates the IRS's Taxpayer Advocate Service. According to one estimate, in 2008 we spent $163 billion to comply with tax laws.
The threat to our liberties posed by the IRS abuses makes this reform more imperative, and more urgent.
The flat tax would replace personal and corporate income taxes, and the FICA (payroll) taxes for Social Security and Medicare. There would be a generous personal exemption for each taxpayer, and for his or her dependents, but no other exemptions, deductions or credits. All income over the personal/dependent exemption would be taxed at a single flat rate.
Excise and estate taxes would remain separate, but the tax rate for them would be the same as for the flat tax.
The flat tax would not prevent the government from subsidizing activities it wishes to encourage, but would forbid manipulating the tax code to do so.
Our least efficient, most deceptive and most economically harmful tax is the corporate income tax, which boosts prices and lowers wages and dividends. At 39 percent, ours is the highest in the world, which discourages investment here.
The dizzying array of exemptions, deductions and credits for some businesses, but not for others, is the chief reason the tax code is so complex and unfair.
Economists hate the corporate tax, but politicians love it, because it conceals from those who actually pay it -- consumers, shareholders, employees -- how much it costs them. Labor bears 70 percent of the burden, the Congressional Budget Office estimated in a 2006 paper.
Duplicity and economic inefficiency are reasons enough to oppose it, but what makes abolition of the corporate tax imperative is the danger it poses to our liberty.
It's the corporate tax that makes the IRS abuses possible. If only personal income were taxed, the tax collectors would not be in the business of regulating speech and monitoring political activity. They couldn't grant exemptions to groups the president likes and deny them to groups he doesn't. They'd have no basis for asking intrusive, offensive questions about a group's members, or their religious beliefs.
And if there were no deductions for contributions to some groups but not for others, tax collectors would have no business asking such questions of individual taxpayers either.
Some say the only way to prevent IRS abuses is to get rid of the IRS.
"The bigger scandal is that once a year we do our taxes fearful that an accounting error could have us in serious trouble with our nation's tax authority, and more broadly, with the law," said RealClear Markets editor John Tamny. "That's why we must scrap the income tax code altogether and institute a national sales tax.
"A national sales tax would mean we no longer need to act as subjects cowering in fear of a tax authority, and because we won't, we'll no longer have to prove to the very federal officials whose salaries we pay how much we earn," Mr. Tamny wrote.
There's a beguiling simplicity to a national sales tax. But I fear the rate would have to be so high, it would be an invitation to fraud. The result might be a tax collector even more arbitrary and intrusive than the IRS is today.
But "reforms" that just tinker around the edges won't do, said Rep. Dave Camp, R-Mich, chairman of the House Ways and Means Committee.
"Our entire tax system -- it is rotten at the core, and it must be ripped out so we can start fresh," he said. |
