Writes Garrett Epps at the conclusion of his piece titled "Why Is It So Hard to Keep the IRS Out of Politics? Government officials need a refresher course in the First Amendment 'anti-retaliation' principle."
Instapundit linked, saying: "Two observations: (1) Obama was joking about auditing his enemies in 2009; and (2) Go to a flat tax or a national sales tax and this problem largely disappears."
On point #1, Instapundit doesn't mean Obama was only joking (and therefore he shouldn't be taken seriously or thought to be connected to the actual targeting of enemies). Instapundit means that Obama thought so little of the important principle at stake that a joke could be made of it.
On point #2: Yes! As I said when this story first broke (responding to Ezra Klein who'd argued that what we need most is harsher — but equal — enforcement of tax law):
The unequal, politically skewed enforcement of a law is a far more serious problem than the level of harshness of a neutrally enforced law. We can disagree about what the tax laws should be and how strictly or harshly they should be enforced, but everyone knows it is fundamentally wrong to vary the degree of enforcement, selecting victims by their politics. If government cannot be trusted to avoid that fundamental wrong, it cannot be trusted with any power at all. It would be better to wipe the tax code clean and rebuild it without any complicated corners where government officials — great or small — have a place to do their dirty work.Let's do it! Let's set things up so we are not dependent on the good faith of government officials. Flat tax or national sales tax.
ADDED: Rereading this, I see that I need to distance myself from Epps. Even though I agree we need broad and deep cultural understanding of freedom of speech and that the courts alone cannot preserve it, I don't accept that freedom of speech will die unless "all of us" keep the faith. We have a legal system with constitutional rights because of the danger that the political majority will — in some times and in some circumstances — lose track of these values.
And quite aside from what the people in general think, the individuals who get their hands on power will always be tempted to put their immediate desires ahead of other concerns. No "refresher course" on the First Amendment will overcome that tendency. We need to use law to confine them. Of course, Epps is right that First Amendment law, enforced by courts isn't going to control them enough, but inculcated First Amendment principles are not enough either.
We should do what we can to redesign the structures of power so the inevitable degradation of commitment to freedom will not have such a damaging effect. When it comes to taxes, we do have an obvious legal solution at the statutory level: replace the tax code — with all its hiding places for abuse — with the flat tax or national sales tax.
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84 comments:
Ditto!
National Sales Tax. No filing, no getting around it. Everyone pays.
Shut down the 501c4s entirely. They're all scams.
National sales tax of 7% on all goods and services. Period.
This whole IRS scandal is Stranger Than Fiction at this point.
... I've been waiting a long time to use that.
Charles Woods, the father of former SEAL Ty Woods, says that on Sept. 14, at the ceremony when the bodies reached this country, Hillary Clinton -- then the Secretary of State of the United States of America -- came over to him to tell him that the filmmaker who made the video would be prosecuted.
Setting aside the fact that this was a knowing lie to a grieving father about the cause of his son's death -- if this is what the Secretary of State, a Yale-educated attorney, thinks of the First Amendment, we are in desperate trouble.
And of course, as Glenn Reynolds would say, the filmmaker is still in jail.
If government cannot be trusted to avoid that fundamental wrong, it cannot be trusted with any power at all. It would be better to wipe the tax code clean and rebuild it without any complicated corners where government officials — great or small — have a place to do their dirty work.
Which is precisely why they will fight so hard to keep things as they are.
"Flat tax or national sales tax".
Sales tax by far. Then the IRS can ONLY look at businesses to make sure they are collecting the sales tax.
No 1040, no deductions, no nothing. IRS can concentrate all their agents on businesses to make sure they are compliant!
Simple, no?
Professor, as a retired tax lawyer, I totally agree with your wish.
However, there are so many barnacles on the current system with so many protected interests that it would need a truly inspired and effective leader. I don't see anyone on the horizon capable of that except maybe Scott Walker???
And just at this happy happy moment, the IRS is getting ready to take over even more power over all of our lives as the enforcer of Obamacare.
garage mahal wrote: Shut down the 501c4s entirely. They're all scams.
I agree, but I'd go further. No nonprofits. None.
In the meantime, we have an abuse of power to deal with.
Flat tax or national sales tax.
OR national sales tax..... make sure we don't get both an income and a sale tax. Big government would LOVE that!
Shut down the 501c4s entirely. They're all scams.
No doubt they are, but the IRC is rife with scams given to those who have power and money to influence it. Simplify the code, and you get rid of them all, along with much of the motivation that results in bad government. Get rid of 501c4's only, and you ignore most of the problem.
A national sales tax instantly confiscates 10% of your savings.
(You can't move the point of tax collection downstream in the earn-save-spend cycle without taxing something twice, in this case taxing again when spent the savings on which taxes have already been paid.)
A flat tax is a good idea, chiefly for making people vote on tax increases on themselves instead of others.
@garage,
do you include Organizing for America among those that are all scams?
What about the Sierra Club?
What about the NRA's Institute for Legislative Action? (Which is distinct from the NRA...I believe NRA is a 501(c)(3) org, while NRA-ILA is a 501(c)(4). There's also the NRA's Political Victory Fund, which has to report taxes as a Political Action Committee...)
What about the Planned Parenthood Action Fund, which is a lobbying organization attached to the non-profit Planned Parenthood Federation of America? (Don't you love acronyn-manglers? The PPAF is a lobbying group, probably a 501(c)(4), while PPFA apparently isn't.)
"Shut down the 501c4s entirely. They're all scams."
-- We can deal with what to do about 501c4s AFTER we deal with the current problem. The horse is out of the barn; the milk has been spilled; the chickens have hatched; etc., so forth.
garage mahal said...
Shut down the 501c4s entirely.
How convenient that you're now adopting this position, huh?
Hear, hear!
Likely a combination of the two to incorporate the negative income tax concepts to aid low income workers.
Plus, eliminate the corporate income tax completely (owners pay tax on their income share) and eliminate all deductions, credits and subsidies, then it won't matter if you are for-profit or non-profit.
Oh shock, Democrats have been doing this for more than 70 years:
President Franklin Roosevelt used the IRS to harass newspaper publishers who were opposed to the New Deal, including William Randolph Hearst and Moses Annenberg, publisher of the Philadelphia Inquirer. Roosevelt also dropped the IRS hammer on political rivals such as the populist firebrand Huey Long and radio agitator Father Coughlin, and prominent Republicans such as former Treasury Secretary Andrew Mellon.
Let's set things up so we are not dependent on the good faith of government officials.
There are good arguments to be made for a simpler tax code but the current micro-scanal is a thin reed.
"Shut down the 501c4s entirely. They're all scams."
That's subsumed in my solution. All the scams go down.
That should be "micro-sandals."
That's what mice wear when they're at the beach.
http://michellemalkin.com/2013/05/15/a-brief-history-of-slimy-dem-snoops-and-dumpster-divers/?utm_source=feedly
@rh Good point. I hadn't thought about that. But that's already true about the sales taxes we pay at the state and local level.
Flat tax would be great. A national sales tax would be even better, even if it was a VAT.
Lauderdale Vet said...
National Sales Tax. No filing, no getting around it. Everyone pays.
Unless you repeal the 16th Amendment, it'll only be a short time before some "emergency" will cause them to bring back a "temporary" income tax that'll last for another 100 years. A flat tax will be easier to implement. Furthermore, a national sales tax will still give the chance for corruption as companies try to get their products declared exempt from the tax.
In the meantime, we have an abuse of power to deal with.
In the sense that IRS employees are deciding what a social welfare org is or is not.
I always thought a national sales tax would be a good idea- but only if it's "instead of," not "in addition to," the federal income tax.
The usual complaint against it is that it is "regressive," in that the rich invest much of their income instead of spending it on present consumption.
And yet one could argue that money doesn't really do anything directly for its owner until it is actually exchanged for goods and services. After all, you can't eat a stock certificate or drive it to the grocery store or watch YouTube on it.
Nonetheless I think the political reality is that if it were proposed it would inevitably be implemented as "in addition to," and would contain give-backs (e.g., EITC) for those with low incomes.
And if it were implemented as a VAT it would be largely hidden from those paying it. Yet surely it's better that taxpayers should never be insulated from actually seeing a line-item called "tax" when they pay a tax.
There's zero chance we'll ever replace income tax with a sales tax. Income taxes are the primary redistributive tax tool and that redistribution is the Democrats core value proposition. In fact they constantly claim the income tax isn't redistributive enough, while simultaeously trying to replace other tax funding (payroll taxes) with income tax funding to further their mission. There is zero chance they fail to demagogue the issue.
Throw in various entrenched constituencies (CPAs, enforcement agents) and the result is no chance.
Either a national sales tax or a flat tax would solve the problem. That's why we will never have either one in pure form.
Remember back in 1986 when we had a pretty good taste of real tax reform, with lowered rates, reduced deductions and a broadened tax base? The last quarter-century has seen a thoroughly bipartisan effort to undo these reforms, because pols realized that the opportunity for graft and favor-passing were severely lessened. I think no tax reform, unless enshrined in the Constitution, can survive the efforts of the vicious pack of thieves we call "congress."
"In the sense that IRS employees are deciding what a social welfare org is or is not."
-- No. In the sense the IRS confessed to targeting those who disagree with the current administration. Stop obfuscating.
mrs whatsit @8:44
This is why Hillary will never be president.
The IRS is not to be trusted says liberal,so we need to go with a national sales tax.However we need to pass the national sales tax first,can't have the country without a tax system in place. Once the sales tax is in place we will repeal the income tax.We will,it's a promise.
-- No. In the sense the IRS confessed to targeting those who disagree with the current administration
No they didn't.
Marshal said...
There's zero chance we'll ever replace income tax with a sales tax. Income taxes are the primary redistributive tax tool and that redistribution is the Democrats core value proposition.
Exactly.
Now, just hold your horses, or rein them in, if you will. With a flat tax how are we gonna soak the rich, a long enjoyed national pastime more important to our culture than Baseball?
You're suggesting that someone who makes twice as much money as me only pays twice the taxes, and he still gets the same things I do from the government. Right now he pays 4 times as much as me for the same thing, so who's gonna make up the difference?
Blogger garage mahal said...
" Shut down the 501c4s entirely. They're all scams."
Including "Organizing for America" and all the Soros metastases ? OK
I favor a flat graduated income tax starting at 10% and scaling up to 25% with almost no deductions except for dependent exemptions and scrap the EITC.
I don't like sales taxes because it is almost impossible to keep track of what you paid, in total, in a year, to support the guvmint. plus it will spur growth in the underground economy.
Ann Althouse said...
"Shut down the 501c4s entirely. They're all scams."
That's subsumed in my solution. All the scams go down.
On what basis are these a scam?
Did so too!
And I think "social welfare organization" refers to (c)(4)'s, and the fuss here is about (c)(3)'s, which are political non-profits, not "social welfare," and the rules are different for the two classes.
It's too complicated for me, but I notice that the MSM are deliberately conflating them, so the distinctions must be important in some way.
"We have a legal system with constitutional rights because of the danger that the political majority will — in some time and in some circumstances — lose track of these values."
Yes, we'll, unfortunately it has not been of any particular value in limiting the lawbreaking and discriminatory enforcement practices of the USDOJ, and now the IRS.
If we ended non-profit status, it would be fun watching the ginormously rich Ivy Colleges squeal not to mention the howls fro liberal groups like the Southern Poverty Law Center which has more than $200 Million in the bank.
5/15/13, 9:08 AM
Blogger garage mahal said...
" No. In the sense the IRS confessed to targeting those who disagree with the current administration
No they didn't."
You're right. They only confessed to half of it. The rest is obvious and they are lying about that.
Just like you do.
It's a game. We [ tax lawyers ] teach the rich how to play it so they can stay rich -- and the I.R.S. keeps changing the rules so we can keep getting rich teaching them.
-- John Grisham, lawyer and author
When was the last time an elected Presidential Administration gave power to corruptly reward friends and punish enemies back to the people?
Early Reagan, maybe. Andrew Jackson definitely.
The War on America has had it's own noble status conferred upon it from Clintons and the Obamas. The forces occupying the DC area seem to have NO IDEA that they are our enemies...or maybe not since the extra billions of rounds of ammo to kill us was stockpiled.
A VAT has a lot to recommend it. Our products become cheaper to export, like China's and Europe's.
But it is regressive. Don't we have enough regressive taxes, and hidden taxes, all ready?
They are in your phone bill paying for Obamaphones. They are in your electric bills subsidizing lower income folks. In your property taxes. In your social security taxes.
If we are going to have a large welfare state, I think those who can best afford it ought to pay for it, using the definition of disposable $. A flat tax on disposable $ makes more sense to me than on core $ for welfare. What sense does that make?
I don't understand the supposed defense that Golly, Tax Laws Are Hard. Seems to me that tax regulations which can only be enforced via a requirement that the IRS violate the Constitution are clearly unconstitutional.
In the absence of a fair and legal taxation system, anyone who wants to be tax exempt should be tax exempt. Of course there will be scams. Who cares?
"Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions."
James Madison, The Federalist #51
The executive branch has too much power and too little accountability. Vastly more now than under Bush, when it was a already a problem. The Democrats in Congress are responsible for that, and so long as they get to pretend they still matter they're quite happy with it.
The flat tax sounds like a great idea.
And we are attracted to it because of simplicity, and a perceived fairness.
The problem is that when the government finishes fine-tuning the new flat tax, it will undoubtedly be be far more complex than our current graduated tax system.
That's just the way it works with our oversized bureaucracy. In My working life I can remember 2 times when there was a major "tax simplification" program put into place. And each time it's complexity doubled.
As to fairness?
Please.....
"You can't move the point of tax collection downstream in the earn-save-spend cycle without taxing something twice..."
We do that all day everyday now anyway.
The corporation you work for gets taxed on the income you produced. You are taxed again on the portion given to you. You are then taxed again when you spend it, and when you own a home, or pay rent, and when you buy cable, phone service, water, gas, electric, and then again when you die and leave it behind. Not to mention all the licenses and fees you also pay along the way. The dollar initially produced by your labor is taxed over and over and over.
Yet somehow it's not enough to fund a government. Think how hard that is to do. It takes special people with special talents and education to do that.
"And I think "social welfare organization" refers to (c)(4)'s, and the fuss here is about (c)(3)'s, which are political non-profits, not "social welfare," and the rules are different for the two classes."
The 501 (c) 4 is allowed to support issues, not candidates, and donations are NOT tax exempt (unlike Nancy Pelosi's statement). The (c) 3 is tax exempt for donations and is not allowed to support issues. But, of course, they do.
eliminate non-profit status. charities could avoid paying tax by simply distributing all of the donations they receive instead of ratholing the money. as it is non-profit is just a way to keep your profit tax free.
hawkeyedjb brings up a problem with the flat tax but omits the psychological drivers involved. Every plan to lower the tax-rate is based on "expanding the base" by eliminating "tax loop-holes," such as the mortgage deduction, elimination of deduction of state sales taxes, etc. The only problem with this is that, once done, the institutional pressures (i.e., unabated congressional spending) to raise tax rates remain. Eventually, inevitably, when they are finally raised once again back near their previous high levels (as happened after TEFRA 1986) guess what? The "loopholes" (read deductions) that made the higher taxes bearable, are NEVER reinstated. The reason? It is ALWAYS argued that tax raises "across the board" are "fair" because the affect everyone, but things like the mortgage deduction, write-offs for medical and business expenses, etc., are "loopholes" for the "privileged few." Thus one is inevitably, invaribly left in the end with the worst of both worlds: high taxes and no deductions/off-sets for the little people.
When I came into the workforce the top rate was 50% but one could deduct credit-card interest, car-loan interest, and all medical expenses >1.5% of AGI. Those were sacrificed for the "lower-rates" in TEFRA 86 and for what? The rates were raised again were they not? But the former deductions were NOT re-installed. THAT is the snare and delusion of the "flat tax." Once the protections that deductions provide for the average wage-earner are sacrificed upon the alter of lowered rates they are NEVER reinstated, but the rates are INEVITABLY raised (and sooner than later) because the institutional pressures that begat the original previously higher rates always remain.
The rise of the university speech codes is all the evidence we need that reliance on internalization of the values of liberty is unreliable. Note also the failure to internalize due process as a important value in adjudications of student conduct, especially involving sexual activity. This in our colleges and universities.
Reliance on the courts is imperfect too, but by and large it has worked lately.
X said...
eliminate non-profit status. charities could avoid paying tax by simply distributing all of the donations they receive instead of ratholing the money. as it is non-profit is just a way to keep your profit tax free.
Think about what's going on here. A group of people are banding together to make their political preferences heard. Without exempt status donations to enable that speech are taxable. I think it makes perfect sense that no organization of this type should be taxable. The donations have already been taxed to the income earner, there's no basis for taxing money donated to further political speech.
@Marshal/
Exactly..
Michael K said...
The 501 (c) 4 is allowed to support issues, not candidates, and donations are NOT tax exempt (unlike Nancy Pelosi's statement). The (c) 3 is tax exempt for donations and is not allowed to support issues. But, of course, they do
Tax exempt and tax deductible are different things, as are charities and 501/4s. Donations to charities are tax deductible but the income to the charity is not taxable. This non-continuity is what generates specific requirements for charities.
Donations to 501/4s are not deductible. Therefore consistent treatment is for them to be tax exempt to the recipient.
http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Donations-to-Section-501(c)(4)-Organizations
Marshall, are gross donations taxable or is it revenues minus expenditures that are taxable?
Flat tax or national sales tax.
How on earth would this solve the problem. With either there are still going to be tax exempt organizations.
With either there are still going to be tax exempt organizations.
why? So SPLC can pile up $200 million. So Harvard can pile up $3 billion?
why shouldn't "charities" pay tax on their retained profits?
The corporation you work for gets taxed on the income you produced. You are taxed again on the portion given to you.
If you are talking about salaries, salaries are not taxed at the corporate level, they are considered expenses.
At the very least you are being deceptive.
and you are being retarded frederp
Obama joking about auditing his political and personal enemies is a 'dog whistle' to his minions in government if there ever was one.
He's right about the courts. The job of the courts is not to fine tune the Constitution.
And how about getting rid of any big confiscatory tax and force the government to live within its means?
Income, flat or sales, any tax has to be administered. You'll still need an IRS.
And we are attracted to it because of simplicity, and a perceived fairness.
A flat tax may be perceived as fair by some ignorant people, but most if not all the proposals are inherently unfair as the tax would apply to earned income only.
X said...
Marshall, are gross donations taxable or is it revenues minus expenditures that are taxable?
It would be minus expenditures. You're essentially taxed on whatever cash you have at the end of the reporting period, or on the increase in cash after the first period. But without tax deductibility on the front end there's still no basis for taxing the activity.
Let's say you and three friends sharing a home opened a bank account for the household expenses and contributed your share. Should the proceeds be taxable if there's money at the end of the year you haven't spent? Why should political speech have less protection?
Freder Frederson said...
Flat tax or national sales tax.
How on earth would this solve the problem. With either there are still going to be tax exempt organizations.
All organizations become income tax exempt and therefore there's no reason to define or enforce rules about who should be exempt.
Althouse is making progress, it is nice to see her realizing that humans are naturally corrupt and will abuse any system we set up. Her suggestion that we radically simplify the tax codes to reduce the opportunities for corrupt government officials to abuse the system is a great idea.
Because people are so flawed, so naturally corrupt, it is extraordinarily difficult to construct governmental systems that won't be abused on a large scale. Our founders did a great job defining our constitution, we need to be humble enough to realize that it is very difficult for us to improve on the constitution and that reestablishing governmental conformance to the constitution would radically increase the probability that our descendants will be free.
Most countries have a VAT. That puts everyone in the game..even the poorest cannot keep yelping about mo's free Obamaphones , mo' teachas, mo's goodies --without realizing that they pay for it and their sales tax on everything will go up if they keep demanding mo' free stuff.
However, a national sales tax is regressive, and that is why even countries with a VAT couple it with an income tax.
Because otherwise, the working poor pay far more in taxes on each dollar they make than a rich person.
Such touching faith in the power of "education" to make "good people."
Wait -- Garage: Do you honestly believe the IRS did not target conservative leaning groups for extra scrutiny, solely due to their political affiliation?
If you don't -get- that, then you need to stop commenting on the topic because -that is the scandal.- Not that a random sampling of some 501c4s were asked for slightly more information than others.
I would go further and say the Constitution does not belong to Courts.
It is quite dangerous for the other branches to believe they have no duty to follow our Constitution.
Among other things, we might get a Supreme Court that starts inventing infanticide rules in the name of our Constitution. And the other branches do and say nothing. Because they cannot read, apparently. Or it's not their job.
AA: " On point #1, Instapundit doesn't mean Obama was only joking (and therefore he shouldn't be taken seriously or thought to be connected to the actual targeting of enemies)."
The term is 'ha-ha, only serious': "ironic jokes that are both intended and perceived to contain a possibly disquieting amount of truth,..."
http://www.catb.org/jargon/html/H/ha-ha-only-serious.html
Flat tax of all income whether cap gains or earned income.
$20K deduction for first adult in house.
$10K deduction for second adult (two can live as cheaply as one).
$4K for each child.
All money coming in is taxed at the rate. Multi-generational trust, lottery, trust property that is lent to family members at fair market value. If you weren't taxed on the money then you are taxed on the benefit.
It is time the Kennedys started paying taxes.
"A flat tax may be perceived as fair by some ignorant people, but most if not all the proposals are inherently unfair as the tax would apply to earned income only."
I have no idea what proposals you're discussing, but there's nothing unfair about that scenario at all. Non-wage income has already been taxed. And when it's spent and becomes someone else's wage income, it'll be taxed again.
Originally, under the 1787 Constitution, the federal government was funded mostly by customs duties on imports collected by customs offices located at commercial ports. The first several officials in charge of this process, took the money and ran, to Britain, I think. I don't remember if it was the first, second, and third, but it happened more than once.
My point here is that even the simplest system can be corrupted. Oversight and safeguards are always needed.
Non-wage income has already been taxed.
This is simply not true. Some non-wage income is double taxed (e.g., income directly derived from corporate profits--provided of course the corporation is paying income tax). And again, most of the flat tax proposals eliminate the corporate income tax entirely, eliminating that double taxation.
re: Flat tax, National sales tax, but but but....gee whiz.... then all those rich folks don't get to pay their fair share.
If the vast majority of government policy, taxing and spending occurred at the state level instead of the federal level, oversight of the feds would be a much less vexing problem.
Your state level vote would be (on average) 50 times more important/weighty than your federal vote.
If you don't like the governmental policies of your state, you can always move to a more agreeable state, meaning that most people would be less unhappy with their government.
Each state can act as a laboratory for government policy so that we can see in practice how various approaches to governance work out in reality.
The probability of the USA declining into a one party dictatorship goes way down.
The power and influence of the national media goes way down.
Saint Croix said...
"I would go further and say the Constitution does not belong to Courts.
It is quite dangerous for the other branches to believe they have no duty to follow our Constitution.
Among other things, we might get a Supreme Court that starts inventing infanticide rules in the name of our Constitution. And the other branches do and say nothing. Because they cannot read, apparently. Or it's not their job."
Great points, our activist judiciary is a continuing gross violation of the constitution. The executive and legislative branches do nothing cuz:
1. if they are dems they are happy with the results of judicial activism
2. if the are gop pols, they are probably too stupid/incompetent to realize that preserving constitutional government is crucial (plus they are probably cowardly slackers who yearn to avoid a fight).
Thrilled to hear Rand Paul define himself as a constitutional conservative.
James Surowiecki in the April 15 New Yorker discusses the apparent increase in the underground economy since 2008. He cites an economist who says the national deficit would be MUCH lower if people paid what they owed. Recent reports of IRS abuses don't help and no doubt encourage even more tax evasion. A simpler tax system that cannot be gamed and is not distorted by favors to political cronies sounds great to me.
Flat tax or national sales tax...
Won't happen as long a statists, be they Democrat or Republican, have any traction in DC. Authoritarian regimes (our national government qualifies now) can't function without a vast and omnipresent national police force armed with power to arrest, detain and punish on mere suspicion, in other words a gestapo. The IRS is America's gestapo
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