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Nothing Is Certain But Death and Taxes. The IRS Can Deliver Both
In Orwellian Washington, DC-speak, a “budget reconciliation” bill is winging its way through Congress. Under the post-Watergate 1974 Budget Control and Impoundment Act, “reconciliation” bills have special status, especially in the United States Senate.
More Orwellian than calling it a “reconciliation” bill is its actual title: The Inflation Reduction Act. It does no such thing. But by the time you read this, it will likely have passed the Senate and is on its way to being rubber-stamped by a House narrowly controlled by Democrats and signed by a clueless, hapless, and compliant President. The Senate vote, I predict, will be 51-50, with Kamala Harris breaking the tie. There is always a chance a Senator won’t show up but don’t count on that.
Unlike most legislative items, reconciliation bills cannot be filibustered. A simple majority enacts them. Debate is limited to 30 hours. But it resembles a Faustian bargain. The bill (and any amendments) must strictly focus on permanent spending and tax programs – no “extraneous” provisions. Any attempts to mask policy issues as “revenue raisers” – such as raising the federal minimum wage to $15 per hour – are verboten unless a supermajority of 60 Senators says so.
For those reasons, our current very slim Democratic majority endlessly and aggressively tries to cram as many of its agenda items in reconciliation as possible. The Senate Parliamentarian gives the “reconciliation” bill a “Byrd bath,” so named for the late Senate Majority Leader who, in 1985, became concerned about abuse of the reconciliation process. He was prescient about his own caucus.
But Byrd baths and budget rules can’t fix all horrible big spending and tax provisions that have made their way into this horrific legislation.
Much has already been written about the 15 percent minimum corporate tax allowing Medicare, our nation’s largest government health care program, to “negotiate” (i.e., set) prescription drug prices. There are many other bad ideas, especially billions to fund so-called “green energy” programs, including wildly distortive tax credits for not-as-environmental-friendly-as-you-think electric vehicles. Owners of those heavier-than-gas-operated vehicles also pay practically nothing to maintain roads and bridges, funded largely through state and federal fuel taxes.
But one provision that is escaping much notice as a “revenue raiser” is $80 billion in new spending for the Internal Revenue Service to double it’s workforce, adding 87,000 new agents over the next 5 years. Ostensibly, this “investment” will result in $200 billion in new revenue by catching tax cheaters.
Remember, kids … auditing elections is expensive and unnecessary. Insisting on it means that you are a conspiracy theorist, a white supremacist, and a threat to our democracy.
Auditing you, however … that’s just fine.
Yet another reason to repeal the 16th and 17th amendments. 1913 was a bad year.
Indeed. And that was called the “Progressive era.”
Oh, but you forgot the 18th amendment. At least that was repealed by the 21st amendment. We have precedent.
There is no value added to the tax code beyond one single deduction for procreating another W-2 slave. Everything else is dumber than Soviet central planning.
Taxing business is completely redundant and regressive to the income tax. Completely unnecessary drag on productivity.
When are the Republicans going to start talking like this?
If we had a flat rate income tax or The Fair Tax, we wouldn’t fear the tax man . . .
What if businesses act as “concentrators” of wealth in that both richer and poorer people buy food, for example, so that “taxing the business” is a way of balancing the load?
It’s regressive taxation because you can’t force it to come out of shareholder income. People think that’s what happens, but it’s not even close to being like that.
I’m not sure that matters. In a way it could be a means of having something of a “flat tax” – since the tax on a poor person buying something would be the same as the tax on a rich person buying the same thing – but without it seeming visibly “unfair” that the poor person pays the same amount of tax as the rich person.
What has to be reduced when you pay this tax? Make a list of the possibilities. tia
That wasn’t my point. But increasing prices to cover the tax, is almost part of the point. If a poor person buys a bucket of paint and pays $1 tax, and a rich person buys a bucket of paint and pays $1 tax, that’s a “flat tax” where poor people pay too, that doesn’t get people screaming about “UNFAIR!” because the rich person pays the same AMOUNT – not just the same RATE – as the poor person.
And it’s a “consumption tax” which many people seem to think is the best way to go.
It doesn’t have to be built into increased prices. They can reduce other things in the company–productivity, worker benefits, WAGES– or the product quality. Nobody has any idea of what it comes out of.
It’s too convoluted to say it’s a good consumption tax. It’s redundant to the income tax, anyway. Just tax personal income once.
That may be becoming increasingly… unworkable. As more and more people are “on the dole,” etc. And the people I hear/read who support consumption tax, usually seem to think there should be ONLY a consumption tax. So, no redundancy.
The corporate and/or business taxes are totally redundant to the income tax. This isn’t debatable. That is the point I’m making.
Not totally redundant, since they are also a consumption tax. And they’re a tax that, for example, Hollywood stars can’t avoid by making a movie in South America so the income isn’t American, but what they buy with it in America, is.
You are literally the only person that says this.
The reason it’s redundant is, if you wiped it out, it would show up in personal income, dividends, or capital gains completely. Therefore, all tax collection at the business level is a complete waste of time because it’s redundant.
How about addressing my point of people who get their income from places/in ways that are not taxable in the US? Or maybe are just taxed at much lower rates.
Drug cartels being another example. They pay no income tax, and if they pay no consumption tax either, because you think that’s redundant, then they don’t even help to partly pay for the police and other services that their activities make necessary.
I think I’ve heard this argument before, but do you really think it nets out?
What needs to net out, and why?
I can see a point to having only consumption taxes, vs only income taxes; and I can see a point to having some of both, including business income taxes (which amount to indirect consumption taxes); but I can’t see the point of having ONLY personal income taxes. There are too many ways around it.
The IRS tax code is idiotic central planning and I don’t know if you’re keeping up with the news but the organization is getting increasingly notorious in multiple ways for people that can’t afford lawyers.
A flat tax on your revenue. This is not complicated. I have no idea what you’re talking about.
That seems to invite shenanigans to avoid having something be considered “revenue.”
You do realize that the term “revenue” would have to be defined?
Gross, or net?
If gross, how does that encourage “capital formation” etc?
And are loan proceeds etc “gross” revenue? If yes, why? If not, when, and why not?
If net, what deductions are allowed?
I am not talking about anything new. You define revenue the same way. I have absolutely no idea how you came up with this.
I said a flat tax with one deduction. This is not complicated.
That seems pretty unworkable, if you look at it closely. That is, in terms of saying you’re only going to have personal income taxes, and nothing else. How much is Warren Buffet’s salary, $1?
Nobody is taxing assets now anyway. I already explained how this flows to the personal income.
Maybe it will help inspire other people to stop voting for Democrats, but I haven’t had taxable income in years. Many/most retirees don’t.
Grammarly: Government Edition (reason.com)
It’s an artificial creation built from politics and an undying bureaucracy. So naturally, it’s clean, sleek, easy to understand, and makes sense.
The bulk of the problem is the code. You want to reduce a need for auditors? Simplify the tax code. Your current set of auditors can then more easily process and disposition audits.
And it’s no surprise that it’ll hit the middle class. I’ll keep saying it: That’s where the money is, because that’s where the bulk of the taxpayers reside. The wealthy don’t earn a W2, it’s on investments. If the number of people with 100MM or above is 14,000, you could assign 1 auditor per wealthy household and you still wouldn’t generate much additional revenue, and spend your billions in doing so, and making auditors comfortable on a federal salary, for a lifetime.
It’s funny how Congress complains about tax cheats while they’re the ones who make the tax laws and change or add to them, annually.
There’s a reason why I blow right past kedavis’s posts. No hard feelings, but way too much free time and incoherency = manual ignore button.
Great post, Kelly, btw – great summarization of the issue and breakdown of the stupid.