Me and the Deficit--Raise Taxes!

 NYTimes has an article on how social issues and the deficit play with Republican voters. The point is the Tea Party was very concerned about spending; now voters are less concerned.  (I'd quibble a bit with Cohn's analysis: I think a lot of the Tea Party emotion was over the idea of socialism, specifically pushed by a black president, not so much a concern for fiscal conservatism.)

Anyhow, I find myself not in the mainstream of Democrats--I'm much more concerned about deficits and the rising cost of interest on the debt than the average elephant, and much more in favor of raising taxes as a way of handling it than most anyone.  I wholeheartedly support boosting the IRS budget to collect taxes, but I'd also raise taxes on those above $100K. 

On IRS and Taxes

 Matt Yglesias has a discussion here.  I like it.

A note on a related issue: as I understand the Inflation Reduction Act it raises much of its revenue by taking really big corporations on their profits as shown by their public accounting, what they show to their stockholders.  I've always resisted the idea that people could have two different sets of accounts, one for stockholders, one for the tax collector. I understand--whenever we mess with the tax code to allow special deductions in order to push something we like (such as investing in low-income areas of a city, etc), we deviate from my ideal.

IRS Doing Your Tax Return?

 I like this part of the IRA, but I'm dubious that H&RBlock and Intuit will ever be beaten, at least not without a drastic change in American politics.

87,000 IRS Agents

I've reservations about the Democratic spin on the "87,000 agents" in IRA, as described here, specifically the idea that the new hires are, in part, replacing present employees who will retire over the next 10 years. I haven't seen the IRS report which is the basis for the 87,000 claim, but normally I'd think the baseline for an agency for the next 10 years would include funding for employees at the current level. 

If the IRS has currently 100,000 employes (this Post piece says 80,000) and half will retire over 10 years, that would mean to me that IRS employment would increase by 37,000 because of IRA. 

I've reservations on the CBC's estimates of their added collections as well.  I bet the first thing the Republicans do when they gain the House, Senate, or Presidency is to use that leverage to negotiate a cut in IRS employment.  (Of course, CBC can't be that cynical.)

The Long Slow Progress of Direct Deposit

Been 25 years or more since FSA started pushing direct deposit (it was just starting back in the mid 90's before I retired)  According to the notice about 82 percent are now direct deposit/ Since I retired they've come up with a waiver provision, presumably for hardship, but only 5 percent of the paper check people have a current waiver on file.  

It seems that it's still the producer's option--she "invokes" the waiver for one of the three permissible reasons, there's no burden on the FSA to determine the validity. I'm curious whether compliance with the requirement is greater among the other agencies which issue payments to the public. Somehow I expect farmers to be more resistant to the change.

Might have helped to sell the idea to note that having direct deposit makes it easier and more foolproof to get benefits issued by IRS, as has happened now several times this century.

Of course the answer is for everyone to get a basic bank account with fees paid by the government, but that would be against the American individualistic ethic, so a nonstarter.

Our Modern Government at Work

 Just saw this FSA notice.  Its title: Updated Schedule for FAXing CCC-941’s to IRS.

The Farm Service Agency has to check with the IRS to see that program participants have an adjusted gross income (AGI) of less than set amounts.  Because of restrictions on releasing IRS data, FSA has to provide an authorization signed by the participant--the CCC-941 form.   FSA and IRS use fax to transmit and receive the form. 

I don't know enough to comment further, but I will.  It seems to me if IRS can accept 1040s electronically, they ought to be able to accept 941's electronically. Or it seems as if lawyers/Congress could work out a way to bypass the requirement entirely.  

Not Enough for the IRS

 That's my reaction to this request from President Biden which was included in his 2022 budget outline:

 Supports a Fair and Equitable Tax System. To ensure that all Americans are treated fairly by the Nation’s tax system, including that the wealthy and corporations comply with existing laws, the discretionary request provides $13.2 billion for the Internal Revenue Service (IRS), a $1.2 billion or 10.4-percent increase above the 2021 enacted level. With this funding, the IRS would: increase oversight of high-income and corporate tax returns to ensure compliance; provide new and improved online tools for taxpayers to communicate with the IRS easily and quickly; and improve telephone and in-person taxpayer customer service, including outreach and assistance to underserved communities. In addition to increases for base IRS enforcement funding, the 2022 discretionary request provides an additional increase of $417 million in funding for tax enforcement as part of a multiyear tax initiative that would increase tax compliance and increase revenues. Altogether, the 2022 discretionary request would increase resources for tax enforcement by $0.9 billion

I'd prefer a multi-year plan for 50 percent for more. 

What Gets a Member of Congress Reelected?

 It's certainly not ensuring that the IRS has enough funding and authority to do a good job of collecting taxes.  

See this report.  It's issued by  the House Budget Committee and these are its members.

[Updated: Annie Lowrey at the Atlantic has a relevant article.]

Fund the IRS

That's my first wish for the next Democratic president.  Why?  See this distressing report by Pro Publica.

The IRS Budget

Trump proposes to cut IRS employees by over 1,000.

Trump proposes an increase in IRS budget.

I saw both takes online, which was very confusing.

Here's a bit of explanation:

For the Internal Revenue Service, the plan proposes $12 billion, which is about a 4% increase from fiscal 2020, yet would decrease staff levels by 1,183 full-time employees. However, with $400 million in “cap adjustments,” there would be a net increase of 1,700 positions from fiscal 2020 levels. “Cap adjustments” are spending that is allowed above the limits in the 2019 budget agreement because of its potential to generate revenue.

There's much more at the link.

As a Country, We're Idiots

In 1953 I was 12 and there were roughly 150 million in the country.  Now I'm 78 and there are something over 300 million in the country.  The IRS today has roughly the same number of auditors as in 1953. See this ProPublica piece.  In real dollars our GDP has increased six times since 1953.

Taxes--the Rise of Intermediaries

There have long been tax-preparation services.  H&R Block was an early one.  One of the brothers who founded the firm, Henry Bloch, died recently.  His obituary in the Post says this:

business boomed in the mid-1950s as the Internal Revenue Service began discontinuing its free tax-preparation services, and the Bloch brothers began advertising their discount tax service in a local paper.

Who knew the IRS once did returns for free?  Now of course H&R Block is one of the firms lobbying Congress to be sure that IRS doesn't resume the service,.

Good for IRS

In the midst of a not very good week, I was pleased by an IRS website.

It turns out that you can get your old tax returns from IRS, or at least the data from them, in case your house burns down or computer file systems crap out on you.  To do so you go to an IRS website which gives you options: online, phone, or mail.  I of course chose on-line and was impressed by the process.  They obviously require data to confirm you're who you say you are, but the process of getting it is easy and well-thought out.  (The only glitch was they weren't able to recognize a smartphone using Google FI--I assume there's a semi-valid reason for that.)  You end up creating an on-line account, which judging by the username which was available isn't all that well patronized.

If I had any ambition left after this week I'd suggest to Sec. Mnuchin that he have Treasury Direct scrap their log-in system, which hasn't changed for years, and have them use the IRS system.

I might write my Congressional delegation telling them I deeply oppose the legislation which would ban the IRS from creating a free online tax system, as reported by ProPublica.  I'm almost tempted to support Sen. Warren for president, since she proposes to beef up IRS. 

Taxation Policy and Staffing

I commented on a Noah Smith tweet a couple days ago, a thread discussing tax policy. AOC (Alexandria Ocasio-Cortez)  has gotten notoriety by proposing a tax bracket of $10 million and above with a rate of 70 percent.

I've not followed the debate enough to know what, if anything, she or others have proposed for the current brackets and rates.  Personally I'd add more brackets (because "simplicity" isn't important when you use software packages to file your taxes, with increasing rates.  And I'd have no problem with the 70 percent proposal.

What I do have problems with is IRS staffing.  IMHO the first priority for Democrats is to try to get bipartisan agreement on improving IRS staffing and administration, by which I mean something like doubling the auditors of richer people.  One of my early blog posts was to complain about a then-celebrity evading taxes. As an ex-bureaucrat, I want people to follow the rules, damn it.

My Inner Populist Is Aroused

At least briefly.

What aggravates me is the conjunction of two news stories:

1. the NYTimes report on the Trump family's shenanigans to avoid taxes and evade rules.
2. a recent report noting the decline in IRS tax audits since 2010 because Republicans keep cutting the budget.  The Times report uses the Manafort and Cohen pleas as the hook.  When you Google "decline in IRS tax audits" you get a lot of reports from the spring, around tax time.

To my mind these are just examples of a much bigger phenomenon, a phenomenon which can be summed up in the old saying: "them as has gets".   Turns out Jimmy Lunceford and his band recorded the song.  As did the Andrews Sisters, It's written by Gene de Paul and Don Raye.

Good Thinking by Congressional Republicans?

Govexec reports on the resignation of a Treasury tax expert, who apparently struggled with the job of writing regs to implement Trump's tax cut law.

But some parts of the law as drafted “were not well thought out,” Trier, a Treasury veteran from the 1980s and later a New York lawyer who consulted to congressional committees, was quoted as saying. Trier revealed that people looking at pieces of the new law sometimes asked him whether lawmakers could have reasonably meant to write it the way they did. “We’re going to have trouble with about half the legislation if we apply that standard,” he said, according to the Journal. 

Implementing a big bill is always difficult, but it sounds as if the GOP gave the bureaucrats a more difficult job than usual, a job likely to be complicated if Congress can't agree on passing a technical corrections bill to fix some of the problems. 

I wonder whether Treasury will be able to live with the 2 for 1 regulation mandate of the administration when implementing this?

More on the IRS and Policing Nonprofit Groups

A long piece on the IRS and enforcing the legal provision that to be qualified for to receive contributions which are deductible the group must be mostly a social good group, not a  political action group.  It includes a chart, which I've copied (and thereby changed the formating) below:

Approved

Denied

2005

63,402

765

2006

66,262

1,283

2007

68,278

1,607

2008

65,761

1,221

2009

56,943

472

2010

48,934

500

2011

49,677

205

2012

45,029

123

2013

37,946

79

2014

94,365

67

2015

86,915

57

2016

79,545

37

Note the Obama administration rejected fewer groups than did the Bush administration.