Every federal employee with a badge and gun seems to think he’s a law unto himself.
We have recently received allegations that an Internal Revenue Service Agent provided a false name to an Ohio taxpayer as part of a deception to gain entry into the taxpayer’s home to confront her about delinquent tax filings. When the taxpayer rightfully objected to the agent’s tactics, the IRS agent insisted that he “can …go into anyone’s house at any time” as an IRS agent.”
We have seen for some time how off-the-rails the FBI has become, a danger to a free society. More and more evidence now shows it’s not just the FBI. Every federal employee with a badge and gun seems to think he’s a law unto himself. This week the spotlight is on the IRS, and the Congress has to step up and rein the agency in.
While Matt Taibbi was testifying before Congress on the administration’s extensive censoring of social media content, the IRS appeared at his door, ostensibly to question him about his taxes, but obviously to intimidate him for showing up government censorship.
Mr. Taibbi has told Mr. Jordan’s committee that an IRS agent showed up at his personal residence in New Jersey on March 9. That happens to be the same day Mr. Taibbi testified before the Select Subcommittee on the Weaponization of the Federal Government about what he learned about Twitter. The taxman left a note instructing Mr. Taibbi to call the IRS four days later. Mr. Taibbi was told in a call with the agent that both his 2018 and 2021 tax returns had been rejected owing to concerns over identity theft.
Mr. Taibbi has provided the committee with documentation showing his 2018 return had been electronically accepted, and he says the IRS never notified him or his accountants of a problem after he filed that 2018 return more than four-and-a-half years ago.
He says the IRS initially rejected his 2021 return, which he later refiled, and it was rejected again — even though Mr. Taibbi says his accountants refiled it with an IRS-provided pin number. Mr. Taibbi notes that in neither case was the issue “monetary,” and that the IRS owes him a “considerable” sum.
The bigger question is when did the IRS start to dispatch agents for surprise house calls? Typically, when the IRS challenges some part of a tax return, it sends a dunning letter. Or it might seek more information from the taxpayer or tax preparer. If the IRS wants to audit a return, it schedules a meeting at the agent’s office. It doesn’t drop by unannounced.
But that was just the beginning of a series of outrageous actions.
We have recently received allegations that an Internal Revenue Service Agent provided a false name to an Ohio taxpayer as part of a deception to gain entry into the taxpayer’s home to confront her about delinquent tax filings. When the taxpayer rightfully objected to the agent’s tactics, the IRS agent insisted that he “can …go into anyone’s house at any time” as an IRS agent.”
Putting the government-taxpayer conflict of interest aside, until the US income tax is radically simplified — such as with a flat tax with few or no deductions or credits, no differentiation between short- and long-term capital gains, no differentiation between tax rates on investments and earned income, and no disguised welfare handouts like the EITC — an IRS-run tax-filing platform is for the birds.
Or maybe we should say “for the birdbrains” — like the survey participants who said these things about the prospect of an IRS tax-prep platform:
In 2024, the IRS will launch a pilot program to offer its own, government-run, income tax return-preparation website, according to a report the universally-despised agency provided to Congress on Tuesday. The report follows a $15 million study of the concept.
If there were ever a proposal absolutely guaranteed to be a multifaceted disaster, this is it. Boobus Americanus, however, is apparently champing at the bit: IRS surveys find 72% of Americans are “very” or “somewhat interested in” a free government tool for calculating taxes. What are they missing?
For starters, the IRS and all of us animals on the government’s taxpayer ranch approach this endeavor with an enormous conflict of interest. We don’t want to pay a penny more than we absolutely have to, while the government is hell-bent on extracting an entirely fictional “fair share” — and more — from each of us.
The Veterans Administration (VA) purchased 11 million rounds of ammunition (equivalent to 2,800 rounds for each of their officers), along with camouflage uniforms, riot helmets and shields, specialized image enhancement devices and tactical lighting.
The Department of Health and Human Services (HHS) acquired 4 million rounds of ammunition, in addition to 1,300 guns, including five submachine guns and 189 automatic firearms for its Office of Inspector General.
According to an in-depth report on “The Militarization of the U.S. Executive Agencies,” the Social Security Administration secured 800,000 rounds of ammunition for their special agents, as well as armor and guns.
The Environmental Protection Agency (EPA) owns 600 guns. And the Smithsonian now employs 620-armed “special agents.”
This is how it begins.
We have what the founders feared most: a “standing” or permanent army on American soil.
This de facto standing army is made up of weaponized, militarized, civilian forces which look like, dress like, and act like the military; are armed with guns, ammunition and military-style equipment; are authorized to make arrests; and are trained in military tactics.
Mind you, this de facto standing army of bureaucratic, administrative, non-military, paper-pushing, non-traditional law enforcement agencies may look and act like the military, but they are not the military.
Rather, they are foot soldiers of the police state’s standing army, and they are growing in number at an alarming rate.
According to the Wall Street Journal, the number of federal agents armed with guns, ammunition and military-style equipment, authorized to make arrests, and trained in military tactics has nearly tripled over the past several decades.
While Americans have to jump through an increasing number of hoops in order to own a gun, federal agencies have been placing orders for hundreds of millions of rounds of hollow point bullets and military gear. Among the agencies being supplied with night-vision equipment, body armor, hollow-point bullets, shotguns, drones, assault rifles and LP gas cannons are the Smithsonian, U.S. Mint, Health and Human Services, IRS, FDA, Small Business Administration, Social Security Administration, National Oceanic and Atmospheric Administration, Education Department, Energy Department, Bureau of Engraving and Printing and an assortment of public universities.
The militarization of America’s police forces in recent decades has merely sped up the timeline by which the nation is transformed into an authoritarian regime.
“Major duties” of the job include “Carry a firearm and be willing to use deadly force, if necessary,” and “Be willing and able to participate in arrests, execution of search warrants, and other dangerous assignments.”
Part of the $trillion bill that is supposed to reduce inflation and help you
Only two things in life are certain – death and taxes, and the IRS can take care of both.
As the agency prepares to add 87,000 new positions over 10 years, pending the passage of the Inflation Reduction Act that will give the agency $80 billion (half of which will be earmarked to help crack down on tax evasion), an online job posting for “Criminal Investigation Special Agents” has sparked outrage over a “key requirement” that applicants be “legally allowed to carry a firearm.”
“Major duties” of the job include “Carry a firearm and be willing to use deadly force, if necessary,” and “Be willing and able to participate in arrests, execution of search warrants, and other dangerous assignments.”
Armed Federal agents busted into former President Trump’s Florida house last night, ostensibly to seek classified documents that were to be turned in to the National Archives. What’s behind this unprecedented move? Also today: Biden sends Ukraine $4 billion…to help with their budget! And finally: media races to claim Biden chalking up victories. Why?
How does printing a $billion for yet another government program and making government bigger going to reduce inflation. Right! It won’t.
How will doubling the size of the IRS be of benefit to you? Right! It won’t.
Deciding that the proletariat are all honest taxpayers, giving the IRS nothing to do, ain’t gonna happen. Just as a district attorney’s job is to get convictions and will lose his/hers/it’s job if “they” don’t put people in jail…the IRS person won’t get promoted nor get to keep their job if they don’t put the hurt on a lot of people and collect a lot of fines. The bigger the fines the better. The more big time headlines of “offenders” handcuffed and entering the big house the better. “Look at us doing our job.”
I’ll bet they will have their own SWAT teams.
That grinding sound you hear is your, family’s and your friends names being engraved on the headsman’s ax.
We were assured by one and all, at the time, that this new withholding tax was strictly limited to the wartime emergency, and would disappear at the arrival of peace. The rest, alas, is history. But the point is that no one can seriously maintain that an income tax deprived of withholding power could be collected at its present high levels.
The consumption tax, on the other hand, can only be regarded as a payment for permission-to-live. It implies that a man will not be allowed to advance or even sustain his own life unless he pays, off the top, a fee to the State for permission to do so. The consumption tax does not strike me, in its philosophical implications, as one whit more noble, or less presumptuous, than the income tax.
Orthodox neoclassical economics has long maintained that, from the point of view of the taxed themselves, an income tax is “better than” an excise tax on a particular form of consumption, since, in addition to the total revenue extracted, which is assumed to be the same in both cases, the excise tax weights the levy heavily against a particular consumer good. In addition to the total amount levied, therefore, an excise tax skews and distorts spending and resources away from the consumers’ preferred consumption patterns. Indifference curves are trotted out with a flourish to lend the scientific patina of geometry to this demonstration.
As in many other cases when economists rush to judge various courses of action as “good,” “superior,” or “optimal,” however, the ceteris paribus assumptions underlying such judgments—in this case, for example, that total revenue remains the same—do not always hold up in real life. Thus, it is certainly possible, for political or other reasons, that one particular form of tax is not likely to result in the same total revenue as another. The nature of a particular tax might lead to less or more revenue than another tax. Suppose, for example, that all present taxes are abolished and that the same total is to be raised from a new capitation, or head, tax, which requires that every inhabitant of the United States pay an equal amount to the support of federal, state, and local government. This would mean that the existing total government revenue of the United States, which we estimate at $1.38 trillion—and here exact figures are not important—would have to be divided between an approximate total of 243 million people. Which would mean that every man, woman, and child in America would be required to pay to government each and every year, $5,680. Somehow, I don’t believe that anything like this large a sum could be collectible by the authorities, no matter how many enforcement powers are granted the IRS. A clear example where the ceteris paribus assumption flagrantly breaks down.
But a more important, if less dramatic, example is nearer at hand. Before World War II, Internal Revenue collected the full amount, in one lump sum, from every taxpayer, on March 15 of each year. (A month’s extension was later granted to the long-suffering taxpayers.) During World War II, in order to permit an easier and far-smoother collection of the far-higher tax rates for financing the war effort, the federal government instituted a plan conceived by the ubiquitous Beardsley Ruml of R.H. Macy & Co., and technically implemented by a bright young economist at the Treasury Department, Milton Friedman. This plan, as all of us know only too well, coerced every employer into the unpaid labor of withholding the tax each month from the employee’s paycheck and delivering it to the Treasury. As a result, there was no longer a need for the taxpayer to cough up the total amount in a lump sum each year. We were assured by one and all, at the time, that this new withholding tax was strictly limited to the wartime emergency, and would disappear at the arrival of peace. The rest, alas, is history. But the point is that no one can seriously maintain that an income tax deprived of withholding power could be collected at its present high levels.
One reason, therefore, that an economist cannot claim that the income tax, or any other tax, is better from the point of view of the taxed person, is that total revenue collected is often a function of the type of tax imposed. And it would seem that, from the point of view of the taxed person, the less extracted from him the better. Even indifference-curve analysis would have to confirm that conclusion. If someone wishes to claim that a taxed person is disappointed at how little tax he is asked to pay, that person is always free to make up the alleged deficiency by making a voluntary gift to the bewildered but happy taxing authorities.1
A second insuperable problem with an economist’s recommending any form of tax from the alleged point of view of the taxee, is that the taxpayer may well have particular subjective evaluations of the form of tax, apart from the total amount levied. Even if the total revenue extracted from him is the same for tax A and tax B, he may have very different subjective evaluations of the two taxing processes. Let us return, for example, to our case of the income as compared to an excise tax. Income taxes are collected in the course of a coercive and even brutal examination of virtually every aspect of every taxpayer’s life by the all-seeing, all-powerful Internal Revenue Service. Each taxpayer, furthermore, is obliged by law to keep accurate records of his income and deductions, and then, painstakingly and truthfully, to fill out and submit the very forms that will tend to incriminate him into tax liability. An excise tax, say on whiskey or on movie admissions, will intrude directly on no one’s life and income, but only into the sales of the movie theater or liquor store. I venture to judge that, in evaluating the “superiority” or “inferiority” of different modes of taxation, even the most determined imbiber or moviegoer would cheerfully pay far higher prices for whiskey or movies than neoclassical economists contemplate, in order to avoid the long arm of the IRS.2
Even more important is the question of what to do with capital losses. Billionaires do not just make money by exploiting the poor, but are rich because they take on business opportunities that sometimes turn out to be losers. Similarly, stocks and other securities can decline in value. Would billionaires receive tax refund checks in those years? For example, what would happen if the stock market had a sharp selloff in December? Would billionaires receive massive tax write-offs on unrealized losses in their portfolio, leading the IRS to send tax refund checks to Jeff Bezos, Bill Gates, and Warren Buffett?
Keep in mind the original income tax law was sold on the premise it was only to tax the rich.
President Biden’s proposal to require roughly seven hundred US billionaires to pay taxes annually on unrealized capital gains has garnered wide support from Democrats as another step to make the rich pay for the uncontrolled spending by the federal government. House of Representatives speaker Nancy Pelosi says Democrats hope the plan will raise as much as $250 billion to help pay for expanding the social safety net and tackling climate change. The current tax system is already too complicated and adding another layer will not make the system any fairer or make rich people pay more in taxes. More importantly, the proposal is another scheme by the government that defies the reality and raises again questions of government overreach.
The proposal would reinvent how the government taxes investments not for everyone but just for the few hundred richest people. Under the current plan under discussion, capital gains on stocks and other traded assets would be taxed only for US taxpayers with over $1 billion in assets or $100 million in income for three consecutive years. What this amounts to is a different interpretation of the tax code for rich people. When an investor buys an asset, stock, real estate, or even a business, the asset hopefully becomes more valuable over time. Currently, the tax code requires the investor to pay a capital gains tax only when the investor sells the asset. However, under the new proposal the capital gain does not have to be realized in order to be taxed. Lawmakers are aiming to effectively increase the taxes rich people pay by rewriting the rules. Often investors hold on to their investments over many years while their assets increase in value, thus avoiding paying a capital gains tax until many years down the road, except for paying income taxes on the dividends and other cash distributions from the investment. In theory, a person could accrue capital gains indefinitely while never owing any taxes. In the proposal under consideration, the simple increase in the value in a portfolio will be taxed.
While the idea to get billionaires to pay more of their fair share in taxes seems to get lots of support from the public, lawmakers miss a key point in their excitement about having the rich pay more in taxes, the reality of the current tax system. The rhetoric of the super wealthy getting richer during the pandemic without having to pay taxes on the increases in wealth while regular taxpayers have to pay taxes on their income every year sounds very good to the tax-the-rich crowd. Surely, George Soros and other billionaires will comply and hand over their money without resisting. Actually George Soros applauds and supports this proposal while at the same time, according to the ProPublica report from June, Soros has not paid federal income tax for three years in a row. Similarly, Jeff Bezos and Elon Musk have not paid federal income taxes in some years.
The proposal defies reality as not all assets are as easy to value as publicly traded stocks. For example, a rare but valuable item like a precious painting or music album like the Wu-Tang Clan’s “Once Upon a Time in Shaolin” would be even more difficult to tax which raises the question on how do you assess the value of less liquid assets. Billionaires are the type of investor with the means to purchase less liquid investments like rare pieces of art. More importantly, as the wealth of people increases, they have a bigger incentive to hire high priced tax accountants and tax lawyers to fight the internal revenue service every step of the way. Ultimately, the government would have to be prepared to fight long and complicated legal battles with billionaires to establish what constitutes a capital gain.
Even more important is the question of what to do with capital losses. Billionaires do not just make money by exploiting the poor, but are rich because they take on business opportunities that sometimes turn out to be losers. Similarly, stocks and other securities can decline in value. Would billionaires receive tax refund checks in those years? For example, what would happen if the stock market had a sharp selloff in December? Would billionaires receive massive tax write-offs on unrealized losses in their portfolio, leading the IRS to send tax refund checks to Jeff Bezos, Bill Gates, and Warren Buffett? Ultimately, this will lead to the question when of valuations for unrealized gain taxes would be determined. Lawmakers forget that just because something increases in value does not mean the owner has the cash to pay taxes. The current rationale of taxing capital gains once the asset is sold avoids two fundamental problems with the proposal. First, the market alone should determine the fair market value of an asset, not the IRS according to some complicated formula defying reality. Secondly, even billionaires may not have the cash to pay taxes on unrealized gains. A tax on realized capital gains avoids those two problems: once an asset is sold, the true value is determined and the seller will have money from the sale to pay the tax bill.
While the current proposal will be supported by a large swath of the public, as the rhetoric is simply too appealing, taxpayers should be alarmed by this proposal. Once lawmakers have the power to tax unrealized gains, it will be just a matter of time before lawmakers running out of tax revenue will take aim at one of the largest sources of wealth hiding from the IRS, unrealized gains in real estate and mutual funds that the public holds. For example, CNBC reported that homeowners with mortgages saw their equity jump by 20 percent from a year earlier in the first quarter, which represents a collective cash gain of close to $2 trillion, or an average gain of $33,400 per borrower. Would it not be nice for the government to tax the increase in value in your house every year?
This proposal is dangerous and should be declared unconstitutional. As Ludwig von Mises explained, “‘Taxing the Rich’ Doesn’t Make Us Better Off,” and new taxes are always a danger to every productive citizen. Author:
MCViewPoint 
