Disband the IRS? Heresy!

Josh Nowack

October 30, 2015

What would a presidentail election cycle be without idealistic candidates preaching the values of a flat tax and to throw away the Internal Revenue Service and the Internal Revenue Code.  While I am fully aware of the complexities of the tax code and some of the potentially questionable behavior of the folks at the Service, there are a couple of things to consider before you buy into the story I am hearing.

A flat tax - in theory - levels the playing field.  The play is that removing all of the deductions and loopholes streamlines the process, establishes parity and fairness, and the Treasury is revenue neutral.  Let's just assume for a second that the statement is true.  Who still collects the tax?  Establishing a fixed rate is helpful.  It would help wage-earning taxpayers come closer to a net zero tax liability (nothing owed, nothing refunded).  But the compliance measures that the IRS enforces are still very much in play.

I find the most ironic piece of the conversation is that while Congress speaks of disbanding the IRS, Congress could take a new position.  Congress makes tax law.  Congress created the Internal Revenue Code.  Congress created the Internal Revenue Service.  If it does not appreciate how the IRS conducts its activities - legislate it as they did in 1998.  Prior to 1998, the IRS, if you can believe it, had an even worse reputation.  The Revenue and Restructuring Act of 1998 put a stop to many of the abusive practices of the day.  Rather than impeaching the Commissioner, they could just merely legislate any changes they want to occur.  But...that would require Congress working together.  Perhaps another day.

   

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