From article U.S. Tax Army to Expand. Chris Edwards, Cato. August 2022.
The Inflation Reduction Law will vastly expand the size of the Internal Revenue Service.
THE IRS CURRENTLY HAS 82,000 EMPLOYEES AND THIS LAW WILL BOOST THE NUMBER BY ROUGHLY 87,000.
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That expansion promises to damage small‐ and medium‐sized businesses and undermine civil liberties.
Politicians complain about tax cheats, but NONCOMPLIANCE IS LOW IN THE UNITED STATES COMPARED TO OTHER COUNTRIES.
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All those new IRS employees will lower GDP growth rate rather than increasing it.
Besides increased tax payments ANOTHER COST WOULD BE THE INCREASED TIME AND ENERGY NEEDED BY TAXPAYERS, LAWYERS, AND ACCOUNTANTS TO DEFEND against a more aggressive IRS.
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The Inflation Reduction law adds or EXPANDS A SLEW OF SPECIAL‐INTEREST TAX BREAKS and creates a parallel corporate tax structure based on financial statement income.
Those misguided changes would also increase tax compliance costs on the private sector.
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The Office of Management and Budget estimates individuals and businesses currently spend 6.5 billion hours a year on federal tax paperwork.
This is equivalent to 3.6 million people working full‐time on this unproductive activity.
The current TAX-COLLECTION “TAX ARMY” IS TWO AND HALF TIMES LARGER THAN OUR UNIFORMED MILITARY OF 1.4 MILLION service members, and now will double in size.
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Congress has created an even more complex tax code at war with growth and efficiency.
The government needs to collect adequate revenue, but WE COULD REDUCE THE COMPLIANCE BURDEN BY 90 PERCENT IF WE REPLACED THE INCOME TAX WITH A CONSUMPTION‐BASED FLAT TAX.
We could demobilize most of the Tax Army and put people back to work adding to the nation’s economy.
(end of article)
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“Congress has created an even more complex tax code at war with growth and efficiency.”
The current U.S. tax code is complex and getting more complex.
This makes about half of politicians, bureaucrats, lawyers, and accountants happy, keeps them in demand, employed, and busy.
Essentially the IRS has now been tasked to attack and milk the gray area.
People naturally want to pay as little taxes as legally possible.
In the gray unclear areas taxpayers decide to pay less taxes.
In gray areas the IRS wants taxpayers to pay more taxes, and often considers the non-payment criminal.
We need a simple tax code, replace the current complex code with a flat tax.
Republicans want a flat tax and Democrats don’t want.
Republicans want an ever-downsizing IRS paying out an ever-growing Citizens Shareholder Dividend to All us from the tax revenue surplus.
Democrats want an ever-upsizing IRS helping Dem make us ever-more government-dependent.
Per Figure 1 the higher the effective tax rate the more the deadweight loss and government waste and smaller the economy size.
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