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Tag Archives: the hill
Last week, I made the case against return-free taxes in an op-ed in The Hill. Under such a system, the IRS would prepare your taxes for you.
Rep. Jim Cooper, a Democrat from Tennessee, is the sponsor of a bill that would institute a return-free program. He responded to my criticisms in a letter to the editor that ran yesterday. He explains his position, and for some reason also throws an ad hominem my way. I’ve met Rep. Cooper and have worked with him and his staff on several occasions. We disagree on this issue, but overall I have a positive opinion of him. He is more philosophical and better-read than the average Congressman, but he doesn’t seem to quite understand my position. Rep. Cooper argues:
Arguments that a Simple Return is a regressive tax on the poor assume the government will take advantage of those who file basic returns by consistently erring in its own interest and hoping filers don’t notice. There are no facts to support this claim.
Actually, there are. I share one of them in my article:
That is exactly the case in the U.K., which uses a return-free system. The government has a 15 percent error rate, overwhelmingly in the government’s favor. In 2009, British taxpayers were overcharged the equivalent of $370 million. Those lucky enough to underpay still didn’t get a good deal. They are held liable for the government’s mistakes. Today, 1.4 million people are on the hook for an average of $2,200 each — a month’s pay for many people.
Here is Rep. Cooper’s closing flourish:
A powerful lobbying interest made up of accounting, advisory, and software firms wants to defeat this bill. Those companies are cashing in on taxpayers’ $2 billion annual misery. No wonder they don’t want a simpler system.
I can’t speak for powerful lobbying interests since I’m neither powerful nor a lobbyist. Nor do I have a personal stake in the bill. But even if I did, that would have nothing to do with whether the arguments I make are right or wrong. That depends on their actual merits. That Rep. Cooper dodges those merits means that he must believe his own arguments are weak. Why else the need to go personal?
There is also the fact that I do, in fact, favor a simpler tax system. Here’s the closing line from my article:
There are much better ways to reduce the 26-hour burden Americans face every year. The obvious solution is to simplify the 70,000-page tax code.
It’s possible to have even a progressive, multi-tiered income tax that takes up only a few pages. Real tax reform would eliminate almost all deductions, tax breaks, and other special favors. They encourage endless rent-seeking, and waste millions of man-hours that could be spent doing something productive instead.
A return-free system would do precisely nothing to simplify the tax code. It would merely keep that complexity out of sight, and out of mind. That makes reform harder, not easier. Rep. Cooper is proposing to treat a symptom. I encourage him to go after the root problem instead.
Campaign finance regulations are an incumbent’s best friend. The incumbent already has name recognition, and a deep network of fundraising contacts. Heck, Congress’ franking privilege allows incumbents to send out de facto campaign messages for free. Challengers have none of those advantages.
It takes a lot of money to buy enough ads to get a challenger’s name recognition anywhere near the incumbent’s. Campaign finance regulations make it harder to raise that money, and harder to put up a fight against established officeholders. No wonder so many incumbents from both parties favor strict campaign finance regulations! It’s good for their job security.
The budget for the federal government is currently over $2.5 trillion. Just think about that for a second.
Now it gets worse.
Not too long ago, I attended a meeting on the Hill with several Republicans. They were very proud that they had proposed over $40 billion in budget cuts for FY 2006.
Then someone else at the meeting reminded them of two things. First, increases elsewhere more than negated their proposed cuts. Government was still going to grow. Second, $40 billion isn’t even a rounding error when you’re talking $2.5 trillion.
The Republicans were very offended when this was pointed out.
Then within two weeks, almost all of the proposed spending cuts were eliminated.
Now with the current round of hurricane relief spending, history is repeating itself almost exactly with the RSC’s “Operation Offset.”
So it goes.