Category Archives: Taxation

Suing the IRS – And Winning

Proving that sometimes good guys can win, our friends at the Institute for Justice are celebrating a big win against the IRS. In a move supported by large, established tax preparation firms, the IRS tried to require all tax preparers to get licenses. The licenses, along with other requirements such as annual continuing education courses, would raise costs for smaller firms and put many individual preparers out of business entirely; one sees why large firms would welcome the extra burden. They would face less competition. IJ sued to put a stop to his perfidy and preserve a more open competitive process.

A few years ago, before IJ filed its lawsuit, now-CEI Adjunct Scholar Caleb Brown and I co-authored an op-ed warning why mandatory tax preparer licenses are a bad idea:

Since the IRS has the power to revoke registrations, tax preparers will have to be careful not to advocate too aggressively for their clients. Besides this chilling effect, mandatory registration reduces consumer choice.

There are at least 600,000 unregistered preparers. Many of them are retirees. Others have jobs, but prepare taxes on the side to help make ends meet. Still others are volunteers. They give their services for free to people who can’t afford a tax preparer. How many will give up, rather than jump through the proposed regulatory hoops?

The IRS estimates the total cost of the new regulations at $48.5 million, plus 1.71 million hours of paperwork and record-keeping burdens. That’s equivalent to 855 full-time jobs — and not the kind that will spark an economic recovery.

Read the whole piece here. Read more about IJ’s victory here, and see a short video they produced about the case here.

CEI Podcast for December 5, 2013: Ending Corporate Welfare

corporate welfare
Have a listen here.

Stephen Slivinski, a senior economist at the Goldwater Institute, discusses solutions to the seemingly intractable problem of corporate welfare.

CEI Podcast for November 7, 2013: A Prohibitive Excise Tax

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Have a listen here.

A new CEI study finds that the most expensive ingredient in beer isn’t grain, hops, or equipment: it’s taxes. Study co-author and Fellow in Consumer Policy Studies Michelle Minton has more on the problem, and how and how two bills currently before Congress might solve it.

CEI Podcast for July 2, 2013: The True Story of European Austerity

europe satellite night
Have a listen here.

Warren Brookes Fellow Matthew Melchiorre discusses his new study, which finds that, despite the prevailing narrative of severe austerity across Europe, only 4 countries out of 27 have actually cut taxes and spending.

Now it’s Getting Serious

From Politico: “The IRS softball team in Washington canceled a game scheduled for Friday against a team from Texas Sen. John Cornyn’s office and wasn’t able to reschedule.”

The plot thickens.

New Cato Video on the IRS Scandal

Well worth five minutes of your time. Features the ACLU’s Michael MacLeod-Ball, David Keating from the Center for Competitive Politics, and Cato’s John Samples and Gene Healy (Gene’s column on the same subject is also worth reading). Click here if the video embedded below doesn’t work.

IRS Apologizes for Targeting Conservative Groups

richard nixon pointing finger
The only surprising part of this story is that the IRS apologized. Whichever party is in power, its critics can expect more IRS attention than usual. Since  the executive branch is currently run by a Democrat, tax-exempt groups with phrases like “tea party” and “patriot” in their names were targeted. But the tables turn when a Republican is president. Charlotte Twight gives a historical example on p. 271 of her book Dependent on D.C.:

Republican President Richard Nixon in 1971 expressed his intention to select as IRS commissioner “a ruthless son of a bitch,” who “will do what he’s told,” will make sure that “every income tax return I want to see I see,” and “will go after our enemies and not go after our friends.”

President Bill Clinton, a Democrat, is also alleged to have abused his position to punish political enemies.

Conservatives are right to be outraged by today’s news. But they shouldn’t be surprised by it. Nor should they direct their ire at President Obama or the IRS staffers who initiated the unnecessary investigations. They should be outraged that politics has become such a high-stakes game in the first place that officeholders view this type of behavior as a legitimate political tactic. The problem is systemic, not partisan.