by | ARTICLES, BLOG, IRS
You have the Editorial Board at the WSJ taking the IRS to task. The following article outlines numerous problems listed in multiple agency audits, and yet Congress is still eager to give the IRS an extra $80 billion. I’ve reprinted it below.
The new Inflation Reduction Act has many damaging provisions, but for sheer government gall the $80 billion reward to the Internal Revenue Service stands out. The money will go to hire 87,000 new employees, doubling its current payroll. This is also doubling down on incompetence, as anyone can see in the official reports of the Treasury Inspector General for Tax Administration (Tigta).
We’ve read those reports for the last several years so you don’t have to, and the experience is a government version of finding yourself in a blighted neighborhood for the first time. You can’t believe it’s that bad. The trouble goes beyond the oft-cited failures like answering only 10% of taxpayer calls, or a backlog of 17 million unprocessed tax returns. The audits reveal an agency that can’t do its basic job well but will terrorize taxpayers whether deserving or not.
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Consider the agency’s chronic mishandling of tax credits. By the IRS’s own admission, some $19 billion—or 28%—of earned-income tax credit payments in fiscal 2021 were “improper.” The amount hasn’t improved despite years of IRS promises to do better.
• A January Tigta audit found that an estimated 67,000 claims—totaling $15.6 billion—for the low-income housing tax credit from 2015 to 2019 “lacked or did not match supporting documentation due to potential reporting errors or noncompliance.”
• A May audit found that 26% ($1.9 billion) of its American opportunity tax credits for education expenses were improper in fiscal 2021, and 27% ($541 million) of its net premium tax credits (ObamaCare) were improper in fiscal 2019 (the most recent year it estimated). The same May audit said the IRS acknowledged that 13% ($5.2 billion) of its enhanced child tax credit payments were improper.
• How did it handle $1,200 stimulus checks, the sick and paid family leave credit, or the employee retention tax credit? Unknown, since the agency didn’t estimate failure rates—for which Tigta rapped its knuckles.
• A September 2021 audit found the IRS in 2020 issued 89,338 notices to taxpayers insisting that “balances were owed even though the taxes were not actually due.” Why? Because the feds had extended the filing deadline amid Covid but the IRS apparently didn’t notice.
• A February audit found the IRS department responsible for ensuring retirement-plan tax compliance suffered a 23% decline in the quality of its examinations from fiscal 2018 to fiscal 2020. In the past seven months, Tigta has issued searing reports on IRS mismanagement of everything from its partial-payment program for delinquent taxpayers, to its auditing of partnerships, to its struggle to handle internal employee misconduct.
• This ineptitude extends to programs Democrats insist will now raise revenue—those targeting higher earners. In 2010 Congress passed the Foreign Account Tax Compliance Act, which was supposed to identify wealthy Americans using undisclosed foreign accounts. Congress’s Joint Committee on Taxation said this would raise some $9 billion in revenue by fiscal 2020. Yet an April Tigta audit noted that while the IRS has spent $574 million to implement the law, the agency has drummed up only $14 million in compliance revenue.
• A July 2021 audit related the failure of the IRS small-business/self-employed division’s strategy, which began in 2010 to examine more returns from “high-income individual taxpayers.” The IRS defines high earners as those with income greater than $200,000. Yet from fiscal 2015 to the end of fiscal 2017 (when the strategy was shut down), 73% of returns targeted by the strategy fell below $200,000.
Democrats say a turbocharged IRS won’t pursue taxpayers earning less than $400,000, but don’t believe it. Middle-income Americans are easier marks, as they are more likely to write a check than engage in years of costly litigation.
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The Tigta site shows the IRS is good at one thing: punishing those who resist its demands. A March audit chastised the IRS for using lien foreclosure suits to confiscate “principal residences” from delinquent taxpayers, a process that does “not provide [taxpayers] the same legal protections as seizures.”
A March 2017 report related the agency’s crackdown on businesses flagged as potentially evading a law that requires financial institutions to report currency transactions exceeding $10,000. The IRS took to seizing property from its targets before even conducting interviews. Tigta reports that even when interviews were conducted, the IRS failed to advise the accused of their rights or the purpose of the interview, and failed to consider “realistic defenses or explanations.” Tigta found that “most” of those targeted (owners of gas stations, jewelry stores, scrap-metal dealers, restaurants) had not committed crimes, though many were never able to regain their property.
This is the IRS that Democrats are now arming with more money and manpower to unleash on Americans. The $80 billion is a demonstration of their priorities, and further proof of the rule that failure in government is invariably rewarded with a bigger budget.
by | BIDEN, BLOG, ECONOMY, HYPOCRISY, TAXES
The Inflation Reduction Act of 2022 is a scam, and the very name insults the American populace. Our President, Joe Biden, was quoted saying, “Yesterday, I spoke with both Senator Schumer and Manchin and offered my support for a historic agreement to fight inflation and lower costs for American families. It’s called the Inflation Reduction Act of 2022.” Inflation is quickly approaching 10% the last time we’ve seen it this high was over 40 years ago, in the 1980s. The bitter irony is that the Biden administration knows what causes inflation, yet virtually nothing in the new law will make matters better.
The claim is that the bill is “fighting inflation” because it reduces the deficit by $300 billion over ten years, which is 1% of GDP. But the deficit reduction doesn’t start until the fourth year, so for the next three years it makes inflation worse!
And let’s look at the numbers. How could a $300 billion reduction in the deficit over ten years be a massive step forward in fighting inflation when the law passed last year increased the deficit by an estimated $1.7 trillion in one year? Utter nonsense.
The Inflation Reduction Act of 2022 is a spending bill, first and foremost, and a repackaging of the American Rescue Plan of 2021. Unfortunately, despite their best efforts, they could not disguise the stench; trash is funny like that. The main push in the bill is to encourage investment in renewable energies and allow Medicare to negotiate Rx drug prices. God forbid we cut the deficit by meaningful reductions in spending.
Regardless of your feelings on energy consumption, it is undisputed that green energy is more expensive than traditional forms, evidenced by the fact that we pump billions every year into the industry via subsidies to keep it afloat. We know that the inflation we are experiencing is due to a surplus of money in the economy and demand exceeding supply. Yet, this administration’s solution is to put further pressure on supply via taxes and thereby disincentivizing production. Furthermore, increasing corporate tax rates will put additional pressure on supply; none of Biden’s plans make any sense.
The Democrats claim that the bill will reduce the deficit by roughly $300 billion spread over ten years is meaningless. With government spending approaching $7 trillion in 2021 (with a $3 trillion deficit), and the two consecutive quarters of negative GDP growth (recession) we’re experiencing, the light at the end of the tunnel just got a lot further away.
by | BIDEN, BLOG, ECONOMY, FREEDOM
Let’s concede the claim that man-made climate change is real and poses significant harm to humanity as a whole. That statement is then used as a rallying cry to inflict irrevocable damage on today’s generation, both the rich and the poor. So often in American society, we see a problem, and the immediate reaction of our politicians is to invoke a top-down approach to “fix it,” which often does more harm than good. Frederich Hayek said it best, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
The Biden Administration and the Democratic party have started a never-ending push to wage war on Climate Change and reduce our carbon footprint. Well, how’s it going you may ask? Per one model, eliminating all U.S. emissions would reduce global temperature by less than 0.2 degrees Celsius by 2100. Our current administration would offer you up, today’s citizens, in hopes of saving some future person that has yet to exist in their futile war. They throw us in the fire, yet the Earth grows hotter still; their reprehensible actions are all for naught.
The EPA says, “the largest source of greenhouse gas emissions from human activities in the United States is burning fossil fuels for electricity, heat, and transportation.” The Biden Administration then takes that statement and runs with it. Even with theoretical efficiency in their crusade, the costs of their policies would be staggering. The economy would, in aggregate, lose $7.7 trillion of gross domestic product (GDP) through 2040, which is $87,000 per family of four. What then should we do, you may ask? Well, the best shot we have going forward is a market-based approach. The government should reduce red tape surrounding proven superior energy sources, like fusion energy, reduce unrealistic mandates, and allow people to innovate as they do best. In short, this administration needs to cease and desist their self-proclaimed climate war; the cost paid in American lives is too steep.
by | BLOG, ECONOMY
It appears that many people now believe that a place like China, which dictates the economy from the top down, provides better economic results than the free market in the United States, and that the Chinese are somehow doing better than us. This is absolutely not true. The top-down decisions arising a non-free market economy show China making egregious mistakes. But the reason why China — given the detriment of a non-free market economy — appears that they are doing better to some people is really quite basic. It’s not smart centralized planning or lower wages and costs in China but rather, the actual ability of a business to conduct day-to-day activities unburdened by the government at all levels. China does not hamper their every move or require horrific environmental or other useless regulatory burdens.
We are part of a global economy now, but foreign countries such as China have always been more user-friendly than our own. We overburden our businesses with convoluted tax codes, unnecessary paperwork, and regulatory holdups. The host of local, state, and federal regulations becomes a cost of every product we make and every service we sell.
I have a close relative who is an owner and executive of a substantial manufacturing operation in China precisely because of its business-friendly environment. I’ve heard from him many times that he went into business, not to comply with government diktats, but to make things. Here, we face climate regulations, environmental restrictions, unnecessary specialty licenses, partisan individuals not allowing projects, and so much more that the Chinese do not have to deal with. Simply put, expensive and complex regulations have rendered the United States less globally competitive. Without major changes, we are destined to decline while China rises.
by | BLOG
In the economic nightmare we are in, it was refreshing to open up the pages of the Wall Street Journal and find an Op-Ed that championed free trade over tariffs as a means to fight inflation. What’s more, the piece was written by two Democrat members of Congress: Jake Auchincloss and Stephanie Murphy. Tariffs clearly and consistently hurt the consumer and taxpayer by driving costs up to everybody in amounts far in excess than any benefits given to beneficiary companies. In fact, tariffs are cronyism of the highest order.
You can read the article, which is reproduced below:
Free Trade Can Fight Inflation
And other reasons Biden should reduce or lift Trump-era tariffs
“To fight inflation, President Biden should repeal or reduce Trump-era tariffs. Economists across the political spectrum agree that trade lowers prices and expands choice for consumers, and trade deals open markets for American businesses. Smart trading pacts forge deeper ties with allies, and they serve as a counterweight to Beijing’s aggressive efforts to buy global influence.
The official Congressional scorekeeper finds the bill would raise taxes on nearly everyone. Will Arizona Sen. Kyrsten Sinema go along? Plus, moderate House Democrats might vote for a bill that doesn’t have the state and local tax deductions they were insisting on.
That’s why the Trump tariffs should go. And instead of being defensive about the decision, the Biden administration—and both parties in Congress—should pivot toward an unapologetically pro-trade agenda.
Despite the known benefits, both parties have grown more hostile to trade in recent years. For too many U.S. politicians, trade has become anathema. And as a result, the U.S. has missed opportunities to move forward through economic statecraft. In some cases, we’ve instead taken steps backward.
The Trump administration’s decision to pull out of the 12-country Trans-Pacific Partnership was a gift from Washington to Beijing in the contest for influence in the Indo-Pacific region. It was met with disappointing silence from both parties in Congress.
Section 232 tariffs on aluminum and steel imports, imposed on friend and foe alike, raise production costs and consumer prices. Even worse, Section 301 tariffs levied on an array of Chinese products have done little to change China’s abusive trade practices. These tariffs contribute to inflation and impede our commitment to clean-energy independence. They also place American companies at a competitive disadvantage, because China (predictably) slapped retaliatory tariffs on our exports. National Security Council spokesman John Kirby recently acknowledged that tariffs have “increased costs of American families and small businesses” without “addressing some of China’s harmful trade practices.”
The failure of U.S. policy makers to reauthorize the Generalized System of Preferences program is another error. The GSP waives tariffs on certain goods from about 120 lower-income countries. It encourages U.S. firms to get products from a diverse set of emerging partners, promotes international development through trade (not only aid), and lowers prices for U.S. consumers. It’s a tool of soft power that we have removed from our toolbox.
Congress must step up. Tariffs are taxes, and the Constitution confers the taxing power on Congress. We must not yield this prerogative to the executive, regardless of who occupies the White House.
This administration has pledged that its foreign policy, including trade, will benefit the middle class. That’s a laudable goal, but actions need to match the rhetoric. Congress should insist that U.S. trade policy actually address the most vexing challenge that working families face: the decline of their purchasing power.
Trade liberalization policies, such as removing 301 and 232 tariffs, could save the average American household almost $800 annually—far more than the president’s proposed gas-tax holiday. It’s no cure-all, but for struggling American families and businesses, every dollar in price relief counts.
Congress should also extend and modernize GSP.
In addition, Congress should update the Trade Adjustment Assistance law, which supports American workers hurt by foreign trade. Workers should be compensated if they are harmed by restrictive measures such as tariffs, not only by liberalization policies such as trade agreements. This would be a more balanced approach, rooted in the recognition that protectionism comes at a cost.
Finally, the president and Congress must understand that expanding trade relations, including by reconsideration of our withdrawal from the Trans-Pacific Partnership, is crucial to outcompeting China. American policy makers can’t claim to be tough on China if they aren’t willing to promote a muscular trade policy.
Opponents will contend that trade liberalization drives a race to the regulatory bottom. But we know how to prevent that. The trading system should be rules-based. Trade deals should impel U.S. companies to innovate, not force them to compete against foreign firms unrestrained by labor, environmental and intellectual-property standards. U.S. officials have these templates at hand, but they can’t enact them if elected leaders don’t start negotiations.
Detractors sometimes blame trade liberalization for hollowing out communities. The evidence is clear, however. Trade creates jobs and lowers costs. Automation has been far more disruptive to local economies than trade has. Where dislocation does occur, adjustment assistance should help smooth it out.
American families and businesses are grappling with high prices. Lowering tariffs can provide immediate relief. The president and Congress should act now.”
Mr. Auchincloss and Ms. Murphy, both Democrats, represent, respectively, Massachusetts’ Fourth and Florida’s Seventh congressional districts.
by | BLOG, ECONOMY, POLITICS, POTUS
The Committee to Unleash Prosperity recently reminded folks that the prospect of inflation was raised and rejected by a plethora of Nobel prize winning economists as early as last September. As Congress was debating Biden’s $5 Trillion Build Back Better plan, 17 economists signed an open letter urging passage of this atrocious spending bill (coming on top of an extra $3 trillion in spending, mind you).
The letter opened and closed with these two absurd statements: “The American economy appears set for a robust recovery in part due to active government interventions over the past year and a half” and “[the agenda] will ease longer-term inflationary pressures.” At the time of their writing, inflation was at (only) 6% and now we are past 8%. How much more egregious would things be had Congress actually passed this spending behemoth? And even more critically, how is it that 17 prize-winning economists managed to get their economic forecast so wrong?
Readers would be wise to steer clear of the following economists:
- George A. Akerlof, Professor, Georgetown University
- Sir Angus Deaton, Professor, Princeton University
- Peter Diamond, Professor, Massachusetts Institute of Technology
- Robert Engle, Professor Emeritus and Co-Director of the Volatility and Risk Institute, New York University
- Oliver Hart, Professor, Harvard University
- Daniel Kahneman, Professor, Princeton University
- Eric S. Maskin, Professor, Harvard University
- Daniel McFadden, Professor, University of California, Berkley
- Paul Milgrom, Professor, Stanford University
- Roger Myerson, Professor, University of Chicago
- Edmund S. Phelps, Professor and Director of the Center on Capitalism and Society, Columbia University
- Paul Romer, Professor, New York University
- William Sharpe, Professor Emeritus, Stanford University
- Robert Shiller, Professor, Yale University
- Christopher Sims, Professor, Princeton University
- Robert Solow, Professor Emeritus, Massachusetts Institute of Technology
- Joseph Stiglitz, Professor, Columbia University
It must also be noted that Paul Krugman, another Nobel winner, did not sign the letter but did actively discuss it in his NYTimes column.
These economists had exactly one job: to tell the truth about spending and inflationary policies, namely that increased government spending as a means of intervention will typically result in higher inflation. But they didn’t do that. They would rather tell Congress what it wants to hear, instead of what it needs to hear, and they ought to be ashamed.
by | ARTICLES, BLOG, EDUCATION, FREEDOM, HYPOCRISY
The continued maltreatment of Amy Wax at UPenn is egregious and unacceptable. Ted Ruger, Dean of the UPenn Carey Law School, has consistently mismanaged the entire affair; his recent change in policy effectively abandoned his prior stance that upheld the right for faculty to express their views buckling under pressure from students who clearly do not understand the concept of freedom of expression. UPenn certainly doesn’t seem to be doing its job these days.
Wax’s “crime” of expressing unfavorable views to some on the topic of immigration — off-campus and unaffiliated with UPenn, by the way — has resulted in a barrage of unrelenting criticism among her colleagues; Ruger went so far as to issue an official statement distancing the law school from her and then penned an op-ed in an act of pure posturing while thinly conceding that free speech is still a thing.
Not so anymore. Ruger bowed to student demands that Wax be sanctioned and that tenure be reformed to “ensure that tenure be consistent with the principles of social equity.” Ruger has now announced that he will indeed take action against Amy Way, a tenured professor who may face termination. This change in policy undermines the right of faculty to speak freely and UPenn’s commitment to safeguard those rights. This chilling change will undoubtedly affect anyone who espouses an unpopular idea that might be found offensive at some point. One would think that UPenn faculty would be aghast at such a prospect — for they too could be next.
UPenn has proven to be rather un-collegial in this entire sordid affair which makes me recoil at the thought of supporting such an institution any longer. Clearly gone are the days by which the highest goals of a university are the pursuit of knowledge through the debate and discussion of ideas and the defense of the free expression of those ideas.
by | BIDEN, BLOG, COVID, ECONOMY, POTUS
As Biden’s presidency continues, it’s become increasingly apparent that he is wholly . unconcerned about the economic wellbeing of our citizens. But what’s less apparent to most people is that he’s taking his cues straight from China’s president, Xi Jinping.
Over the last year, Xi has been targeting wealthy Chinese billionaires, such as Alibaba, for being too successful or not being as aligned with his Communist platform. Using tactics such as increasing regulation or restricting their abilities to do certain things, the value of many successful Chinese companies declined rapidly. Xi claimed that the billionaire businessmen were getting out of control and too powerful, and it was worth it to him to tank their companies to show that communism and being a good citizen was more important than their good fortune or the economic well-being of all individuals.
Biden is doing the same thing. What Xi did unilaterally, Biden needs to get passed in Congress. He is going after the billionaires even if it screws the little guy too. This is why he has consistently pushed to raise corporate rates, implement a global minimum tax, double GILTI taxes, and raise individual rates (which impacts millions of small businesses, by the way). Now this “Billionaire Minimum Income Tax” proposal is just another scheme to punish wealthy Americans to fund absurd government programs. Nevermind that it is purposefully misnamed — it affects more than just billionaires and taxes more than just income — in an effort to sell the idea to legislators and the general public.
Xi took down the economically successful men and women in his country to bolster communism and Joe Biden is following his playbook. He’s happy to punish the wealthy in order to make them more responsible citizens. Biden has repeatedly stated that his goal is a more equitable economy by ensuring corporations and high-income earners pay their fair share (though they are already paying far more than their fair share). Xi would certainly approve.
