Tuesday, May 21, 2013

The End of IR

The late Richard Bruno, who taught me Financial Accounting at Babson College, used to refer to the Internal Revenue Service as the IR, instead of the IRS.  When asked why he left out the S, he would say that that organization does no service to anyone.  I think most people would be in full agreement with Professor Bruno, even without considering the recent scandal involving the IRS’s injection of politics into their screening of would-be tax-exempt groups.

But complaining about the politicizing of the IRS’s activities is, at the risk of sounding a bit cynical, sort of like complaining that a mosquito bites.  There will be outrage, of course, and finger pointing.  Heads will undoubtedly roll.  But while the affair was despicable indeed, in the end it was just human beings acting like, well, human beings.  The larger issue, and the one we should be focusing on instead, is that the federal income tax itself should be abolished, and the IRS, to everyone’s delight, should cease to exist.

Although the federal government enacted a temporary income tax to pay civil war expenses in 1862, the federal income tax began in earnest in 1913, when the Sixteenth Amendment to the Constitution, which granted Congress the power to “lay and collect taxes on incomes”, was ratified.  Today, the IRS collects over $2.4 trillion each year from around 234 million tax returns.

Both the concept of an income tax and its implementation are deeply flawed.  As former congressman Ron Paul indicates on his website:

An income tax is the most degrading and totalitarian of all possible taxes. Its implementation wrongly suggests that the government owns the lives and labor of the citizens it is supposed to represent. Tellingly, “a heavy progressive or graduated income tax” is Plank #2 of the Communist Manifesto, which was written by Karl Marx and Friedrich Engels and first published in 1848.

But not only is an income tax per se conceptually inconsistent with our philosophy and form of government, its implementation has resulted in a patently absurd system.  The 73,000 page  tax code is almost comically complex, and taxpayers are bewildered by it.  Not even the professional advisers most of us depend on to help us determine what we owe and submit the required forms to the government pretend to understand the entirety of the code, and many tests have determined that different IRS agents, when asked specific questions regarding tax return preparation, will more often than not give conflicting advice.  Tax evasion is rampant, and the system encourages honest taxpayers and their advisers to use the inevitable unintended loopholes which are a logical consequence of the unwieldy code to pay the least tax legally possible.

The people behind the FairTax Plan support legislation that would eliminate the federal income tax as well as payroll taxes.  There would be no need for the IRS, which would be abolished under the plan.  The government revenue lost would be replaced with a national sales tax on new goods and services, excluding necessities.  People and corporations would be taxed on what they spend, not on what they make.   Makes perfect sense.

Mr. Paul goes a step further:

I want to abolish the income tax, but I don’t want to replace it with anything....  We could eliminate the income tax, replace it with nothing, and still fund the same level of big government we had in the late 1990s. We don’t need to “replace” the income tax at all. I see a consumption tax as being a little better than the personal income tax, and I would vote for the Fair-Tax if it came up in the House of Representatives, but it is not my goal. We can do better.

Whether we dramatically reduce the size of our government as Mr. Paul suggests, or enact a national sales tax to replace income and payroll tax revenue, it is abundantly clear that eliminating the federal income tax and abolishing the IRS would benefit everyone significantly.  Yes, literally millions of jobs, within the IRS and related industries, would become obsolete overnight.  But those jobs represent a grotesque misallocation of resources anyway, as intelligent people are spending countless hours on artificially constructed busywork instead of directing their efforts at the plentiful real problems we face.  They will need support in their transition, but the temporary resources required for that support pale in comparison with those that are wasted every single day maintaining our current system.

As was abundantly clear to anyone who witnessed the Google I/O keynote presentation in San Francisco yesterday, we have solved much harder problems than this.  When provided with the proper incentives, there is no limit to what we can accomplish.  The species that targeted their political adversaries at the Cincinnati IRS office and went phone-tap crazy at the Justice Department is the same species that literally mapped the entire world and placed the results on servers accessible to anyone.  The same species that developed the technology that enables computers that we carry in our pockets to reply to any question we ask them.   The same species that responded to a clearly unrealistic challenge by, well, meeting it.

How can we possibly continue to be burdened  by the albatross that is the federal income tax and the inefficient, unnecessary ecosystem it has generated?

IR, your days are numbered!

Tuesday, May 7, 2013

Django is Jackie

A powerless black man is selected by a powerful white man to play a historic role for the ultimate benefit of both men.  The role is difficult and fraught with challenges.  In playing his new role, the black man is chastised, ridiculed and attacked.  For bringing the black man into his new role, the white man is chastised, ridiculed and attacked.  The black man ultimately finds redemption, and although many years later vestiges of prejudice clearly remain, for the most part the world has moved on from the absurd notions that actually made the role he was placed into anything but normal and commonplace.

The black man is Jackie Robinson.  The white man is Branch Rickey.

Or, the black man is Django (the “D” is silent).  The white man is Dr. King Schultz.

Both apply.

Many people, including New York Times film critic A.O. Scott, determined that the 2012 movies “Django Unchained” and “Lincoln” told the same story, each in a vastly different, yet equally valid, style.   And while it is true that in their movies Quentin Tarantino and Steven Spielberg presented different “solutions” to the problem of slavery, an even more interesting comparison may be made between “Django” and “42”.  For while in “Lincoln” the former slaves simply stand by while their fate is decided by others, in both “Django Unchained” and “42” a black man is specifically selected to take an active role in the solution of the issue at hand: slavery in the case of “Django”, and the color barrier in baseball in “42”.  

At first sight, the methods used by each man are as different as they can be: Django literally blows up the plantation while Jackie Robinson contains his emotions in the face of unabashed bigotry.  Yet there is more similarity in their approaches than meets the eye.  Both are simply acting within the roles they were given.  Richey explains to Robinson that the only way they will be successful in paving the way for future men of color in the major leagues is by showing almost heroic restraint, which Robinson does.  And in Django, Schultz gives the former slave various roles to play, each of them requiring brutal violence on Django’s part.  Against his nature, Django relents, dispensing pain reluctantly at first, but with gusto in the end.

So Jackie Robinson is Dr. Martin Luther King, Jr., to Django’s Malcolm X.  Robinson maintaining his dignity in the face of unspeakable insult is about as satisfying to watch as Django taking revenge on the lords of Candyland.   And it continues to be as puzzling as ever that the species that delights upon Robinson and Django’s triumphs is the same as the one that constructed the worlds which made their acts necessary to begin with!