It is popular in the US to bash the Internal Revenue Service. Part of the reason is the spreading of the right wing and libertarian propaganda that paying taxes is a form of theft by the government that is taking money away that rightly belongs to the people, ignoring the obvious fact that the government needs money to provide the services that we all enjoy. The oligarchs have fueled this dislike of the IRS to advance their own nefarious agenda, which is to gut the IRS staff so that they cannot fully audit the various frauds that wealthy people engage in to avoid paying taxes.
I have never grudged paying my taxes. In fact, I think my taxes are ridiculously low. But in addition, I have always found the IRS to be very helpful and scrupulous in its actions. Whenever I have had the need to contact them with questions, they have been courteous and helpful.
This year I filed my taxes as usual. I was expecting a refund but it took a long time coming. I was not surprised because I was aware that due to the pandemic, there was a backlog of paperwork so I did not worry about it. But when I got the deposit in my bank, the refund was for almost three times the amount I had asked for. When I got the explanatory letter, it appeared that I had made an error in calculating my taxes (taxes in the US are pretty complicated) and the IRS agent reviewing my file had caught it, corrected it, and increased my refund accordingly. Not only that, they also paid me interest for the extra money I had not claimed.
This is not the first time that the IRS has corrected an error in my favor and increased my refund.
So do not include me among the IRS bashers. They may not have the popular support that the United States Postal Service gets but I think that it too is a fine organization that needs to have its funding increased.
This has been my experience, as well. I’ve noted some frustrating difficulties resolving mixups in the last few years, which seem certainly to be the effects of repeated budget cuts and short staffing. Even so, they’ve always been helpful and reasonable.
Let’s just turn all of that around. (Don’t worry. It will be okay.) What we need is for the government to provide goods and services that the private sector can’t or won’t. Although it’s pretty normal, the way you described spending and taxing is sort of backward, according to Modern Monetary Theory. (An interesting 57 minute video, with Marshall Auerback interviewing Stephanie Kelton.)
State and local governments need to levy taxes to pay for whatever we’ve decided is public spending which is to be done by state and local governments. So what you said makes sense for them. Budgetary debts for them (if they’re even legally possible) are somewhat like debts for ordinary people, businesses, or anyone who merely uses the currency and doesn’t issue the currency. It’s not such a great idea to put too much in that hands of those governments, since their options are more limited.
In contrast, the federal government can’t run out of its own currency, because it’s the only thing that can legitimately issue US dollars. Congress spends the dollars into existence, whenever it decides to hire people to do some public work, or when it pays them for their goods/services which are used for such things. If instead of something good, they want to give tons to our military, banks, etc., that’s still exactly what they do, because the citizens have given them that power. So, there’s no need for it to first harvest the dollars from the private economy, then store all the dollars in a big pile somewhere, which will then be available if/when Congress decides to send them back out to various private bank accounts. That is how some Congresscritters think, or else it’s merely how they talk whenever it’s spending on something they don’t like. When they do like it, it’s never a concern.
Now, if you think about this situation for a bit, you may object “but if the government creates more and more dollars every year, that could cause inflation.” Yes, that is important. If the government spends money in a way which supports the real economy, like employing people who are looking for work or using our natural resources to do whatever we want (building/repairing infrastructure, producing medical equipment or food, anything you like), then that doesn’t need to put the government into a bidding war with the private sector, which could drive up prices. (The government can always outbid them, but you want the spending on something useful which we’re lacking.) There is a very tangible limit then, which is the capacity of our country to produce the goods and services that people want to spend the money on (either publicly or privately).
But we do need some taxes, which come after the dollars are made, in order for some of them to have a way back out of the system. It shouldn’t be taxing all of the dollars, because we want to have some left to spend and not go into debt ourselves. That’s basically why the federal government should run a deficit and not a surplus (meaning it should tax less than it spends): because we honestly do have to worry about affording things and paying our own debts, while the government can’t have problems with issuing its own currency. When it spends the money on us and doesn’t as much back in taxes, then we got a surplus of money and the talk of a “deficit” is just confused.
Of course, more of our taxes should be paid by richer people, because they have more that they don’t need, and because inequality is one of the problems we want to address with taxation. Sometimes, taxes may also be on cigarettes or gambling or gasoline or things like that, if the intention is to discourage people from spending on that, without banning those things altogether.
Anyway, if the taxes were paid in paper bills, they could simply be tossed into a giant bonfire, since the whole point is that they are not currently needed and would just drive inflation – it’s not that the government must somehow get them from us (where they didn’t originate) in order to pay for stuff. Today, they’re just numbers that go up or down in electronic accounts, meaning their destruction isn’t such a spectacular event. It could be done that way … maybe we could turn it into a fun national holiday, but that would be pretty wasteful and the pollution would be bad for the environment.
So, in a sense, the job of the IRS is sort of like garbage collection. We need them to clean things up here and there, after we’ve made a mess of the place in one way or another. Thieves don’t steal stuff from people, in order to promptly destroy it and to help stabilize the economy … at least not ordinary thieves.
Sorry: “When it spends the money on us and doesn’t [take] as much back in taxes,”
“taxes in the US are pretty complicated”
Deliberately and unnecessarily.
All my tax is deducted automatically at source by my employer. This is the case for most people in the UK. The US system come across as baffling.
sonofrojblake, not everyone has an income solely derived from payment from their employer.
(Also, you do have VAT in the UK, no? And excises. And stamp duties.
That sort of thing is also taxation)
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Re the post itself, that’s what a properly functioning bureaucracy should be like — impartial.
Then there’s—Why is a rundown Mississippi county the most heavily audited in the US?—which ledes:
Why is that? Because, the deck on the story proclaims:
I’m sorry but you lost me in the first paragraph. It is a right wing meme that private enterprise should provide everything it possibly can, without government competition, and make a profit at it. I reject that. A few examples:
1) Prisons. I feel that it is morally abhorent that incarcerating people should be subject to a profit motive. consider also that prisoners who commit crimes in prison are punished by having their sentences lengthened, or at least by having early parole denied. combine this with the profit derived from keeping them prisoners, and you have a clear profit incentive to keep people locked up, and a clear conflict of interest.
2) Effective service monopolies like cable TV. I hope I do not have to ‘splain that cable TV, and frequently Internet access, are effective monopolies. Municipalites may bid out their service periodically, but once the bid is granted, the monopoly is in force. Even if legally allowed, it would be practically impossible for another company to compete. In some states it has been made illegal for cities to offer competing service. The result: higher prices and poor service. Look up customer service surveys and you will find that the large cable companies regularly compete for the worst customer service around.
So here are just two examples of how private enterprise “can and will” offer goods and services, but where it is not in the public interest that we allow them to do so.
@7 Reginald Selkirk
The biggest natural monopolies are the utilities. Different electric companies cannot compete as to which one gets to run a wire to my door — that is effectively a government granted monopoly. Furthermore, in our state the private electricity company is GUARANTEED a profit by legislation. Even if they screw up and build something that turns out to be unnecessary, they’re allowed to just raise their rates to make up for it. Also, they spend millions they collect from schlumps like me to lobby the state legislature. Is there a connection? Why are they run to benefit their shareholders rather than the taxpayers?
Rural hospitals are the same thing — natural monopolies. IMO, all natural monopolies should be run by the state — the system right just allows middlemen to grift.
The biggest natural monopolies are the utilities.
Are roadways a utility?
That’s not what I said. Read it again: “What we need is for the government to provide goods and services that the private sector can’t or won’t.” Why is it that they can’t or won’t? I didn’t say. So I didn’t imply that it must be up to them. It can be that they can’t/won’t because we aren’t allowing them to do so.
We, the people/citizens, decide what’s public or private. We’re not “the government,” but its authority ultimately comes from us. I didn’t mention this, because I didn’t think it was necessary to say so explicitly, when I was focused on MMT. But there you have it. I think we can have a decent society which is mixed, both public and private, so in that respect it’s like the one we have now but is much less oppressive and unjust. However, the private sector should be limited to only what the public allows, because it does not have (and was never claimed to have) any legitimacy from us like our government does.
So it’s not assumed that it should do as much as possible, without government “interference” or what have you. To take a somewhat extreme example, forget about “regulating” them or what have you…. If we want to entirely shut down a corporation (or an entire industry) and send its CEOs to prison for violating the laws we (and not they) have a right to make, for abusing their powers which we have the right to remove/restrict at any time, then we can certainly do things like that.
The only reason I even wrote that is to turn around the statement about what “the government” supposedly needs. I started with a basic statement what we need, and “we” did not refer to “private enterprise.” What I had in mind was the public, the citizens themselves in a democracy, who hire officials in government positions to do what the public wants.
Marcus@9 opens up a can of worms:
Roadways are indeed built and maintained by some level of government, but it’s a mixed bag. The street in front of my apartment is maintained by the city of Lakeshire; leave my subdivision in one direction and you wind up on a road maintained by St. Louis County; leave in the other direction and you’re on a road maintained by the State of Missouri; just a couple of miles roughly north of me is part of the old “Route 66” and is maintained by the United States of America.
Airports are mostly owned and operated by cities and paid for by some mixture of local taxes and fees charged to airlines. Some small-town airports are considered “essential” services and are heavily subsidized by the U.S. And no planes would fly at all without the Air Traffic Control System which, IIUC, is totally paid for by the feds.
Railroads are mostly all private companies that haul freight. The National Railroad Passenger Corporation (shorter name, Amtrak) is a “public corporation” something like the Postal Service which owns and operates most of the Northeast Corridor (NEC), a bit of track in Michigan, and often, but not always, the track immediately in the vicinity of larger Amtrak stations. Some local commuter railroads, e.g., Metro North Railroad, Long Island Rail Road, are owned by some combination of cities and states. (Metro North, not Amtrak, owns the NEC from New Rochelle through the eastern part of Connecticut.)
All of the above are essential and are “natural monopolies;” but none, AFAIK, would be considered “utilities.”
The nice people at the IRS
Might I suggest sending a letter to a med-level supervisor in that person’s chain of command stating your appreciation. No need to even name the person you were dealing with.
mid- level!
@Marcus #9:
According to the rich and the right wing, no. Their tax money should not go toward funding roads.
Until the potholes start getting big enough to eat their car. In which case the answer becomes YES, please god yes, it’s a utility, it’s essential, just fix the damn thing already!
And then it changes again once fixed because who cares about other people’s cars or roads? Not them, certainly. One could call this sort of thinking selfish but the snowflakes would scream because it’s not politically correct enough for them.
jrkrideau:
Why, yes, you might, until and unless you can’t.
It remains to be seen whether you will do so.
jrkrideau @#13,
I have many times in the past sent letters to companies praising employees whom I thought provided exceptional service. In this case, the correspondence I got was computer-generated and had no person attached to it.
Toll roads seem to be the way we expand road capacity here in Texas unfortunately. Also if cars shift to electric power something will have to replace the gasoline taxes
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