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Friday, February 19, 2016

Why the IRS Will Never Die

Every four years, we here in America are treated to a national edition of American Idol, in which politicians of all stripes vie for the top spot in the American government. We call it "the national presidential election," but in so many ways, it more accurately resembles a talent show.  Like the television show, it even has a national vote to help decided who the winner should be.

Just as predictable as the show, the national election dredges up the same acts and performances we've come to expect:  Instead of the country music singer, we get the religious zealot.  Instead of the opera soprano, we listen to the noble idealist.  You can see where this is going.  Every four years, it's a reprise of last season's show, with a few new twists.

One aspect that never changes, however, are the candidates' pie in the sky promises, the loudest of which is usually the pledge to "eliminate waste in government."  Of those, the charge generating the loudest applause is in response to the politicians' mighty oaths to slay the dragon that is the Internal Revenue Service (IRS).

For those of you not in America, the IRS is the Federal government's organization responsible for monitoring taxation, collecting taxes and enforcing tax rules.  It is not, to put it lightly, the favorite institution of American citizens, who view the department as the largest, laziest bunch of clock-punchers whose only mission is to make life as miserable. as possible for their fellow Americans  IRS regulations are not only often inconsistent, they're so complicated that even its own experts can't figure out how to consistently apply the same regulations in identical circumstances.  This makes compliance with IRS rules difficult at best and burdensome at most, costing American citizens and businesses a lot of time and money -- and that's not including the time lost when the IRS decides to audit them.

So it's no wonder that Americans love to hear politicians demonize the IRS and threaten its existence. More than one candidate has sworn to simplify the tax code, reducing a hundreds-page long tax form to a simple post card. Others have gone even further, vowing to wipe the department from the face of the earth.

Newsflash: It's never going to happen.

While promising and never delivering is nothing new in politics, there are simple reasons why nobody in power would ever want to abolish the IRS.  In the first place, the IRS has employed, on average, roughly 110,000 people, all of whom are civil servants.   That's a lot of jobs that can seriously increase the unemployment rate, especially when you figure that without an IRS, there aren't many places for those people to go.

But that's just a drop in the bucket:

The truth is that all that tax code confusion employs even more people in private industry.  In fact, according to franchisehelp.com, "Tax preparation is BIG business – there were 300k people employed at 109k firms in 2012 - generating $9 billion in revenue in 2012. The industry grew over 2% from 2010-2015, and is expected to speed up the pace of growth. Revenues of $11 billion are forecast for 2018. "   You show me one candidate that would boot another 300,000 people out of their jobs -- for a total of over 500,000 unemployed -- and I'll show you a loser.

Yet one more reason why nobody would shut down the IRS is that those 500,000 employees and the 109,000 tax preparation firms generate billions in tax revenue for the Federal government.  How quickly do you suppose any of them would propose losing that income?

Yes, it sounds really nice to live in a world without the Internal Revenue Service.  And yes, we really do have software that could probably handle the workload more efficiently than the hundreds of thousands of people currently sitting in cubicles.  But don't hold your breath waiting for it to happen.


Remember, it's a national election. Politics. Nothing is going to happen unless Simon Cowell decides to run for President.

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