The IRS scandal: it’s even worse than we feared

Last week the Heritage Foundation held a lunchtime conference to discuss the latest developments in what it calls ‘Taxing the First Amendment: Using the IRS to Censor Speech?‘.  I’m going to post the entire hour-plus video of the conference below, but I wanted to first highlight five very short excerpts from a post-conference interview provided to the Powerline blog by one of the speakers, Cleta Mitchell.  She’s an attorney who’s represented several clients facing IRS abuse over the past few years.  In these short excerpts, she highlights an agency that appears to be completely out of control, and blames both the Democratic and Republican parties for their blind refusal to apply the law to the bureaucrats concerned.  The five clips together total less than twelve minutes in length, and are well worth your viewing time.

Here’s the full 1 hour 10 minute video of the lunchtime conference presentation.  I recommend that if you take constitutional government seriously, you make the time to watch it – because if these practices aren’t stopped now, we won’t have even the semblance of constitutional government that we have now.

This is perhaps the clearest possible evidence that ‘going Galt‘ is no longer an adequate option.  When the organs of government can be suborned to prevent you doing as you please according to your constitutional rights, and to exert illegal and unconstitutional pressure on you to conform, it’s too late to found a Galt’s Gulch.  It’d just get a tax lien placed on it.

My solution is simple – and some would doubtless describe it as simplistic.  It’s in three parts, all of which would be necessary.  It goes like this:

  1. Institute a flat tax rate of 10% on all income – corporate, private, whatever – with no deductions or exemptions whatsoever.  Earn a dollar?  Pay 10c to Uncle Sam.  Simple, direct, efficient.
  2. Institute a flat consumption tax of 5% on all purchases – corporate, private, whatever – with no deductions or exemptions whatsoever.  For every dollar you spend, you pay 5c tax to the Feds.  (You may pay more for local sales taxes, of course.)
  3. You now no longer need massive, complex calculations about what any person or company owes the government.  It’s a simple calculation that anyone with a few functioning brain cells can do in their heads (or use a calculator or spreadsheet if they must).  Therefore, abolish the entire IRS and the entire tax preparation industry.  You’d save the country billions in unnecessary and useless overhead at the stroke of a pen – and taxes would be lower, besides.

Not that complicated when you think about it, is it?  Unfortunately, the politicians and the bureaucrats will never agree.  They’d argue that you have to provide for ‘income redistribution’ or ‘welfare assistance’ or all the rest of that sort of crap that’s never mentioned in the constitution at all.  To that, my answer is simple.  If someone is in need of welfare or other assistance, that’s not an IRS issue – so why keep the agency around to address it?  Why make it a federal issue at all?  It can be dealt with by state welfare agencies.

To statists, the issue isn’t about taxation efficiency at all.  It’s about control.  When that control gets out of control . . . you have the present IRS catastrophe.



  1. The flat tax is simple, elegant, and efficient. Therefore, the government will never adopt it, unless they're forced to.

    And THAT is the issue, isn't it?

  2. Not that flat taxes are as simple as they are touted to be, but this former IRS agent basically concurs with you.

  3. The flat X% sales tax on stuff used to appeal to me. Then I watched what the Europeans have done, and how their VAT is added at each stage of sale, from raw materials to final product. Eh, nope, because it will stay at X% only until the day after everyone gets sworn in, and then hey presto, up she goes!


  4. The flat tax/sales tax isn't ideal but it's many times better than what we have. The resistance first comes from congress critters being unable to sell favors in the tax code to donors. Then it comes from the IRS having the power to bully the congress to keep them from shutting the IRS down. Finally, should a groundswell of popular resistance to the IRS rise up, the IRS will use its considerable powers to destroy the citizens. As it's currently doing.

    Silicon Graybeard @ work…

  5. You should look up . Basically a retail sales tax on all finished goods and services of about 23%, built in to the final price (so if you buy a $1 book, you pay a dollar, the seller sends in 23 cents). No income tax at all. It encourages savings, captures under-the-table wages and tourists and gray-market labor, etc. People can sign up for a "prebate" to have the taxes they pay on the first X dollars per month refunded ahead of time, so their effective tax rate is zero on the first (poverty rate) of income. If they don't want to register because they are here illegally, they don't have to, but they pay tax on the first dollar they spend. Eliminate all other welfare systems and taxes. Ever dollar you earn helps your situation, and the prebate will keep you from dying of starvation if spent wisely, but little else.

  6. Perhaps one of the reasons no-one outside of libertarian circles thinks flat-tax is a good idea is that no-one else thinks killing a multi-billion dollar industry is a net gain. These sound an awful lot like the arguments for offshoring jobs, which hasn't exactly brought widespread benefits to the American working class….

  7. So, to fix the 'but they will just make the tax bigger' is to tie the 'flat sales tax' (not income tax, SALES TAX) directly to the GDP.

    NO MORE than 15% of GDP can be dragged out of the system. (OK, 20%, you pick, but we stick.)

    Simple. Elegant. Will never fly.

  8. @Anonymous at 2:04 PM: "… no-one else thinks killing a multi-billion dollar industry is a net gain".

    Come again???

    I was taught that commerce and industry PRODUCED wealth and/or assets. The tax preparation 'industry' produces nothing at all – it merely consumes billions of dollars by leeching on the backs of those who are forced to use it, thanks to the complexities and absurdities of the tax code.

    That's not an industry. That's an economic liability.

  9. "To statists, the issue isn't about taxation efficiency at all. It's about control."

    *Sigh*…so close…you ALMOST got it…and yet every single comment here wants to compensate for putting out one house fire by lighting a different house on fire.

    If you want to cut off their control, you need to strike the root. That which is used to control every facet of your life: The State Slave Number. Think hard…is there any (viable) way you can legally engage in the activities necessary to sustain your life WITHOUT a state slave number? Is that the American Freedom I hear so much about?

    Eliminate entitlement spending and you eliminate the 'need' for an 'income tax' (something America thrived without in the first half of it's existence) without having to replace it with anything. Calls to abolish the IRS are a big red flappy cape dangling in front of your enraged noses. The IRS will NEVER go away, as they are still the proper agency for collecting all the other LAWFUL taxes: import duties, fuel taxes, wagering taxes, etc.

  10. Even if we instituted a flat tax somehow in spite of our current "public servants" and their opposition to it, how long do you think that it would take them to just arbitrarily raise it and use the increase to fund the same social programs and tax exemptions for reliable low-income voters and other special interests?

  11. Has anyone read the book "Unintended Consequences" by John Ross? The approach taken to government agencies in that book is beginning to sound about right, the deeper into this thing that we go. Too bad.

  12. Agree with much of what was written but a "sale tax" on business to business transaction is nuts. It would create a huge financial incentive for large numbers of small to median business to conglomerate into one large corporations. It would kill small to median businesses. A 5% "sales tax" on business to business tax could easily turn into a 50% tax by the time a consumer buys it.

  13. Sir,

    I fear that if you think a National Sales Tax or a Flat Tax will not be accompanied by a vast bureaucratic enforcement regime, you are living in a fool's paradise. I have worked retail, and I assure you that the apparatus for collecting State sales tax in not simple or pleasant to deal with. And if you think the Twitocracy would stand by and not crack down on yard sales, bake sales, swap meets, etc. you underestimate their desire to meddle by an order of magnitude.

  14. Despite all the arguments – whining and moaning, mostly, that "it can't possibly work" – I'm all for a national sales tax and ONLY a national sales tax – no other type, form or inculcation of tax in any way, shape or form except a national sales tax.

    Set it at 10%, on absolutely everything, no exceptions, no deductions, no nothing – if you spend money, 10% goes to the fed dot gov. Period. That 10% is listed as a line item on every receipt in the land. Oh, but yard sales, church bake sales, etc. Set a floor – sell more than $250 of stuff per year, whether individual, corporation or charity, get a tax ID number and file sales taxes. Done.

    Yes, state sales taxes are complex, yadda, yadda, yadda. But they form an existing mechanism with which the 10% federal sales tax can be collected and forwarded to the federal government.

    Why 10%? Why not? First, the federal government needs to be reined in to live within its means, and second, getting government out of the economic legerdemain business would result in a substantial increase in economic activity, and a resultant increase in tax revenue. If 10% isn't enough for the federal government, tough beans. Cut government – and government programs – back to fit within the 10%.

    Is a national sales tax perfect? No. Is it workable? Yes. And, is it better than all the smoke, mirrors, corruption and incompetence we now suffer under? Absolutely.

    Peter's proposal of a 10% income tax, in my opinion, heads down the wrong road. Income should be sacrosanct, subject to no whim of government, however slight. As long as it comes from legal sources, our income, our investments, our returns on those investments, should be immune from any involvement by government.

    Biggest reasons to not have anything resembling an income tax? If there's any sort of tax on any sort of income, there will have to be an IRS to manage that process. Haven't we learned why that's a bad idea by now? No income tax, no IRS is needed. Nuke it by repealing the 16th amendment and totally, completely defunding the agency and all its tentacles, then bring in Jack Loizeaux's kids to turn the IRS building into rubble.
    Second reason: Everyone spending money pays taxes. Everyone then has skin in the game.

  15. A flat tax on income is the only way to tax. I also say set it at 10%. If the government only rakes in tax revenue based on folks' incomes, then the government has a vested interest in adopting policies that would actually help folks increase their income! If folks make more money, so does the government. When the gov't sets stupid policies (like the current POTUS and Congress) that cause income to go down, then the gov't gets less money to play with.


  16. Do you people understand that the underground economy is multiples of the officially recorded one? I've heard it is three times larger in THIS country. That is mostly due to our income taxes (fed and state and local). Some of that is due to illegal enterprises.

    Get rid of ALL the income taxes. Being able to tax your income means the .gov knows too much about you, and thus is able to control too much of our lives.

  17. I don't believe there should be any tax, state or fed, on basic foodstuffs. And that includes BEER!!!

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