The Internal Revenue Service expects to lose more than $37 million by using private debt collectors to pursue tax scofflaws through a program that has outraged consumers and led to charges on Capitol Hill that the agency is wasting money for work that IRS agents could do more effectively.
Since 2006, the agency has used three companies to go after a $1 billion slice of the nation’s unpaid taxes. Despite aggressive collection tactics, the companies have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program. The debt collectors have pocketed commissions of up to 24 percent.
Now, as Americans file their 2007 taxes, Democratic leaders want to end the effort.
“This program is the hood ornament for incompetence,” said Sen. Byron L. Dorgan (D-N.D.), a leading critic who has introduced a bill to stop the program. The measure has 23 co-sponsors, all but one of them Democrats. “It makes no sense at all to be turning over these tax accounts to private tax collectors that end up costing the taxpayers money.”
I’m sure it will all be OK if we just plan to make it up on volume. Seriously, isn’t it time to put the IRS out of business and do the Fair Tax?
Dilbert: What rate will you charge? Will you apply the tax to all goods and services?
Irenaeus, I like the plan proposed at http://www.fairtax.org. If you are willing to read through all the specifics your questions will be answered. I suggest you begin with “The Basics” found at http://www.fairtax.org/site/PageServer?pagename=about_basics_main and move next to the “FAQ” at http://www.fairtax.org/site/PageServer?pagename=about_faq. If you have specific detailed questions not covered at the site you can pose your question at http://www.fairtax.org/site/PageServer?pagename=about_ask_expert.
I’m not trying to put your off, but so many of these questions have been answered, it is not efficient to cover them in the back and forth of a blog.
I do believe the current system of taxation mainly benefits the lawmakers who use federal taxes to punish foes and reward friends.
Fortunately, our congress is sensible enough to recognize that the fair tax is regressive and will result in greater deficits. Plenty of smarter ways to generate income.
But the real issue is out sourcing. what we’ve learned is that sometimes the government is cheaper than private industry. Especially when the government audits itself. Unfortunately, we have a government that deliberately wants to manage badly because it is ideologically predisposed to do so.
JW, as you pronounce regressive taxes bad, may I presume you find a progressive tax such as our current income tax to be good? If so you put yourself in spotty company.
“The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the State, …
“Of course, in the beginning, this cannot be effected except by means of despotic inroads on the rights of property, and on the conditions of bourgeois production; by means of measures, therefore, which appear economically insufficient and untenable, but which, in the course of the movement, outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionising the mode of production.
“These measures will, of course, be different in different countries.
“Nevertheless, in most advanced countries, the following will be pretty generally applicable.
“1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.”
And the list goes on in The Communist Manifesto by Karl Marx (1848, Chapter 2) Find it at http://www.marxists.org/archive/marx/works/1848/communist-manifesto/ch02.htm
The Fair Tax is neither progressive nor regressive. It taxes consumption while protecting all taxpayers by refunding in advance the tax that would have been collected on basic needs. At the proposed tax rate it produces at least the same revenue as is brought in by the current system.
It really would be worth your time to read up on the Fair Tax at the URLs I provided above. I think you will find, if you will leave yourself open to the possibility, the Fair Tax is a better alternative.
As to the sensibleness you impute to Congress, I would characterize as the behavior of Congress as callous self-interest exercised at the expense of the nation. Members of Congress use the power to tax as a most effective and efficient political contribution generating tool. A short phrase, perhaps so much as a sentence, inserted or omited from a lengthy piece of legislation can punish political foes or reward political friends. Seeing that such activity takes place is a major part of the function of lobbyists as they steer the labors of Congress. You don’t like that very much, do you?
The Fair Tax takes this dirty business out of the hands of corrupt men and women (oops, I’m getting close to a discussion of ‘original sin’ and all that ‘old testament’ stuff – can’t go there, can we) and instead instead gives Congress just as much revenue as is generated by the current infinitely adaptable tax system to allocate for the many needs of the nation.
The fact is Congress has yet to take up the Fair Tax as active legislation and until it does so Congress can only be said to be sensible enough to recognize its own selfish interests.
I know a fair amount about the fair tax: I read plenty on economics. I think there is some laudability to it, but in the end, it is probably clumsy when it comes to environemtnal costs and other public externalities. Further, I think plenty of people raise some good exceptions. I did look at them, and found them fascinating, although I don’t have the competence to examine the numbers.
Philosophically, however, it reminds me of Henry George, who seemed to have a much fairer understanding of land, productivity and consumption.
As far as logic goes, you use the guilt by association tactic which goes something like this:
All communists are civil rights supporters.
Person X is a civil rights supporter.
Therefore, person X is a communist.
As an idea – a progressive tax argues along the lines “Those to whom much has been given, much is expected” or – if you have a lot ofstuff, your dues is more because it costs more to protect you, and do those things that governments do. The government protects people’s property rights. Those who have more property have more at stake in the government. Not only that, they have more of a stake because they benefit from other people having a stable government as well.
Of course, then you also recognize that with the current progressive tax scheme coupled, as it is, with slightly lower tax rates higher wage earning taxpayers are already carrying the vast majority of the load and sending record levels of revenue to Washington.
From the New York Times, 1/8/2007:
“The top 1 percent of income earners paid about 36.7 percent of federal income taxes and 25.3 percent of all federal taxes in 2004. The top 20 percent of income earners paid 67.1 percent of all federal taxes, up from 66.1 percent in 2000, according to the budget office.
“By contrast, families in the bottom 40 percent of income earners, those with incomes below $36,300, typically paid no federal income tax and received money back from the government. That so-called negative income tax stemmed mainly from the earned-income tax credit, a program that benefits low-income parents who are employed. ”
Find the article at http://www.nytimes.com/2007/01/08/washington/08tax.html?_r=2&adxnnl=1&oref=slogin&adxnnlx=1168287624-Z9kDCrEbywzklcB0Uw5+SA&oref=slogin
Seems to me we are in urgent need now of a strong dose of change in the direction of tax regressivity to make all our citizens active participants in financially supporting our national policies through taxation. The Fair Tax accomplishes this end while protecting those lower wage earners through prebating taxes that would otherwise be collected on basic needs.
As to comparisons with Mr. Marx, regardless of how one spins oneself on the issue of tax progressivity, supporting tax progressivity is a position Mr. Marx certainly would find agreeable and useful to the ends he presses for in “The Communist Manifesto.”
If it looks like a duck and walks like a duck and quacks like a duck, perhaps it is a duck.