Paul Krugman Doesn’t Understand The IRS Or How Money Works

Paul Krugman Doesn’t Understand The IRS Or How Money Works

After what has felt like an eternity of depressing news, there’s finally something to smile about: Democrats are crying, literally, about being asked to choose between siccing the IRS on middle-income earners and sending billions more in taxpayer funds outside the country.

It’s beautiful, and my favorite part is watching them and their friends in the media swear to the integrity and efficiency of the most hated federal agency, which exists solely for the purpose of snatching up the income of private citizens and putting innocent people through absolute hell.

Paul Krugman of The New York Times this week declared it incomprehensible that anyone — anyone! — would suggest a new, multi-billion-dollar aid package for Israel should ship out only under the condition that the spending be paid for from a cut of the $80 billion cash infusion that the Biden administration is shooting into the IRS.

That was the brilliant proposal put together by new House Speaker Mike Johnson and immediately rebuked by both the White House and congressional Democrats absolutely beside themselves at the sight of a person who doesn’t just hand out taxpayer money for nothing in return. (To the IRS and a Middle East nation, no less! If those aren’t worth your hard-earned dollars, what is?!)

Krugman said that “the current demand by House Republicans” on the Israel funding “would undermine the ability of the Internal Revenue Service to crack down on wealthy tax cheats.”

The package that Johnson produced, and which has since passed the House, is very plain. It offered nearly $15 billion in aid to Israel, with the funds being pulled from the supersized IRS budget the White House signed into law last year. This is what is known to the average working adult as “prioritizing,” the idea that within a fixed amount of money, some things are more urgent than others — in this case, the capacity for our most reliable ally in the most volatile region of the world to defend itself, versus the IRS’s resources for shaking down individuals with an annual income less than $200,000.

But more blatantly offensive is Krugman’s stupid assertion that reshuffling money away from the IRS will “undermine the ability” of that godawful agency “to crack down on wealthy tax cheats.”

Queue one of those patronizing “fact checks” that the media are so fond of: Fact check! No, Mr. Krugman! There is no evidence that a reduced budget will undermine the IRS’s ability to crack down on wealthy tax cheats! Period!

Who are all these “wealthy tax cheats”? The suggestion that there is some mammoth section of the workforce just skating through the years without turning in a proper accounting of their mega earnings is a myth. That’s not to be confused with the large share of the public able to save itself a lot of money on taxes by using convoluted but perfectly legal structures of LLCs and shell companies, which does exist. The clear difference is that one of these is legal.

If Krugman et al. actually gave a damn about chasing down tax collections, it would once again have nothing to do with funding and everything to do with priorities. He doesn’t even have to take my word for it. It’s in The Washington Post.

“The IRS in recent years has grown more dependent on [lower- and middle-income] types of audits because they are relatively inexpensive,” the paper reported last year. “They’re automated, and they preserve the agency’s limited personnel resources. But they also mostly fall on taxpayers who can’t afford to fight back by spending hours on the phone with the tax agency or hiring lawyers.”

In other words, it takes longer and it’s more involved for feds to litigate with high-income earners. So they rely instead on computers to run down small business owners and independent contractors who have neither the time nor money to invest in a legal battle with the American government’s blight on humanity known as the IRS.

Hiring more agents isn’t going to change how easy it is to choose the path of least resistance. And anyone who has ever found themselves at the mercy of a federal agency, whether it’s the DMV or the Employment Office, knows exactly the type of person that the government is fond of hiring.

The IRS already gets $13 billion per year, and still, the most effective way of corresponding with it is by fax machine. I’m not joking. I spent six months last year doing it because agents refused to answer the phone. (And when they do, they immediately disconnect the line because even without offering help, they can at least mark down that the call was returned.)

If the point is increasing revenue from the wealthy, change the tax code. If the point is easing up on middle-income earners, implement an IRS email system. Neither of those costs $80 billion, and it’s curious that Democrats aren’t willing to part with that money if it means securing our own “national security interests” by giving more money to Israel.

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[By: Eddie Scarry

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