The Broken System

By Stephen Macaulay

I recently had the misfortune of calling an airline about a ticket. I had the “elite” number, meaning, so I supposed, that I would get quicker service. The digital system told me that I had the opportunity to leave my number and get a call back without “losing my place in line.”

When was the call projected to hit my phone? Three hours later. Fortunately, I was able to figure out how to get my question answered online.

Apparently, the Internal Revenue Service, which has lost staff (which makes it like almost every organization, be it a restaurant or an appliance manufacturing firm), has long phone wait times.

It is one thing to have to wait to find out about a trip to a pleasant place. It is entirely something else to have to call the IRS, which is best thought of in the context of calling an endodontist. Yes, you may have to do it, but you don’t like it.

So if the IRS is going to get more funding, shouldn’t it go toward adding phone service?  Certainly, billionaires and corporations are not going to be calling an 800 number to get tax questions answered. But regular folks will.

The Biden plan called for the hiring of 87,000 new IRS workers.

But it seemed that the objective was to hire, as they are colloquially called, “’Revenuers.’”

When they show up, it isn’t good for you. And odds are, you are not a billionaire.

One of the arguments that is raised vis-à-vis de facto legitimacy when it comes to the wealthy not paying in a manner that the 99% does is that the wealthy are the ones who actually invest their monies in ways that creates jobs. Warren Buffett may pay a lower rate than his secretary, but Warren Buffett creates more jobs than his secretary.

What doesn’t get the sort of attention that it should is that the tax code is so convoluted that those who can afford to hire Theseus-like tax experts to allow them to escape paying what they “should.”

Why not reform the tax code so that it is so transparent that regular folks won’t have to make phone calls and the wealthy won’t have the out of hiring the smart people who will allow them to dodge tax responsibility?

To be sure, that would be a heavy lift. And it would not happen quickly.

But let’s think about this for a moment. Hiring more people to chase down people and corporations that are making sophisticated swerves is to simply continue the existing system which is clearly deficient if it allows the underpayment of taxes to the extent that it does.

The Biden administration had projected that there could be as much as $700-billion captured over a decade.

An analogy: Almost every kitchen has two implements: a colander and a sieve.

When you have boiled pasta and need to drain the water, you pour it through a colander. The holes are large enough to let the water go through and the pasta to stay put. When you are sifting sugar, you use a sieve. The fine grains of the sugar go through while the lumps stay put.

Apparently, the existing system is like using a colander to sift sugar. How does that work out? … $70-billion a year?

So why not fix the tools? Why not make it easier for the regular taxpayer as well as for the one who would otherwise dodge: If the procedures are sufficiently transparent, then accountability will be fairly straightforward.

Let’s not be naïve. No one likes to pay taxes. The funny thing is that while no one, not even the rich, likes driving on a road rife with potholes the only way to fix the roads is through funds that are acquired only through taxes.

Does the IRS need more funding? Probably. When cryptocurrency takes hold of a bigger part of private wealth, things are going to get even trickier. In effect, the IRS is going to need a quantum computer, but they’ve got an old Dell running Windows 95.

Funding or not, the system needs to be simplified. The system needs to be fixed.