Monday, January 19, 2015

Online musings: you can't really blame the IRS

So bouncing around on the internet I come across interesting things. Some of them I want to share (and remember myself later). Do you think "online musings" is a good unifying title for these posts? These two relate to taxes...

Do you have tax questions this year? You probably won't be able to get help from the IRS. Congress cut the IRS budget by $350 million below last year and staff reductions mean that the National Taxpayer Advocate estimates that only 43% of callers will be answered by an IRS agent. Oh and by the way, lower staffing and enforcement at the IRS will cost the government $2 billion in lower tax revenue because more people won't pay the taxes they owe.   

Relative position and expenditure cascades--everyone is spending more money in an arms race for relative economic position. This is one big part of why it is harder to be a median incomer earner now than it was 40 years ago. In 1970 you could cover the median rent with 40 hours of median-wage work a month, now it will take you 100 hours. Robert Frank suggests we tax consumption rather than income to blunt this arms race and mitigate the inefficient behavior patterns exacerbated by inequality. That would also encourage more savings and investment. I think it's an interesting idea. 


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