New Push to Abolish the IRS is Nothing New

Posted on May 11, 2016

Senator Ted Cruz was one Presidential candidate calling for the abolition of the IRS.

The concept of forcibly shutting down the Internal Revenue Service is nothing new.  Formed in 1862, the body that collects federal taxes has faced many demands for its abolition in the past 135 years. However, during the latest Presidential election cycle, anti-tax conservatives such as Senator Ted Cruz have renewed the call for the IRS to be shut down. In fact, many of the fellow Republican Presidential nominees echoed Cruz’ proposal.

An even more serious and official push to replace the IRS is afoot. A report recently issued by the Republican Study Committee (RSC) to House Republicans slams the IRS for being a corrupt and political “inefficient behemoth (that is) weighing down our economy.  Under the Obama Administration, the IRS has illegally targeted conservatives,” the report states. “It has channeled millions of taxpayer dollars away from taxpayer assistance for employee bonuses. It has allowed taxpayer information to be compromised in a data breach. The IRS has even intentionally leaked confidential taxpayer information. Despite these facts, the president’s budget actually calls for increasing spending on the IRS by $1 billion.”

While it is true the IRS has faced its share of problems over the years, abolishing it completely wouldn’t solve many of those issues. After all, federal taxes would still need to be collected. Otherwise, how would our government continue to run? In its place, the RSC has proposed that a smaller, more accountable arm of the U.S. Treasury Department take over the collection of federal taxes.  “Applicants to the new department would need to undergo a rigorous evaluation of their work performance before being hired to positions of trust, and would be subject to discipline and termination if they failed to honor that trust,” the RSC report states. “This fresh start is necessary to reassure Americans that the agency with access to every paycheck is trustworthy and honest.”

As part of its report, the RSC has also proposed many changes to the current tax law, including:

  • cutting the current seven tax brackets for individuals into just two, with a top rate of 25 percent.
  • simplifying the tax code to ensure that fewer Americans will be required to itemize deductions.
  • equal tax treatment to individual and employer healthcare expenditures modeled on the American Health Care Reform Act
  • repealing the Death Tax
  • eliminating marriage penalties
  • providing tax-free universal savings accounts to reward saving
  • exempts workers above the normal retirement age from the employee side payroll taxes
  • eliminating marriage penalties and encouraging families
  • repealing the alternative minimum tax
  • reducing double taxation by lowering the top corporate rate to 25 percent
  • setting a maximum rate for capital gains and dividends at 15 percent
  • encouraging net investment, savings, and entrepreneurial activity, including full expensing
  • moving to a competitive territorial system of international taxation
  • ending distortionary special interest giveaways, such as the Wind Production Tax Credit

While the idea of abolishing the IRS might make anti-tax citizens feel better, it would be a Herculean task, especially considering that the IRS is now in charge of much more than just collecting federal taxes, such as administering Obamacare.  As for the future of this latest proposal to shutter the IRS, it is unclear what could happen from here. The RSC report has been forwarded to a Republican House of Representatives task force for further consideration.

What do you think about abolishing the IRS? Would this help our country or hurt it?  Love it or hate it, the IRS or a comparable federal agency is still needed to collect taxes.

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