Abolish the IRS — and the Income Tax With It

By:  Sheldon Richman
05/20/2013
       
Abolish the IRS — and the Income Tax With It

Nothing will have been learned from this scandal if all that happens is the firing of some IRS administrators and the issuance of new guidelines on 501(c)(4) applications. That is not nearly enough.

The Internal Revenue Service has been caught engaging in political profiling while processing applications for tax-exempt status. In this case it was against organizations with “tea-party” or “patriot ” in their names and other right-wing groups. Next time it could be libertarian or left-wing antiwar and pro-civil-liberties groups. No dissenter can ever rest assured he is safe from the arbitrary power of the IRS.

Nothing will have been learned from this scandal if all that happens is the firing of some IRS administrators and the issuance of new guidelines on 501(c)(4) applications. That is not nearly enough.

Obviously, tax exemptions exist only because individuals and some organizations are subject to income and other forms of taxation. Congress levies a tax on incomes, then in its “wisdom” chooses to exempt certain activities but not others. This is social engineering, with Congress seeking to encourage some kinds of organizations — while not forgoing more revenue than necessary. The IRS then writes rules to carry out the directions of Congress.

Where possible, people will naturally strive to qualify for exemption by pushing the boundaries of the regulations. That incentive will always be strong because a nonprofit organization that is exempt from taxation will have more resources with which to pursue its mission. Since the language of statutes and regulations is inevitably vague, the IRS will have room to interpret when ruling on who qualifies and who doesn’t qualify for exemption. The line between vigilance and harassment is not bright, and the potential for abuse is great.

It should be apparent that this power, which is inherently arbitrary, ill suits a society that sees itself as free.

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