Wednesday, April 13, 2005

Give us your tired, your poor, but only if we can tax them to hell

The AP reports on people who don't report all of their income on tax returns. At the risk of sedition, I say these people are doing nothing wrong. It's true that the law and IRS code says the cited examples are taxable income, but I say we're already overtaxed. Furthermore, for a supposedly progressive tax system, the IRS wants to extract every last tax dollar from all the wrong people -- with certain socialists' blessing:
Tuesdsay, using new IRS data, the Economic Policy Institute released a study of tax cheating, or what it termed "Do-it yourself tax cuts." The Washington, D.C., group called the compliance problem "a crisis in US tax enforcement," and said closing the gap "is one of the best bargains available in economic policy."
Only a socialist "thinktank" like the EPI could call it a "crisis" when people simply want to keep the money they've earned. And in fact, the people most targetted by taxing are far from "rich," as evidenced right in the article. I wonder how many man-hours the IRS spends, trying to recover every last cent from mothers teaching a few swimming lessons, or a painter who's already taxed so much that one more room isn't worth it.

The EPI is frequently dead-wrong on policy and raw economics, but now they're being hypocritical. Obviously George Soros had $27 extra million to blow, so why aren't they pointing at him? Instead of bleeding a mother dry for teaching a few swimming lessons, how about going after the countless millions that Soros hides in off-shore accounts? Maybe, as we learned from David Hogberg's expose last February, it's because the Soros-funded Open Policy Institute has donated money to the EPI?

Update: I checked epinet.org, which I've always noticed has ample criticism off offshoring jobs. However, there's only one page that criticizes offshore tax shelters, and Soros wasn't mentioned. Indeed, the tax shelters were mentioned only in passing, as part of the United States' mythical "deindustrialization" crisis.

Come to think of it, a painter is a perfect example of what Bruce Bartlett wrote this January, which I've cited before: every $1 collected in taxes discourages about 20 cents of economic production elsewhere. Like all other forms of output, each painted room has an increasing marginal cost (especially marginal opportunity cost) to the painter. Even if the extra income doesn't push the painter into a higher tax bracket, there's a certain point where it's just not worth his time to do one more room. That's one room that doesn't get painted; that's less income for the painter. That's less economic growth, because of taxes.

Liberals and socialists like to mock proponents of low taxes and limited government. Krugman & Co. deride the idea that low taxes promote economic growth, at the same time pushing huge tax rates as if they wouldn't discourage economic growth. And supply-side advocates like me are called crazy?

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