There is at the moment a serious controversy in the US about the way in which certain Internal Revenue Service persons harassed – that is not putting it too strongly – certain groups, such as Tea Party activists seeking tax-exempt status. And it appears other groups, according to this article in National Review, have been targeted.
This is all very bad, and I am sure that those who are calling for heads to be put on spikes, so to speak, are justified. Tar and feathers, etc. However, it occurs to me that political conservatives/libertarians who complain – with plenty of justification – about the bully-boy tactics of the current Obama regime are in danger of missing the chance to frame the argument in a broader way. Surely the problem is that if any group, of any political colour or leaning, applies for tax-exempt status, then that is playing to the fundamental problem with the tax regime in the US (and for that matter, in other countries where similar tax regimes operate). The problem is that taxes are relatively high, so that getting a tax-exemption is worth a lot of effort and lobbying (and the potential for corruption is obvious). And the bureaucrats therefore get a lot of power in deciding what is, or what isn’t, a tax-exempt organisation.
Surely a way to cut out the need for all this activity is to sweep away the whole system of loopholes, exemptions and special status for for this or that organisation, and institute a flat-, low-tax regime. No exemptions, nada, zip, nothing. Just a simple system that requires far fewer people – such as leftist IRS officials – to operate. Besides removing the potential for mischief-making by such officials, it means we can sack a lot of bureaucrats, saving the public a great deal of money and removing the deadweight cost of a hideously complex tax code.
The IRS scandal over the targeting of the Tea Partiers and others certainly suggests that recently enacted – and complex legislation – such as the US FATCA Act (which targets expat Americans working abroad) could be misused to go after anyone who, for whatever reason, gets on the shit-list of the government of the day. Not an encouraging thought.
But conservatives and libertarians must do more than just moan about the abuses of such powers. It often bemuses me how we are told that conservatives and particularly anarchic or “atomistic” libertarians just don’t get the importance of institutions and the complexities of civil society, etc, etc. But institutions can mestasise into malignant forms, especially where the operation of coercive force, and receipt of privileged sources of income, is involved. In office, conservatives, such as Britain’s Tories or the US Republicans, often fail to deal with, or even better, abolish, those institutions which have become malignant and do them, and the countries they get to lead, a great deal of harm. Just as the Tories have allowed organisations such as the BBC to run on, with privileges unchecked, for years, so the Republicans in the past have missed a trick by not reining in the IRS.
It may be that the IRS cannot be easily abolished outright – which would be the best option – but this institution is is in dire need of drastic shrinkage and simplification. I should have thought that promising to achieve such changes would be a sure vote-winner in forthcoming elections.