"I Pay My Taxes"

Behold, the infantile level to which "argument" has devolved in the modern 'public square' that is social media. As if channelling Monty Python's Argument Clinic, people devolve to one-liners, meme wars, and other forms of "automatic gainsaying of anything the other person says."

Thus, when Biden, Manchin, and the rest of the Democrats passed the Inflation Reduction Act, along purely partisan lines (nary a single Republican voted for this mis-named tax and climate bill), Internet partisans come out to defend it. Not with any sort of cogent analysis, but with sound bites, slogans, and catchphrases. They are, oftentimes, playing the same game as the serial meme-ers, such as those who've been sharing variations of this "the IRS is hiring 87,000 new agents" bit:

The rebuttal?

It doesn't bother me that the IRS is hiring new agents. You know why? Because I pay my taxes.

This is a form of the Nothing To Hide argument used to excuse government surveillance, house searches, stop-and-frisk infringements, and other forms of privacy invasion.

I'd bet, however, that many "I pay my taxes" defenders might sing a different tune if it were 87,000 new street cops given a mandate to find wrongdoing wherever they can. That the tax code is even more complex and labyrinthine than either the criminal or civil codes, where cops and prosecutors have myriad picayune rules to leverage against individuals that catch their attention in the wrong way, is left out of their simplistic nyah-nyah of a rejoinder.

If you're a 1040EZ filer working a corporate job, with only W-2 income and taking only standard deductions, you probably don't have much to worry about from an audit (though that envelope landing in your mailbox will very likely quicken your pulse). But, as your income gets more complex, and that's before we even get into those remunerated in cash (see: service industry), there are more things for the IRS to question.

And rest assured, those 87,000 new agents aren't being installed to simply streamline your filing.

They're being given a mandate to raise more money for the government, and there will be countless equivalents of plea bargaining, where you have a genuine argument that you did everything right, but where you'll be better off simply paying them some nuisance money than going through the time, effort, and expense (CPAs aren't going to work pro bono) of arguing back every disallowance they drop on your head.

The Tax Foundation estimates that compliance sucks $409B out of the economy every year. That's $409B that doesn't get invested in productivity, that doesn't get used for wealth creating jobs, that doesn't get paid to workers that actually benefit the economy. Doubling the size of the IRS may not double compliance cost, but it'll certainly suck even more productive capital out of the economy. Thus, even if everyone "pays their taxes" without cheating, and no differences of interpretation ever happen in an audit, this expansion will increase the government's drag.

Consider, next, the targets - stated vs actual. The IRS doesn't need 87,000 new agents to audit America's 724 billionaires. The IRS doesn't need 87,000 new agents to audit the 34,507 households with net worths greater than $100M. These people certainly already face primary scrutiny. They also have the infrastructure (accountants, tax attorneys) and the resources to manage any audits dropped on their heads. No, the real targets are going to be the upper middle class, where tax return complexity starts to increase, and differences in interpretation of the tax code offer the IRS a chance to say "disallowed!," and the various cash-based industries, such as restaurants, handymen, the trades, and other services. If the tax man says "you didn't declare all your tips, we think you earned more," what is the average Joe going to do? Hire a tax attorney to argue, or come to a quick settlement, no matter how strong an argument Joe might think he has?

This is the government, mind you, not a pack of angels, and while most government workers are good people, if the job is to find more money for Uncle Sam's pocket, they'll be under pressure to perform. To repeat the legal analogy, it's quite likely that most prosecutors are good people, doing their job to protect the public against bad actors, but we know the system rewards success, and we know that coercive plea-bargaining is not a rare, unicorn-sighting phenomenon.

We already have a terrible trend of the government "othering" the citizens it's supposed to serve. Double the size of an agency whose letters already cause insta-fear in recipients isn't about public service, it's about maximizing the pluck, and will continue to build a government that sees the citizenry as something to manage rather than people to serve.

The "I pay my taxes" bit is also about accusing the "other team" of being selfish, dishonest, cheating degenerates. It's a facile attempt at moralizing over others rather than defending the government's action, possibly because defending this money grab might require defending things they'd rather not, possibly because they don't want to admit a greed or envy-based agreement with the money grab, or possibly because they prefer to pwn rather than argue merits.

If you've offered this defense of the IRS expansion, ask yourself your motives. Are you secretly happy that this could be weaponized against your political counterparts? Do you want to see the government suck up even more of Other People’s Money? Or have you not thought it through more than "the Right hates it, so it must be good?”

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Yours in liberty,

Peter.