The IRS Regulation I'd Like Trump to Issue

I'm not a fan of the Internal Revenue Service.  No one is, except possibly John Koskinen, the current IRS Administrator, a political hack for whom an impeachment bill is pending, and an embarrassment to Finnish-Americans everywhere.

I contend that I have more argument than most, having been through the torture of an audit. As recounted here, it resulted in a determination of zero obligation to the government in taxes, but many thousands in accountant's fees to show that I did not owe many thousands -- or even a red cent, for that matter -- to the IRS.

So in a column whose title is about an income tax regulation I'd like to see, you might assume that it might somehow relate to the audit that we had, and be one that would have prevented something so stupid from happening.

Obviously there are a few things that could have helped, but I'm not sure that anything could be put into law.  When your IRS auditor flat-out doesn't understand the law, and it takes my accountant explaining to her supervisor that she had been misapplying the law, to get the audit to be stopped without owing anything, well, the law won't help.  What would help is to make sure that you don't get a letter informing you of an audit until at least two levels of IRS agent agree to its necessity.

Maybe they needed to try to pay for this insult to the taxpayer.

And another thing that would help would be to forbid the IRS from mailing any notices to taxpayers except on Mondays or Tuesdays.  Somehow letters from the IRS which, except for when they contain checks, and are almost never legible and comprehensible, always seem to be mailed on a Wednesday, so they arrive when you get home after work on a Friday.  That means that you can get no clarification or sleep until the following Monday if you're lucky, and your weekend is full of panic and royally hosed.

That could easily stop with an executive order that would be appreciated.

I'd be thrilled if the IRS would be treated like any other law enforcement agency, meaning that the burden of proof for any claim of debt to them, or contention regarding a filing, is handled with a presumption of innocence on the part of the taxpayer, and the burden of proof shifted to the IRS themselves.  Maybe with an impartial arbiter hearing the case.

Man, I'd be thrilled to be a judge in one of those cases.

But my proposal is not related to audits at all.  Now, I have written tons about how the tax code should be written to flatten the heck out of it, particularly (and first) in this piece from 2014 that still represents my opinion.

That may not happen, certainly not before Congress is somehow incentivized to stop social engineering with the tax code.  I have taken advantage of the mortgage interest deduction for years, but I'd trade that in a heartbeat for a flat tax system with a 17% rate on personal and business income and get rid of the tiered structure.

But if it doesn't, let's try this.  "No individual shall have, as a result of his or her filing, any obligation exceeding 25% of adjusted gross income in the year in which the return is filed."  Now, that 25% can be achieved through ordinary deductions that reduce taxable income, or by taxable expenses or whatever.  But when push comes to shove, and the return has to come up with a number to pay, it would have to be the lesser of the computed tax on taxable income, or 25% of the adjusted gross income (meaning everything that came in to the taxpayer less basic adjustments).

Why?  It's very simple.  The United States of America needs to make an affirmative statement that it is immoral for any country to confiscate more than one dollar out of every four that a person makes, for the running of the country.

I think that 25% is a bit high, but reasonable enough and certainly as high as it should be.  But more importantly, it is vital that the Government state affirmatively that there is -- and always will be -- a moral ceiling on what it should ever be paid in Federal taxes by any one individual, relative to his income.  If you recall, that was something that I made a case of when the Obama Administration, as represented by Valerie Jarrett, refused ever to answer the question about how much tax was "too much."

I hope that you understand the difference.  It's not about whether it is 25%, or 20.665% or whatever.  It is about the moral principle that there is indeed a rate that is too high in the eyes of the American people, and that the Government's right to seize our earnings is limited by percentage.

What do you think?

Copyright 2016 by Robert Sutton
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