What the IRS is for

Over a series of posts here, I've laid out my pretty simple philosophy on taxes.

After World War II, and mostly up until Reagan entered office, taxes on large incomes and substantial wealth were high. That reflected the economic and social philosophy of an exceptional era in America: Those who had more, and who got more, should pay more for the society in which they worked and earned. Large inherited fortunes were a social ill, arbitrarily rewarding children who won the uterine lottery and removing their incentives to work hard or to build. Inherited wealth led to entrenched oligarchy, and should be discouraged.

Since Reagan, actual and effective tax rates on the wealthy have plummeted.

In order to be counted among the 1% of wealthiest Americans, you need a net worth (everything you own, minus everything you owe) of about 13 million dollars. A married couple needs 26 million. You need an annual income of around $400,000 (and double that, again, for a married couple).

That's a lot of money.

Returning to the tax brackets of the 1950s and 1960s on those fortunes and incomes would touch a minuscule fraction of the country. That minuscule fraction has benefited for more than half a century from regressive policies. Their fortunes are due in no small part to long-standing unfair favorable tax treatment.

The population at large certainly has the political power to elect representatives who would return us to progressive tax brackets (though they'd battle big money for messaging during an election). And the revenue we raised through those taxes would eliminate our debt and fund important social policies and programs that benefit the country at large, and the world.

I repeat: Simple.

Our current Congress and President will never implement those policies, of course, but it's still important to me to point out the facts. Sooner or later, good sense will return to government. We should have a plan.

I raise the matter today because I've just read an excellent article by Nathan Tankus in his Notes on the Crises newsletter. It's called The Fiscal State Under Siege: Why People Hate the IRS, and Why You Should Care. Nathan's a technocrat who's worked in government and understands deeply how policy, law and the institutions that implement both fit together. He's been one of my most interesting sources for some time now.

Nathan points out that the politicization of the IRS under Trump satisfies populist anger, but breaks the democratic control of that essential organization. It's a sobering piece, well-researched and well-argued, and I encourage you to read it in is entirety.