First and foremost, all of us at the Taxpayers Protection Alliance (TPA) wish you and yours a safe and happy Memorial Day Weekend. As the nation heads into the holiday weekend, it looks as though a deal on the debt ceiling is taking shape behind closed doors. It is imperative that the Biden administration and House Republicans protect the full faith and credit of the United States and ensure the nation does not default on its debts. Default risks skyrocketing interest payments on federal borrowing, making the cost of the already bloated federal government that much more painful for taxpayers. The risk of default does not mean that elected officials should miss the moment however. With the Covid-19 emergency over, it is imperative for federal spending to reflect reality and taxpayer concerns, which are undoubtedly with ongoing inflation and broader economic jitters.
Bill of the Month: Cutting Paperwork for Taxpayers Act
As of May 13, 2023, the Internal Revenue Service (IRS) reported 4.2 million unprocessed individual tax returns. While this is significantly down from the 23.5 million unprocessed returns in 2021, the agency is still struggling to fulfill its critical functions. When the IRS fails to process a tax refund within 45 days, the refund begins accumulating interest. In January 2022, the interest rate on delayed returns was 3 percent; by the end of 2022 it doubled to 6 percent, and in January 2023, it rose to 7 percent. This rate is higher than savings accounts and Series I bonds, however, once it exceeds $10, it becomes taxable, and the agency issues the filer a separate 1099-INT form. This can be a headache for unaware taxpayers, as the penalty for filing your federal taxes late is 5 percent per month, with a maximum of 25 percent, and a late payment fee of 0.5 percent.
To address this issue, TPA is highlighting as our Bill of the Month for May 2023 the Cutting Paperwork for Taxpayers Act, introduced by Reps. Abigail Spanberger (D-Va.) and Young Kim (R-Calif.). This legislation would make interest accumulated on delayed tax refunds tax-exempt. This critical legislation would make interest generated on delayed tax refunds tax-exempt. The burden of the IRS failing to expeditiously process Americans’ tax returns should not fall on filers, who should rightly be compensated for the agency’s delay.
Profile in Courage: Robert E. Lucas Jr.
It’s difficult to challenge academic orthodoxy. Going against prevailing ideas can lead to plenty of ridicule and seriously damage career prospects. Yet, Dr. Robert (“Bob”) Lucas bravely went against the Keynesian orthodoxy in economics, arguing convincingly that economists need to take people’s actual beliefs and actions into account before evaluating the impact of government policies. Dr. Lucas slammed shut the old, dusty textbooks advocating for open-ended stimulus spending, and authored his own works arguing for restraint and humility in policymaking. The famed economist recently passed, but his ideas endure on in classrooms and even some state governments. For leading an academic revolution and championing fiscal responsibility, Bob Lucas is a Profile in Courage.
Ever the curious student, Lucas discovered the technical field of economics as taught by larger-than-life professors such as Milton Friedman and Paul Samuelson. As Lucas earned his doctorate at the University of Chicago and kicked off his teaching career at Carnegie Mellon, he busily began researching previous boom-and-bust cycles and modeling business investment decisions. His work produced a profound realization that flew in the face of conventional economic wisdom. The economic models printed in textbooks at the time assumed that individuals and businesses reflexively responded to government stimulus policies by spending and investing money. These results would supposedly play out the same way even after multiple rounds of stimulus.
Dr. Lucas realized that this wasn’t true, and individuals made decisions based on their “rational expectations” of what would happen in the wider economy. If individuals believed that increased government debt (resulting from stimulus spending) would weigh down the economy, they might save any government checks they receive instead of going on a spending spree. Similarly, slashing interest rates repeatedly over time could lead to workers expecting increased wages and businesses increasing prices to pay for this compensation. The result would be far from the simple, traditional model of rate cuts lighting a fire underneath the economy and facilitating growth. At a time when the national debt has surpassed $30 trillion, it’s difficult to claim that Dr. Lucas’ ideas have truly caught on. But, he at least started a critical conversation that forced big government advocates to justify their increasingly tortured logic. Dr. Lucas is a Profile in Courage for making the case against reckless policies and asking all the right questions along the way.
Blogs:
Media:
May 21, 2023: An op-ed in The Las Vegas Sun quoted TPA in an op-ed titled, “Don’t force taxpayers to gamble with the IRS.”
May 22, 2023: The Janesville Gazette ran TPA’s op-ed, “ “The sun is setting on costly net metering policies.”
May 22, 2023: WBFF Fox45 (Baltimore, Md.) interviewed me about the Baltimore mayor and city council members spending money on travel to Las Vegas.
May 22, 2023: The Lima News (Lima, Ohio) ran TPA’s op-ed, “The sun is setting on costly net metering policies.”
May 23, 2023: WBFF Fox45 (Baltimore, Md.) quoted TPA in their story, “"The price tag has come due" | Kirwan education spending takes toll on local governments.”
May 23, 2023: WCBM 680AM (Baltimore, Md.) quoted TPA in their story, “"The price tag has come due" | Kirwan education spending takes toll on local governments.”
May 24, 2023: WBFF Fox45 (Baltimore, Md.) quoted TPA in their story,"Who's responsible?" | residents demand answers for Baltimore Co. bridge built too short
May 25, 2023: I appeared on 55KRC Radio (Cincinnati, Ohio) to talk about energy policies, the debt ceiling and the United States Postal Service
Have a great holiday weekend!
Best,
