Yes, today is April 15th. And, no, today isn’t Tax Day. This year Tax Day is April 18th. That gives you one last weekend to get your taxes done.

Yes, today is April 15^th. And, no, today isn’t Tax Day. This year Tax Day is April 18^th. That gives you one last weekend to get your taxes done. I was prepared to share one last Tax Fact before Tax Day, but then I saw a new report by the Government Accountability Office titled, “Tax Filing: 2021 Performance Underscores Need for IRS to Address Persistent Challenges.” The Journal of Accountancy ([link removed]) reported that, “The IRS in 2021 suspended its electronic processing and shunted into a cumbersome manual process about 16 million more returns with errors than the average from 2017 to 2019, an increase of 86%, the GAO reported.” Yea, I think that’s enough. Good luck finishing your taxes this weekend. Please double and triple check your numbers and calculations.

Tax Day – A Whammy on Lower-Income Americans
Before Tax Day even arrives, the IRS is already anticipating a months long backlog of millions of tax returns. With an added $675 million from the omnibus spending bill passed in March, the IRS is dedicating much of that funding to enforcement and investigatory activities, rather than radically focusing on this backlog. This is terrible news for hardworking Americans in the lower income-tax brackets who rely on a tax refund. Once a return is filed, the bad news continues for lower-income filers. Publicly available data show that the IRS disproportionately targets poorer communities for increased audit scrutiny. Shamefully, this scrutiny is also heavily directed at minority communities. The IRS neither denies nor repudiates these trends. In fact, IRS commissioner Charles Rettig has described auditing poor Americans who claim the Earned Income Tax Credit as “the most efficient use of available IRS examination resources.” Now, the IRS has more resources to keep struggling Americans in the
crosshairs.

Rettig and the IRS further rationalize these practices by claiming it is easier to audit disadvantaged communities. It costs less, requires fewer staffers, and takes up less time because these particular demographics do not have the resources to fight back with any seriousness. Simply put, the IRS is a bully with the entire apparatus of the federal government (and billions of taxpayer dollars) at its back.

What could make this problem even worse is a legislative issue gaining traction in the halls of Congress. A proposal from Senator Elizabeth Warren (D., Mass.) would put the IRS in charge of filing tax returns. This is disastrous because the IRS is struggling to handle the caseload it is already receiving from returns submitted the last two years. The IRS has shown no indication that it can handle these added responsibilities with any competency. Second, Warren’s proposal would give the IRS more opportunities to take advantage of vulnerable Americans. The agency has already demonstrated a desire and willingness to target low-income Americans for excess scrutiny. With the IRS in charge of returns, it can extort more from low-income Americans, knowing that the burden of proof will be on taxpayers to prove they’ve been wronged and that they won’t pursue a robust legal defense.

Such a system has already been tried in California. California’s “ReadyReturn” or “CalFile” program has state employees fill out tax returns for citizens, send them the filing, and leave it up to the taxpayer to simply sign it and mail it back. However, in one year almost 80 percent of recipients threw away the pre-prepared return and opted to submit their own. This means that the program on a national level could be a monumental waste. The system is also deceptively billed as a “free” tax filing. The government’s development of tax-return software is done at a higher cost than companies such as Intuit. Government employees are also paid more than private tax preparers. Ironically, Americans won’t notice the difference in a one-time fee of roughly $200, but the charge will be taken out via tax liability, which would be almost unilaterally determined by the IRS under such a proposal. It is also difficult to imagine how much information-gathering the IRS would have to do to reasonably prepare
tax returns for millions of Americans. Unfortunately, the IRS has proven a poor steward of sensitive information. A Department of the Treasury investigation showed both that IRS equipment is susceptible to cyberattacks and that confidential information is not disposed of properly. This new power for the IRS puts the information of millions at risk. If the IRS is to do anything with extra money, it needs to be securing the data it already has, not searching for more. The IRS does not have the best interests of taxpayers at heart. It does not know what is best for each American. Allowing it to set the baseline for tax liability for each American is a costly endeavor and one that will no doubt extort more money than necessary from hardworking people.

Given the issues that currently exist within the IRS, proposals to put it in charge of national tax-return filing are unnecessary at best and malicious at worst.


Tax Day – President Biden’s Tax Increase on the Middle Class
There were a number of tax increases in President Biden’s budget that warrant mentioning. The biggest and potentially most economically destructive is the President calling for an unprecedented 20% minimum tax on unrealized capital gains for high net-worth households. That’s right, the already overburdened IRS would be tasked with accurately calculating changes in the value of privately held companies and siphoning investments from these companies through a complicated maze of taxes. This would not only mean less money for hiring and workers’ raises, but also guarantee massive stock selloffs at a time when millions of Americans are readying their retirement accounts. Instead of finding new ways to fleece the American people, the Biden administration should propose trimming the bloated budget.

Ordinary capital gains taxation is bad enough. A slew of public officials ranging from President John Kennedy to President Bill Clinton have recognized that punishing investment deters productive activity and rarely results in lasting revenues for Uncle Sam. But at least capital gains taxation is fairly straightforward to calculate. IRS bureaucrats need only know the investor’s income, size of the investment, initial purchase price, and selling price to figure out the tax owed. But, if tax-hungry politicians get their way, the IRS will have to divine the constantly evolving value of intellectual property, reputational capital, etc. for privately held companies with little market data to rely on. This would likely result in protracted battles between wealthy investors and the IRS over the value of unrealized gains, with the IRS continually trying to high-ball gains to maximize tax revenues. The IRS winning these battles would mean resources taken from hiring initiatives, training programs,
and worker compensation across the struggling economy. The impact over the first couple of years of implementation would be particularly rough, owing to the particularly poor design of the proposal. As Manhattan Institute senior fellow Brian Riedl notes, “the proposal would be retroactive. So someone who started a $1 billion private business 30 years ago could conceivably get a $200 million tax bill in the first year. The business owner would have to either sell the business, or be assessed additional fees to defer the taxes until whenever they wish to sell the business.”

It gets even worse. Business leaders hold significant sums in publicly traded stocks, and usually only sell these shares in significant sums to pay tax bills. The front-loaded, retroactive nature of the law would mean that these sell-offs would be concentrated in the near-future, and stocks would likely take a large tumble as a result. The main casualties of these large share-price declines would be the millions of Americans owning retirement accounts invested in the stock market. And nearly 60% of Americans report owning stock. A large proportion of these investors are far from wealthy. When Elon Musk’s stock sales caused Tesla shares to fall by 15%, ordinary investors felt far more pain than Musk. Such is the folly of populist tax proposals. Despite the best intentions, policymakers usually succeed only in making it more difficult for middle-class Americans to save for their retirements. And, for all the pain and wage and hiring freezes, the proposal would net just $36 billion per
year under the rosiest of assumptions. So much for financing trillion-dollar deficits with a “fair” tax system. Biden, his administration, and his congressional allies need to make a concerted push to phase out deficit spending and get America back into the black. Real deficit reduction, not tired tax schemes, is the key to renewed prosperity.

BLOGS:

Monday: Telecom experts discuss importance of accurate maps and prioritizing unserved areas in infrastructure funding ([link removed])

Tuesday: Government Watchdog Responds to 40-Year High Inflation Rates ([link removed])

Thursday: TPA Sends Coalition Letter to HHS to Abandon Attempts to Enact Price Controls on Patients and Doctors ([link removed])

Friday: New Poll Shows Voters Want Congress to Focus on Pocketbook Issues ([link removed])


MEDIA:

April 11, 2022: WBFF Fox45 (Baltimore, Md.) interviewed me about the Back River Wastewater Treatment Plant ([link removed]) .

April 11, 2022: Real Clear Policy ran TPA’s op-ed, “Russia's War on Ukrainian Mail ([link removed]) .”

April 11, 2022: I appeared on WBFF Fox45 ([link removed]) (Baltimore, Md.) to talk about Mayor Scott’s budget.

April 11, 2022: The Center Square ran TPA’s op-ed, “No, the FDA does not need to regulate cannabis ([link removed]) .”

April 12, 2022: Townhall.com ran TPA’s op-ed, “The EPA and National Academies of Science Have a Transparency Problem ([link removed]) .”

April 12., 2022: The Jacksonville Journal-Courier (Jacksonville, Illinois) ran TPA’s op-ed, “Harm reduction' could transform health ([link removed]) .”

April 13, 2022: The Georgia Virtue ran TPA’s op-ed, “The FDA Does Not Need To Regulate Cannabis.” ([link removed])

April 14, 2022: I appeared on KWTO 93.3 FM (Springfield, Mo.) to talk about inflation and Tax Day.

April 14, 2022: WBFF Fox45 (Baltimore, Md.) interviewed me about legislation that would ban members of Congress from owning stock ([link removed]) .

April 14, 2022: I appeared on WBOB Radio (600 AM AND 101 FM Jacksonville, Fla.) to talk about inflation and a potential recession.

April 14, 2022: I appeared on WLAC Radio (1510 AM AND 98.3 FM Nashville, Tenn.) to talk about inflation and Tax Day.

April 14, 2022: I appeared on The Real Story on One America News Network to discuss inflation and Tax Day.

April 14, 2022: I appeared on ‘John Solomon Reports’ ([link removed]) Podcast on Just the News to discuss recent budget proposals and Tax Day.

April 15, 2022: Townhall.com ran TPA’s op-ed, “.”

April 15, 2022: The Tennessee Star ([link removed]) quoted me in their story, “Taxpayer Protection Alliance Head David Williams Debunks Dems’ Myth of ‘Temporary Inflation,’ Suggests Biden Administration Is in Fact ‘Anti-Environmentalist’”


Have a great weekend!
Best,

David Williams
President
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 1120
Washington, D.C. xxxxxx
www.protectingtaxpayers.org ([link removed])

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