August
2006
Tax Farming - A New Low in the Annals of Privatization
You have to hand it to them (and most of us do, via deductions from every paycheck, or annually, or quarterly), the IRS has traditionally been one of the bright spots in the federal bureaucracy. Those who study the agency nearly all come away commending it for its relative efficiency and professionalism. The Service has never shown much of an appetite for chasing possible violations of tax-exempt status, which makes its behavior in the All Saints Pasadena case all the more surprising and disturbing.The All Saints case points to a perennial source of potential corruption at the agency, which is abuse on the part of politicians. As his alcoholism and paranoia advanced, Richard Nixon demanded that the IRS crack down on his “enemies.” Lyndon Johnson had a similar agenda in mind but never implemented it.
In our time it’s the GOP-controlled Congress that most threatens the neutrality and effectiveness of a once-great agency. The Republican wreck-the-IRS program has three main elements:
1. Allow the very rich to keep more of their money legally
2. Encourage the very rich to cheat by cutting IRS enforcement and monitoring of their tax returns, e.g., by cutting funding and staff for estate tax enforcement
3. Concentrate enforcement on the poorest, e.g., by demanding that everyone claiming an Earned Income Tax Credit (EITC) be subject to audit as presumptive tax cheaters
Now we can add to this list a further piece of GOP skulduggery: the encouragement of tax “farming,” directed predictably (again) at lower-income taxpayers.
Tax farming, of course, has a long and ignominious history in Europe and elsewhere. Despots traditionally farmed out tax collection to unscrupulous operators who got to keep a goodly chunk of the take. The United States was supposed to be different. Here the idea was to rely upon the good sense and good conscience of the citizens, who would be expected to pay their fair share of taxes without coercion. Just knowing that one could be audited and thus publicly shamed–and penalized financially as well–was deemed sufficient inducement to keep an exemplary honor system going.
Now the U.S. system is coming apart, as favoritism toward the rich breeds ever-growing cynicism and prompts copycat cheating by everyone else. This catch-me-if-you-can cynicism will only get worse–much worse–with the announcement that, in response to a directive from Congress, the IRS will start paying private debt collectors to go after delinquent taxpayers. The new program, which starts next month, means that sensitive tax information will be handed over to private corporate entitities–three companies initially–which will be able to retain 22% to 24% of what they collect. Within two years the new tax farming program will involve as many as ten private companies.
Apart from confidentiality concerns, may we expect aggressive and unpleasant behavior from these companies, which stand to profit more when collection rates increase? Ummm, is it even necessary to ask that question?
The real beauty part, as with so many privatization schemes, is that the government will actually be paying more to collect taxes this way than it would have to pay to step up enforcement but keep the collection activity in house. That little detail doesn’t matter to Republican ideologues who want the IRS to use private collection firms. Their attitude–like that of their president–is “don’t confuse us with the facts.” Or rather, if they say that privatizing public services is efficient and salutary, then it must be so.
Examples of such conservative magic realism abound. Just this week a new study pointed out that charter schools underperform traditional public schools. But does this make the slightest difference to the privatizers? Absolutely not. Expect them to press ahead with the charter school agenda and claim there must be something wrong with the Education Department’s data.
Likewise, expect tax farming to proceed apace, regardless of the waste, fraud, and abuse that will undoubtedly surface. Waste, fraud, and abuse? By private companies?? That can’t be right: as we all know, the WFA label applies only to government programs. Case closed! Now pay up–and shut up–because we know where your children are.
Wait. WHOA. TAX FARMING? Ummm…excuse me, but have these superreligious rePublicans READ THEIR BIBLES? St. Matthew, help us! They’re bringing back the ROMAN EMPIRE!
http://www.jewishencyclopedia.com/view.jsp?artid=595&letter=P
PUBLICAN: Local tax-farmer; the office existed among the Jews under the Roman dominion. The Romans were accustomed to farm out, generally for five years, the customs dues on exports. These taxes were mainly ad valorem, and therefore, as the value placed upon goods varied, lent themselves to extortion; hence the unpopularity of the publicans, especially when, as under the Romans, they were Jews exploiting their fellow Jews. Echoes of this ill repute are found in the New Testament, where publicans are coupled with sinners (Matt. ix. 10; Luke v. 30, vii. 34), and even with the most degraded persons (Matt. xxi. 31). Taxes were levied on pearls (Kelim xvii. 15), slaves (B. B. 127b), and boats (’Ab. Zarah 10b). Tax-farmers were not eligible as judges or even as witnesses (Sanh. 25b), and it was even regarded as undesirable to exchange money with them, as they might be in possession of stolen coin. If one member of a family was a publican, all its members were liable to be considered as such for purposes of testimony (Sheb. 39a).Bibliography: Levy, Neuhebr. Wörtreb, s.v.: Jastrow, Dict. s.v. ; Herzfeld, Handelsgesch, der Juden des Alterthums, pp. 160-163.T. J.