September 19, 2018

The IRS Scandal Has Made the Long Odds of Passing Tax Reform Even Longer

Until last Friday, tax reform seemed to be working a steady pace towards…something. I mean, Max & Dave have both a Twitter account and a website dedicated to the cause so you know they were getting serious about the thing. This kind of effort is enough to get the ghost of Ronald Reagan wandering around DC handing out Jelly Bellies.  

But then last Friday happened and pretty much everybody grabbed the nearest flak they could find to issue a statement about how appalled they are that such a violation of public trust could occur at an agency that should be scrutinizing everyone with the same fervor.

Naturally, this IRS targeting Tea Party Patriots thing has some people worried that some lawmakers will get a little distracted: 

The question, lobbyists said, is how much time and resources the scandal ends up siphoning from the reform effort. If links to Obama administration appointees can be made, the problems at the IRS could mushroom. The House Ways and Means Committee has set its first hearing on the matter for Friday, and the Senate Finance Committee has pledged to investigate as well. Pro-tax-reform lobbyists worry that any time spent dissecting the Tea Party targeting is time not spent on comprehensive tax reform — a project that demands lots of attention, scandal or no. 

Right! Tax reform is complicated! So when some people would rather focus their efforts tearing down an easy target to score political points rather than working improving our tax code that could set things back a bit. 

But some people aren't as worried. This is the Ways and Means Committee after all and they're used to multi-tasking:

“This committee has pretty expansive jurisdiction and is used to having a lot going on simultaneously,” a House GOP aide said.
That's good news, I guess. Plus, there's a chance to tie in new legislation that would criminalize targeting political groups with tax audits to the reform effort, which could get some Tea Party types on board who weren't before. That's pretty clever!
But ultimately, this scandal crushes any momentum the tax reform effort had. Our pals Dave & Max are now focusing on these investigatory hearings and something tells me the political theater of grilling IRS bureaucrats will make for good soundbites in the media as opposed to, say, the merits of the mortgage interest deduction.
Maybe I'm wrong. Maybe Baucus and Camp will dig in even more now, forgoing sleep, family, food, Mad Men, etc. to get this thing done because of what it would mean for their legacies and for the political climate in DC. MAYBE.
But if I had bet on the "Pass" line for tax reform, I wouldn't feel very good about my wager right now.


Related articles

UBS Closer to Getting the McCarthy Treatment

IRS_logo-thumb-150x140.jpgIf you’ve got a Swiss bank account, here’s hoping you opened it because it was convenient for your monthly skiing/Toblerone getaway.
The U.S. and Swiss governments have agreed to share more tax information in order to crack down on all the tax dodgers out there that send their money offshore. The timing of this agreement is is especially diabolical because the IRS is currently trying to get Swiss bank behemoth UBS to name names of over 50,000 American clients.
Hearings in Miami are scheduled for next month to see if the names can be released, however, the Swiss have stated that this may violate Swiss law of double-secret-no-tattling-on-clients.
Ultimately, the Swiss Federal Council and Parliament will decide if the new agreement is kosh but judging by the Obama Administration’s hard-on for closing tax loopholes, they’ll probably play ball.

U.S. and Switzerland to Share More Tax Data

H&R Block Suggests That You Start Saving Receipts

IRS_logo-thumb-150x140.jpgH&R Block announced yesterday that it expects the IRS to get less kind and gentle in the coming years as the Service attempts to close the $345 billion tax gap.
The announcement states that the IRS is nearly doubling its budget for next year and that last year, 1 in 99 individual tax returns were audited as compared to 1 in 202 in 2000.
Maybe the Democrats do want all our money…
Audits Double This Decade [H&R Block Press Release]