Some time ago there was a story in the Tulsa daily paper that was headlined: “Report: IRS refunded $4B to ID thieves.” This caught my eye, but the sub-heading went on to say: “Some of the fraudulent tax refunds went to addresses in other countries last year.” Writer credit was given to Stephen Ohlemacher of the Associated Press (AP). The story reflected so poorly on government mismanagement that I made a photocopy enlargement, but unfortunately neglected to mark the date it appeared, as is my usual practice.
The first paragraph of the story read: “The Internal Revenue Service issued $4 billion in fraudulent tax refunds last year to people using stolen identities, with some of the money going to addresses in Bulgaria, Lithuania and Ireland, according to an inspector generals report released Thursday.” The second paragraph further stated: “The IRS sent 655 tax refunds to a single address in Lithuania and 343 refunds went to a lone address in Shanghai.”.
The rest of the story seemed to be a cover for the efforts of the IRS to fight these false refund claims, without convincing me that much was really being accomplished. One seemingly true statement was a quote of J. Russell George, Treasury’s inspector general for tax administration, which read: “The fraud erodes taxpayer confidence in the federal tax system.”
This whole problem began with the implementation of the 16th Amendment to the Constitution, ratified February 3, 1913, which simply states: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
As with so many such changes, the nefarious results were not noted by those proposing them. Thus we now have a single bureau that has grown to many times the size of its original department and operates seemingly without congressional oversight that, because of its massive size and power, is universally feared.
Some (who in my opinion are misguided) have proposed a law statute mandating a “flat tax,” by which they mean a single rate of taxation. During the 2012 election, candidate Herman Cain proposed what he called the “9-9-9” tax program. However both proposals would leave the IRS in place, which in my opinion will not remedy the problems we all are having.
During the last decade, there was proposed what was called the “FairTax” which would bring about the abolition of the IRS and income tax, thus Amendment XVI would have to be repealed. This, as proposed, would consist of an imbedded tax in the price of every first purchase, thus excepting used cars, houses, etc. It is anticipated that the savings realized by producers from the disappearance of the myriad of taxes now imposed would mean that prices paid would stay the same, or even be reduced. The tax would be collected by the sellers and delivered to the respective state tax authority for forwarding to the U.S. Treasury Department, after deducting a small fee for the service.
While I admit to some skepticism at first, after reading the Neal Boortz book FairTax and its explanation, my opinion was changed to one of total support for the premise. Unfortunately, a good, veto-proof, majority of representatives has not yet appeared, and the presence of former Senate Pro-Tem Harry Reid, D-Nevada, meant it would not even have a hearing there. It is truly unfortunate that his replacement, Sen. Mitch McConnell, does not seem to be any more inclined to be willing to allow a vote. Nor is there enough of a dedicated group there to override a veto.
Thus there needs to be a substantial increase in more constitutionally oriented members in both houses. We all need to get on board this proposal.