Reprinted from Medium.

Forget your politics for a minute. Lose the whole Democrat vs. Republican, liberal vs. conservative thing. Because this doesn’t really have anything to do with that. We’ve heard a lot this week about some IRS people improperly handling tax applications for some conservative and, oddly, Jewish groups.

If so, this shouldn’t a surprise, because it’s happened before. There were certainly allegations of it as far back as the Kennedy and Johnson Administrations, and it comprised one of the impeachment articles against Richard Nixon. Until the IRS is staffed by benevolent philosopher-kings, rather than, you know, people, IRS power abuses will continue to recur.

Even if they didn’t, ordinary run-of-the-mill IRS incompetence should be bad enough. But put aside the various GAO and inspector generals’ reports showing, for instance, that the IRS accepted 2,137 tax returns from a single address in Lansing, MI, to which they returned $3.3 million in refunds. Forget the Treasury Department investigation where IRS taxpayer question centers incorrectly answered 43% of the taxpayer questions they received. And don’t even think about poor Rachel Porcaro, the Seattle single mom who filed a tax return for $18,000, only to be told by the IRS that it was impossible to live in Seattle on that little money, whereupon the IRS demanded an additional $16,000 in taxes and penalties.

All you have to think about is how many times you or some member of your family or friends have had some sort of hassle with the IRS. Think about how you feel when you receive an envelope with the IRS eagle in the upper left-hand corner. It’s not a good feeling is it? Because you know, really, that you’re not gonna open it up and find out that you’ve won a cuddly little puppy.

The IRS is a government agency with the power to delve into the deepest minutia of your personal financial life. If they don’t like what they find they can garnish your income, confiscate your property, or jail you. If they decide you owe them more money, you can’t escape paying them. You can’t even discharge a tax bill with bankruptcy. It’s like having Ray Liotta’s character in Goodfellas in charge of taxation. “Your kid got sick? F*** you, pay me. You lost your job? F*** you, pay me.”

Ultimately, though, the problem with the IRS isn’t incompetence or malice. The problem is that we have a system of income taxation in the first place. If you tax income, you inherently give the government the power to inquire into every single aspect of your financial life. Once you’ve done that, then you automatically have a government agency with the power to destroy individuals’ lives.

So…why would you do that? There are plenty of options for governments to raise revenue. There are sales taxes,value-added taxes, excise taxes, tariffs on imports and exports, user fees, and several other methods. So, why would you intentionally create a tax system that gives the government such enormous power over individuals?

There are lots of other reasons to wonder about the efficacy of a system of income taxation, of course. The IRS estimates that simply completing a tax return costs the average taxpayer 25.5 hours and $149. If you own a small business or are self-employed, that rises to more than 97 hours and $752. That’s a lot of time and money to fill out a single form.

Also, it’s nearly impossible to prevent politicians from expanding and complicating the tax code, because an income tax allows politicians to subsidize or penalize all sorts of individual behaviors—and they do. The assumption being, apparently, that 535 people in Washington, DC, can make better decisions than you can about how to spend your money. Do you remember that Congressman from Georgia who asked the Chief of Naval Operations if sending more Marines to Guam would cause the island “to tip over and capsize”? He’s one of the guys who gets to decide how the tax code handles your income, and he’s a dolt.

Ask yourself a simple question: “If I was creating a new tax system from scratch, would I create one that allows the government to take my house, and maybe send me to jail if I make a mistake?”

If you wouldn’t, then why in the world would you want to keep one that already does?

If it’s possible for a presidential administration to use the IRS to cow his political opponents, why would you want to keep the tax system that allows it, no matter who the president is? That’s serious banana republic stuff. And if that power exists, it seems self-evident that it isinevitable that it will be exercised. Indeed, by all accounts it already has been, and more than once.

We could completely liberate ourselves from individual attention from the IRS simply by switching to a system of consumption taxation, rather than income taxation. No more individual tax returns. No more income tax withholding from paychecks. No more letters from the IRS demanding extra taxes and penalties for some minor mistake three years ago. No more giving out the details of our private financial lives to some government busybody. The government would know nothing about how much money you make or how much money you have. They’d get their money when you spent yours.

Sure, there might be some quibbling about precisely what form a consumption tax would take. Maybe we’d argue a bit, too, about how to build some progressivity into it and make it revenue neutral. But both of those things are achievable. A 23% VAT that excluded non-prepared foods, clothing, and rental housing would get us in the ballpark. In return, we’d get the government’s nose out of our personal business, get a bigger chunk of our paychecks to spend each week, and turn April 15 into just another spring day.

The benefits of eliminating the income tax and switching to some sort of consumption tax seem so clear to me. I cannot imagine why anyone, of any political persuasion, would be opposed to it.

Here are today’s statistics on the state of the economy:

The Chicago Fed National Activity Index slipped to -0.53 in April from -0.23 in March. The 3 Month Moving Average fell from -0.01 to -0.04.

~
Dale Franks
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Grab your wallets, this is going to cost you plenty … for zero gain against a made up problem:

“A principal challenge to all of us of life and death proportions is the challenge of climate change…I regret that my own country – and President Obama knows this and is committed to changing it – needs to do more and we are committed to doing more.”–Secretary Kerry

And the apology tour continues.

~McQ

This week, Bruce, Michael, and Dale discuss the week’s scandal updates.

The direct link to the podcast can be found here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here.

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Here are today’s statistics on the state of the economy:

The Conference Board’s index of leading indicators rose 0.6% in April, much stronger than expected.

The Reuter’s/University of Michigan’s consumer sentiment index jumped sharply from 76.4 to 83.7 in May.

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Dale Franks
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Peggy Noonan makes this statement today:

What happened at the IRS is the government’s essential business. The IRS case deserves and calls out for an independent counsel, fully armed with all that position’s powers. Only then will stables that badly need to be cleaned, be cleaned. Everyone involved in this abuse of power should pay a price, because if they don’t, the politicization of the IRS will continue—forever. If it is not stopped now, it will never stop. And if it isn’t stopped, no one will ever respect or have even minimal faith in the revenue-gathering arm of the U.S. government again.

And it would be shameful and shallow for any Republican operative or operator to make this scandal into a commercial and turn it into a mere partisan arguing point and part of the game. It’s not part of the game. This is not about the usual partisan slugfest. This is about the integrity of our system of government and our ability to trust, which is to say our ability to function.

First paragraph … agree, for the most part.  Where I don’t agree is that there is a “minimal faith” in the revenue gathering arm of the US government.  There’s been little faith in it since it’s inception.  Most people understand that the gun is pointed at them and the prison cell is open and waiting.  They don’t pay taxes because of any “faith” or respect for the IRS or government.  They do it out of fear.

As for the second paragraph, that’s total horse hockey.  Total.

The entire point of the scandal was it targeted “political” organizations.  How does one not politicize it?  It took place under a Democratic administration and the opponents of that party were the target of the IRS.

Hello?

And what do we get from Noonan? “Hey, let’s take a knife to a gun fight”.

Noonan’s advice is, by far, the stupidest advice one could give.

Yes, this is about the integrity of the system. And, like it or not, that is directly linked to those who administer and govern.

Ms. Noonan, who is that right now? And how, if they were doing an effective job, would this have been going on for two years. Oh, and speaking of trust, how are you with the whole AP scandal? My guess is you’re wanting some heads over that.

Well, I want some heads of this. And Benghazi. And Fast and Furious.

Instead we get shrinking violets like you advising everyone to back off and not make this “political”.

BS.

~McQ

Here are today’s statistics on the state of the economy:

The Consumer Price Index fell -0.4% in April, but rose 0.1% ex-food and -energy. On a year-over-year basis, the headline CPI is up 1.1% and the core is up 1.7%.

April housing starts fell -16.5% to a 0.853 million annual rate. Housing permits, conversely, jumped 14.3% to a 1.017 million annual rate.

Initial jobless claims rose 32,000 to 360,000, and the 4-week average rose 1,250 to 339,250. Continuing claims fell 4,000 to 3.009 million.

The Bloomberg Consumer Comfort Index slipped half a point to -30.2 in the latest week.

The Philadelphia Fed Survey slipped into negative territory in May, falling from 1.3 to -5.2.

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So Ed Morrissey points out that the IRS thing has been going on since 2011 and it’s just a “couple of agents” in a single per the official line.  Well, maybe four.

Except the agents in question are claiming only to have done what their bosses wanted.  And their bosses?  We don’t know.  We don’t know who they are.  After all, it was only a couple of letters to a couple of right of center organizations.

But again, per Morrissey, these two – or four – agents were busy little people in that one office.

Did I say 300 organizations? According to the report, Reps. Jim Jordan and Darrell Issa now put that number closer to 500.  If it was just these four agents, they’d have to have been rather, er, productive.

Yeah.  And they did it all over the US and all by themselves for two years.

Is anyone in charge up there?  Does anyone even know what’s going on?  And, if someone is in charge, are we ever going to hold them accountable?

Trust in government?

What trust?

~McQ

Here are today’s statistics on the state of the economy:

The MBA reports that mortgage applications fell a sharp -7.3%. Purchases fell -4.0% while re-fis fell -8.0%.

The Producer Price Index fell -0.7% in April, but the core rate—less food and energy—rose 0.1%. On a year-over year basis, the PPI 0.1% while the care rate rose 1.7%.

The Empire State Manufacturing Survey fell more than 4 points to -1.43 in April.

The Treasury reports that the net outflow of capital from the US was $-13.5 billion in March. Foreign accounts bought a net $15.3 billion of US securities, while US accounts bought $28.8 billion of foreign securities.

The Fed reports that Industrial Production fell -0.5% in April, as capacity utilization in the nation’s factories fell to 77.8%.

The Housing Market Index rose 2 points to 44 in May.

E-Commerce sales rose 2.7% in the 1st Quarter of 2013, down from 4.4% in the 4th Quarter of 2012.

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Besides improving his golf game, you have to wonder what we pay this guy for:

A report by the Government Accountability Institute found that in his first 1,225 days in office, Obama only attended 43.8% of his daily intelligence briefings.

And in the days leading up to Benghazi, well, he had more important things to do than sit in on what should be the first thing he does everyday:

As Breitbart News exclusively reported the day after the September 11, 2012 terrorist attack, Obama did not attend his intelligence briefings (known officially as the presidential daily brief, or PDB) for the week leading up to the attacks.

Hard to lead when you don’t know wtf is going on, isn’t it?

~McQ

Here are today’s statistics on the state of the economy:

The NFIB Small Business Optimism Index rose 2.6 points to 92.1 in April.

April export prices fell -0.7% and import prices fell -0.5%. On a year-over-year basis, export prices fell 0.9% while import prices fell -2.6%.

ICSC Goldman reports weekly retail sales fell -2.0%, and are up only 1.2% from a year ago. Redbook’s year-over-year sales growth reading improved to 2.8%.

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I found this to be very interesting.  From ABC News (email):

THE ROUNDTABLE

ABC’s JEFF ZELENY: The troubles are mounting for the White House – Benghazi, IRS, AP phone records – leading one administration official to ask yesterday: “Is it really still only Monday?” It’s safe to say all three topics are moving into scandal territory, but it’s a mistake to view them together. Of all of the controversies, the IRS seems to be the most troubling because it further erodes trust in government and institutions – from a point that is already distressingly low. At least three Congressional committees are digging in. Even though the president said he didn’t know about the IRS matter until the news broke last week, it happened on his watch. Democrats could have a hard time winning this one. It bolsters the case for Republicans, just in time for the midterm campaign to begin.

ABC’s RICK KLEIN: It comes fast and intense in a second term. And the confluence of events – Benghazi talking points, the IRS scandal, sweeping subpoenas of Associated Press records – leave plenty of reasons to mistrust the government President Obama is leading. Knowing that Congress can’t walk and chew gum very well – it can’t walk all that well without the gum, and this flavor is particularly tasty to the president’s opponents – this is a recipe for stalling and worse for just about anything the White House wants to do. The president’s powers of public persuasion, meanwhile, could ebb in the whiff of scandals. If there’s a White House strategy to turn this all around, we’re not seeing signs of it, not yet.

ABC’s DEVIN DWYER: The talking points coming out of the State Department on Monday were astonishing for their attempted revisionism. Spokeswoman Jen Psaki repeated four times in four minutes that the Obama administration’s early public characterization of the 2012 Benghazi terror attack was dictated by the CIA. “These were CIA points. They were CIA edited. They were CIA finalized,” she said. Nevermind that trove of emails, obtained by ABC News, that shows it was in fact the State Department that sought to edit out the CIA’s references to al Qaeda and to security warnings in Benghazi prior to the attack. “These started and ended as CIA talking points,” Psaki said. Technically, maybe so. But it would be disingenuous to ignore or deny the apparent influence of State during the talking-point sausage-making that occurred in between.

ABC’s SHUSHANNAH WALSHE: The Tea Party groups who say they were unfairly targeted by the IRS showed ABC News questionnaires and documents received from the Internal Revenue Service. They had to answer questions about their donors, views on issues, and one member said she was even asked to show her personal Facebook account, all they say, because of their political views. The agency apologized last week, but these groups don’t feel like they were directly apologized to. All want an investigation, but for Jennifer Stefano who was trying to set up a group called The Loyal Opposition, but finally gave up, she compares this scandal to Watergate: “It became very frightening, the IRS has the power to target the political opposition of a sitting president.”

It’s amazing it has taken these events and this long for these people to actually do their jobs.  And there’s no guarantee they will.  But it can’t be denied any longer — it is on “the” radar screen.  Benghazi, IRS, AP, you name it.  Even the sycophants credulity is being tested.

Maybe it took this administration’s messing with AP to finally make them figure out that for the most part they’ve simply been the media arm of the administration and the administration feels some “ownership” rights.  Thus it was checking on them … or something.

It’ll be interesting to watch this all unfold — or disappear.

~McQ

Here are today’s statistics on the state of the economy:

Retail sales rose 0.1% in April, but fell -0.1% ex-autos. But, ex-autos and gas, sales rose 0.6%.

Business inventories were unchanged in March, resulting in a 1.1% build in inventories for the quarter. Sales were up 0.6% for the quarter, the weakest of the recovery.

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Dale Franks
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This week, Michael and Dale discuss Benghazi, the IRs and loony David Kokesh.

The direct link to the podcast can be found here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here.

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You’ve all read about the first “3D gun” being made?  Well here’s some of the fallout:

Defense Distributed, the Texas-based nonprofit that wants to empower people to 3D print their own guns, has hit a bit of a legal snag. According to founder Cody Wilson, DEFCAD, the open source weapon-printing project powered by Defense Distributed, received a letter (embedded below) from the State Department’s Office of Defense Trade Compliance, telling him to remove the blueprints of the Liberator, his 3D printed gun, from the web so that they may be reviewed by the department.

The group’s website currently has a red banner appended to the top that reads, “DEFCAD files are being removed from public access at the request of the US Department of Defense Trade Controls.  Until further notice, the United States government claims control of the information.”

“We got an official letter from the Secretary of State, telling me who they were, what their authority was under U.S. law and telling me they want to review these files to see if they’re class one munitions,” Mr. Wilson told Betabeat by phone. “That includes blueprints.”

So anyone want to guess how many times those blueprints were downloaded before this order came along?  I know there are many other aspects of this case to discuss such as this:

In the letter … the State Department says that Defense Distributed may have released data that is controlled by the International Traffic in Arms Regulation without getting prior authorization. This would put the company’s actions in conflict with … the Arms Export Control Act.

“Please note that disclosing (including oral or visual disclosure) or transferring technical data to a foreign person, whether in the United States or abroad, is considered an export,” reads the letter. It also says that until Defense Distributed has received the legal all-clear, the company “should treat the above technical data as ITAR-controlled. This means that all such data should be removed from public access immediately.”

But other than a basis to prosecute, the letter accomplishes nothing. Same with the “law”. Add the internet and, well, whoosh, it’s around the world before the government even knows about it.

A perfect example of why, and you can see rumblings of it happening now here (and, of course, it is a top priority in other countries), government is growing more and more interested in controlling the internet.  Again, the excuse du jour will be what?  “It’s for your own safety and security that we clamp down on these things and take away some of your freedoms”.  It has no choice if it is going to enforce it’s laws does it?

And we all remember what Ben Franklin said about trading freedom for security, don’t we?

Don’t we?

~McQ

If you are interested in some more geeky constructed language/font stuff, I have a new article up at Medium on a revision I made to the Quickscript alphabet. Frankly, the Quickscript alphabet is a bit of a mess, despite Kingsley read working on it for years. In just a few short weeks, however, I have created a revision of it that is vastly superior to the alphabet that Kingsley Read made his life’s work.

Because I am a genius in things that don’t matter.

Anyway, read it if you like, and please don’t forget to hit the "recommend" button at the bottom.

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Dale Franks
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Here are today’s statistics on the state of the economy:

Chain stores are reporting April sales that are at the high end of guidance, and with stronger year-on-year sales growth rates than in March.

The Bloomberg Consumer Comfort Index fell slightly to -29.5, but remains at the highest level since early 2008.

Wholesale inventories rose 0.4% in March, while a 1.6% plunge in sales drove the stock-to-sales ratio to a recovery high of 1.21.

Jobless claims fell 4,000 to 323,000, and the 4-week average fell 6,250 to 336,750. Continuing claims fell 27,000 to 3.005 million.

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Dale Franks
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Well apparently the ultimate RINO is restless and looking for a nail on which he can use his legislative hammer.

John McCain is going to release a bill that would dismantle cable as it’s currently constructed, Brenden Sasso at The Hill reports.

The legislation would force cable companies and satellite TV providers to give consumers an option to pick and choose which channels they get. This is called “à la carte programming,” and it’s long been a dream of consumers who only want a handful of channels.

While I’d certainly be fine with a la carte programming, it is none of the government’s business.  When someone finds a way to offer that, consumers will reward them.

Speaking of the government, you’d think another thing that they and McCain would be for would be a la carte health insurance.  You know, a dream of health care consumers.  Instead we get bundled health care with 300 things we don’t want but have to pay for because the government says so.

You’d think people like McCain, et al, would want to do something abou that wouldn’t you … instead of worrying about TV channels.

~McQ

On another slow day for the economic calendar, this is what we got:

The MBA reports that mortgage applications surged last week, with purchases up 2.0% and re-fis up 8.0%.

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Dale Franks
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To be fair, they don’t understand how most things work, especially when there’s math involved, but this particular quirk is quite annoying.

I remember the first time I came across this general ignorance (see the comments), in a West Wing episode:

Actual dialog from a recent West Wing rerun:

Josh: What do I say to people who ask why we subsidize farmers when we don’t subsidize plumbers?
Farmer’s daughter 1: Tell ’em they can pay seven dollars for a potato.

Yes, I know it’s a TV show, but do people actually think like this? I always assumed that the reason we couldn’t get rid of farm subsidies was rent seeking by the farmers, but if people actually believe this, that could be part of the problem.

Yes, people actually do believe this. Indeed, here is David Sirota spouting the same ignorance:

GOP meat eaters aren’t free market – they want everyone to subsidize their eating via taxes that fund meat subsidies.

Among best ways to reduce meat consumption is to end ag subsidies so that the cost of meat is a true free market price – think: $9 burgers

David also makes the correct point that some GOP congressmen vote to keep these subsidies in place (particularly those in states with farms that benefit the most from them), but that doesn’t alleviate the complete misunderstanding of what these subsidies do.

In short: agricultural subsidies don’t reduce consumer prices, but instead raise them.

In fact, the entire point of these subsidies is to set minimum price levels (often called “price supports”) or trade barriers that create an artificial monopoly. The entire milk industry, as an example, is propped up with such subsidies. Why else do you think it costs about as much for a gallon of milk as does for a gallon of gas?

Although there had been several different forms of subsidies in the U.S. prior to the 1930′s, most were simple tariffs. When the Great Depression began, the Roosevelt Administration sought to prop up the nation’s farmers by raising their incomes. How did they propose to do that? Mainly by setting minimum prices and production quotas (remember Wickard v. Filburn?):

When Franklin D. Roosevelt was inaugurated president in 1933, he called Congress into special session to introduce a record number of legislative proposals under what he dubbed the New Deal. One of the first to be introduced and enacted was the Agricultural Adjustment Act. The intent of the AAA was to restore the purchasing power of American farmers to pre-World War I levels. The money to pay the farmers for cutting back production by about 30 percent was raised by a tax on companies that bought farm products and processed them into food and clothing.

The AAA evened the balance of supply and demand for farm commodities so that prices would support a decent purchasing power for farmers. This concept was known as “parity.”

AAA controlled the supply of seven “basic crops” — corn, wheat, cotton, rice, peanuts, tobacco, and milk — by offering payments to farmers in return for farmers not planting those crops.

The AAA also became involved in assisting farmers ruined by the advent of the Dust Bowl in 1934.

In 1936 the Supreme Court, ruling in United States v. Butler, declared the AAA unconstitutional. Writing for the majority, Justice Owen Roberts stated that by regulating agriculture, the federal government was invading areas of jurisdiction reserved by the constitution to the states, and thus violated the Tenth Amendment. Judge Harlan Stone responded for the minority that, “Courts are not the only agency of government that must be assumed to have capacity to govern.”

Further legislation by Congress restored some of the act`s provisions, encouraging conservation, maintaining balanced prices, and establishing food reserves for periods of shortages.

Congress also adopted the Soil Conservation and Domestic Allotment Act, which encouraged conservation by paying benefits for planting soil-building crops instead of staple crops. The rewritten statutes were declared constitutional by the Supreme Court in Mulford v. Smith (1939) and Wickard v. Filburn (1942).

During World War II, the AAA turned its attention to increasing food production to meet war needs. The AAA did not end the Great Depression and drought, but the legislation remained the basis for all farm programs in the following 70 years.

The entire point of these subsidies is to increase the incomes of farmers. It has never had anything to do with making the price of a potato or a hamburger cheaper for consumers. By design, these programs intend to raise the price for agricultural products, as well as to transfer dollars from taxpayers to farmers.

How liberals like David Sirota and Aaron Sorkin came to think the exact opposite is puzzling. As Ronald Reagan said: “It isn’t so much that liberals are ignorant. It’s just that they know so many things that aren’t so.”