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IRS Abuse of Power and Its Economic Impact

 

IRS - Internal Revenue ServiceOver the last couple years, the federal Internal Revenue Service has targeted conservative and “Tea Party” groups for unreasonable degrees of scrutiny.

IRS Commissioner Douglas Shulman, in testimony before Congress, has admitted the targeting was “‘inappropriate’ targeting of conservative political groups during the 2012 election to see if they were violating their tax-exempt status.” ( AP ) Another IRS Commissioner, Steven Miller, who knew about IRS targeting in 2011, was asked to resign, and has. ( TownHall.com )

According to the Associated Press:

“IRS agents singled out dozens of organizations for additional reviews because they included the words “tea party” or “patriot” in their exemption applications, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups. In some cases, groups were asked for lists of donors, which violates IRS policy in most cases, she said.” (AP)

In fact, the IRS asked the groups for Facebook posts, reading lists, and seemed, in some cases, to be asking after even their private thoughts. (Politico) The number of groups said to be targeted is over 500. (TownHall.com) Some of the information wrongfully leaked from the IRS even appears to have been used by one of President Barack Obama’s re-election campaign co-chairmen to attack GOP presidential nominee Mitt Romney during the 2012 election. (Breitbart)

While the IRS was burying Tea Party and conservative groups under mountains of red tape, it approved perhaps dozens of applications from similar left-leaning, progressive groups, according to a USA TODAY review of IRS data. (USATODAY) According to the National Review, IRS employees donated more than twice as much in campaign donations to Obama than to Romney in 2012. (National Review)

Now, David Camp, chairman of the House Ways and Means Committee, “has charged top IRS officials, including former commissioner Doug Shulman, of lying to Congress over the targeting of tea-party groups.” (National Review) “They knew this was going on and responded in writing to the committee that it was not,” said Camp in an interview with National Review’s Jonathan Strong at the Capitol. (National Review) Hearings on the scandal are will continue to be conducted.

The I.R.S. abusing Americans for political purposes at the direction of the President (or his minions) is nothing new. President Franklin Delano Roosevelt used to order I.R.S. audits of his political opponents. John F. Kennedy began an I.R.S. task force devoted to targeting conservative-leaning groups. Lyndon B. Johnson used the I.R.S. to harass and put pressure on groups opposing the Vietnam War.

White House counsel to the Nixon administration, John Dean, wrote in a 1971 memo about “how [to] use the available federal machinery to screw our political enemies.” (CATO Institute, YouTube) Despite these historical precedents, however, I think it’s probably safe to say that most Americans agree with the statements Senator Marco Rubio (R-FL) made on the floor of the U.S. Senate:

“…[I]n the span of four days, [there were] three major revelations about the use of government power to intimidate those who are doing things that the government doesn’t like. These are the tactics of the third world. These are the tactics of places that don’t have the freedoms and the independence that we have here in this country. And it is shocking to Americans that this would come to light in the way that it has. I would submit to you, however, that none of this is new. That what we see emerging here is a pattern, a culture, a culture of intimidation, of hardball politics that we saw both on the campaign trail and now through the apparatus of government.” (YouTube)

To me, as a patriotic American citizen (and a libertarian and a registered Independent), these tactics do seem like what I would expect from a third world government. My standards for acceptable behavior are higher when it comes to the federal government of the United States of America.

Our government, especially the federal government, is the most dangerous threat facing our economy, today. “The foundation for economic progress is a legal system that protects privately owned property and enforces contracts in an evenhanded manner.” (Gwartney) President Thomas Jefferson famously said:

“…a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.”

Though some may interpret the last part of this statement differently, I believe Jefferson meant by “this is necessary to close the circle of our felicities” that this is necessary to our pursuit of happiness. In any event, the author of the Declaration of Independence and modern economists, like James Gwartney agree that protection of private property – not taking from the mouth of labor the bread it has earned – is good government.

Nevertheless, taking from the mouth of labor the bread it has earned is precisely what the IRS does! Before the Sixteenth Amendment, ratified in 1913 during the administration of progressive President Woodrow Wilson, established the authority of Congress to tax income, the U.S. had no federal income tax, except for during a brief period in the Union under President Abraham Lincoln. The law levying an income tax to fund the Union’s fighting of the Civil War expired in 1872. Until 1913, excise taxes and customs duties, also called tariffs, were the primary sources of federal revenue.

For the last hundred years, the American economy has largely prospered despite the increasing burden of an ever growing system of taxation and regulation. Moreover, we have seen that “[p]eople will produce more when they are permitted to keep more of what they earn,” making low tax rates a major source of economic progress. (Gwartney)

The economic prosperity of the 1980s and 1990s is largely attributable to the lowering of tax rates (the Kemp-Roth Tax Cut of 1981) and other Reagan-era fiscal policies sometimes referred to as “Reaganomics.” During the Reagan presidency, the top marginal rate of tax in the United States fell from 70% to 31%, while revenue continued to increase every year from 1980 ($885B) to 1990 ($1.93T). (“Total 1990 Government Revenue”. usgovernmentrevenue.com. Retrieved 15th May 2013.) “As a result of Ronald Reagan’s tax cuts, federal income rose by more than 40 percent, and the rich paid far more, while lower tax brackets paid less. For those obsessed with Reagan-era ‘deficits,’ they certainly did not come from the tax cuts.” (Schweikart)

Of course, sound fiscal policy is the other half of the coin, when it comes to economic prosperity. In the 1990s, Newt Gingrich’s Contract With America contained the promise of a balanced-budget law, which was eventually passed by Congress and signed into law by then-President Bill Clinton. “[I]n his first speech before the Republican-controlled Congress, Clinton said, ‘The era of big government is over’ to wildly enthusiastic applause.” (Schweikart & Allen) It does no good to try to “starve the beast” of big government, if debt can be substituted for revenue to fund government excess.

Progressives in both the Republican party and the Democrat party have always tried to increase the size and authority of the federal government, but every time the government grows, the economy shrinks. If our nation is to survive, we must bring this leviathan to its knees by attacking both of the twin engines of destruction: the federal income tax and run-away national debt.

In my opinion as an attorney and a scholar, I believe the best way to tackle these problems is to first address the issue of taxation by repealing the Sixteenth Amendment, thereby getting rid of the Progressive Federal Income Tax. I believe we should replace the Progressive Federal Income Tax with the FairTax, a tax on consumption that is demonstrably not regressive. (For more information on the FairTax, visit www.FairTax.org.)

Second, in order to prevent further economic damage to the country caused by run-away deficits, Congress and the Senate should pass, the President should sign, and the States should ratify a new Balanced Budget Amendment to the Constitution that effectively forbids the federal government to spend more in a fiscal year than it collected in revenue the prior fiscal year. In other words, the government should not be allowed to spend more this year than it brought in last year.

These issues are simple. We need the FairTax. We need a Balanced Budget Amendment. The Progressive Federal Income Tax and run-away deficits are destroying our economy, and both parties are to blame. Unfortunately, conservative and Tea Party groups that have been pushing for these kinds of tax reforms and constitutional amendments have come under political attack by the federal government, specifically the IRS.

The actions the IRS has taken against these groups has been intended to chill free speech on these vital issues! This kind of government action is like the government giving the middle finger to the First Amendment that guarantees “Congress shall make no law … abridging the freedom of speech, or of the press…” Congress made the law under which the IRS operates in a way that abridges the freedom of speech and of the press by effectively chilling free speech that is critical of out-of-control government. This is a violation of the natural rights, the constitutional rights, and the civil rights of all Americans, and such violations are not Republican issues or Democrat issues – they are American issues.

When I talk about these issues with people, many of them say something like, Well, that’s great, but what can I do about it?! People feel powerless to stop something as utterly massive as the behemoth U.S. government. That’s understandable, but it is important that you understand that you are not powerless. You have a voice. Use it. Contact your state and federal congressmen and senators, and tell them you support limited government, the FairTax, and a Balanced Budget Amendment to the Constitution. Here, I’ll even give you their contact information.

President Barack Hussein Obama and Vice President Joe Biden

Write to:

The White House

1600 Pennsylvania Avenue NW

Washington, DC 20500

or Call: 202.456.6213

U.S. (Federal) Senators

Alexander, Lamar - (R – TN)

Write: 455 Dirksen Senate Office Building, Washington, D.C. 20510

Call: 202.224.4944

Contact Online: www.alexander.senate.gov/public/index.cfm?p=Email

Corker, Bob - (R – TN)

Write: 425 Dirksen Senate Office Building, Washington, D.C. 20510

Call: 202.224.3344

Contact Online: www.corker.senate.gov/public/index.cfm?p=ContactMe

U.S. (Federal) Representative

District 7 – Marsha Blackburn (Budget Committee, Energy and Commerce Committee)
Washington Office:

217 Cannon Building

Washington, D.C. 20515

202.225.2811

202.225.3004 fax

Clarksville Office: 

1850 Memorial Drrive

Clarksville, TN 37043

931.503.0391

931.503.0393 fax

State Governor

Office of Governor Bill Haslam

1st Floor, State Capitol

Nashville,  TN   37243

Call: 615.741.2001

State Legislators

Find Your State Legislator: http://www.legislature.state.tn.us/

If we do not use our voice to tell our elected representatives how displeased we are with the federal government’s abuse of power, and urge them to take real, serious action to curtail future abuses of power, the abuses will continue.

If we do nothing, the federal government will continue to grow. If we do nothing, the IRS will continue to be a powerful, destructive weapon to be used by whatever party or ideological group is currently in power to chill the free speech and other rights of those with whom they disagree. If we do nothing, we will continue to watch our freedoms and our prosperity wither and die. I implore you, regardless of your political affiliation, not to let that happen.

 


References:

Gwartney, J. D. (2010). Common Sense Economics: What Everyone Should Know About Wealth And Prosperity (Rev. ed., 1st ed.). New York: St. Martin’s Press.

Schweikart, L. (2008). 48 Liberal Lies About American History: (That You Probably Learned In School). New York: Sentinel.

Schweikart, L., & Allen, M. (2007, 2004). A Patriot’s History of the United States: From Columbus’s Great Discovery to the War on Terror. New York, N.Y.: Sentinel.


NOTICE: The opinions and ideas expressed in this article are solely the opinions of the author, and may not necessarily reflect the views of the website on which they have been published. Nothing in this article should be construed to be “legal advice.” No attorney-client relationship results from the consumption of this media material. Please contact an attorney if you need legal counsel. This article was written by Noel Bagwell for ClarksvilleOnline.com, and is intended only to inform the general public of the author’s opinion. The opinions expressed in this article are those of the author, and not of any government agency, company, corporation, or individual.


About Noel R. Bagwell, III, Esq.

    Noel R. Bagwell, III, Esq.

    Noel R. Bagwell, III, Esq. is an attorney and the founder of Executive Legal Professionals a small business Legal Services firm serving entrepreneurs and businesses in Tennessee.

    Noel is also the Leader for the Start-Up Entrepreneurship and Small Business Legal Issues Aspects of Practice for the National Center of Preventive Law.

    A graduate of Cumberland School of Law at Samford University in Birmingham, AL, Noel distinguished himself by earning the 2010 Scholar of Merit award for his academic performance in Economic Analysis of Law.

    After law school, Noel opened a general practice law firm in Clarksville Tennessee, a wonderful town just down the road from Nashville, Tennessee; and soon after founded Executive Legal Professionals to focus on providing ongoing and á la carte legal services to entrepreneurs and businesses for flat monthly rates.

    NOTICE: The opinions and ideas expressed in this article are solely the opinions of the author, and may not necessarily reflect the views of the website on which they have been published. Nothing in this article should be construed to be “legal advice.” No attorney-client relationship results from the consumption of this media material. Please contact an attorney if you need legal counsel.

    This article was written by Noel Bagwell for ClarksvilleOnline.com, and is intended only to inform the general public of the author’s opinion. The opinions expressed in this article are those of the author, and not of any government agency, company, corporation, or individual.

    Web Site: http://www.ExecutiveLP.com/
    Email: law@noelbagwell.com

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