Tax attorneys, HRBlock, JKLasser, direct employees of the IRS–is there any realistic estimate of how many jobs, from clerks to high-salary corporate attorneys, depend on the insane IRS code?
These people must be a powerful vector opposing meaningful tax reform or the abolishment of the IRS, right? Do these people have a recognized formal lobby? Any studies about this?
The internal revenue code is written by Congress, not the IRS. The IRS does issue regulations and opinions regarding the code, however.
So tax accountants, tax lawyers, H&R Blockheads, and so on mostly owe their careers to lawmakers, not bureaucrats.
As for the IRS itself, various sources report the number of direct employees at between 90,000 and 115,000. I imagine a significant chunk of those are seasonal.
I think the point is that this is a large contingent who would be lobbying against any meaningful reforms. If we went with a straight flat tax, no loopholes, no games, no fuss no muss, how many people would be out of work?
As far as I know, there isn’t any group called People for an Obfuscated Tax Code, but it is kind of interesting how all “Tax Reform” ends up with making it more difficult for people to prepare their own taxes. Even if they just left it alone for ten years, a lot more people would be able to prepare their own tax returns.
I actually took a income tax course after I graduated from college. It pretty much convinced me that I didn’t want to pursue a career in accounting. Regular accounting actually follows basic principles that make sense and are applied consistently. The income tax code seems to consist of nothing but exceptions.
According to this source, the parts passed by congress are 3,387 pages, while the regulations are an additional 13,458 pages.
http://www.trygve.com/taxcode.html
It puts a different spin on Nancy Pelosi statement, “We have to pass this bill, so we can find out what’s in it.”. Once the bureaucrats get finished interpreting the law, it may do something completely different from what Congress thought it was passing. There are plenty of lobbyists working the IRS to get the regulations written the way they want.
Even that is just the beginning. For important stuff, you have to dig into the case law from the tax court, which may vary from circuit to circuit. It the IRS doesn’t get the ruling they want and they think it might be upheld by higher courts, then they won’t appeal it, but they will continue to use their interpretation in other circuits.
The IRS doesn’t lobby, and H&R Block, though big, barely makes the Forbes 500 for their income. They don’t really have enough clout to affect the tax law (even if the other tax services get involved).
The tax code is complex because it is used for things other than to just raise revenue. There are all sorts of subsidies (e.g., mortgage interest) or other rules to achieve certain economic effects (e.g., this year’s extra tax refund). There are socially desirable reasons for doing these things, so the code is always being tweaked. The thousands of tweaks create the complexity.
A flat tax would put H&R Block out of business, but there are many other problems with it that are just plain politically unacceptable. Block doesn’t have to lobby against it; they just sit back and let it happen.
I suspect if we switched to a fair tax, the IRS would be in charge of running the fair tax, so they keep their jobs. And there is enought state and local taxes to keep H&R Block busy.
Interestingly as many people as like to consider themselves “rebels” in the US the IRS has the highest tax payment compliance rate (by far) of any advanced industrialized nation.
The job and careers that “depend” on the IRS are every federal worker (including all military) and employees, and a host of state and local entities dependent on payments collected by the IRS that are then reallocated to the states. Beyond this a host of people receiving entitlements “depend” on the IRS being able to capture income and redistribute it to them which keeps the cash flow pool filled.
It’s lot more than just tax workers and accountants.