An IRS Fit for a Banana Republic

A politically independent tax collector is vital to a functioning democracy.

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Daniel Gallington is the senior policy and program adviser at the George C. Marshall Institute in Arlington, Va. He served in senior national security policy positions in the Office of the Secretary of Defense, the Department of Justice, and as bipartisan general counsel for the U.S. Senate Select Committee on Intelligence.

We have finally succeeded in perverting the one federal function that we have done better than anyone else in the world – collect taxes – by electively focusing on the tax-exempt status of organizations. But not all organizations, just the ones that have a conservative purpose or message – and it's patently obvious that the direction to do this was politically inspired and "messaged" from Washington.

Just who in the Obama administration directed it will probably never be determined - and the reality may be that high paid civil servants did it "on their own" at the incestuous suggestion of their political management, e.g., "how confident are you that these 'tea party' type organizations really satisfy the IRS criteria to be tax exempt?"

That's all it would have taken.

[Check out our editorial cartoons on President Obama.]

And, what a sad commentary on America, because we are secretly (and not so secretly) admired because of how efficiently we are able to collect our trillions of dollars of income tax revenue. The difference in America is something we don't even think about: We pay our income taxes, perhaps not happily, but voluntarily though withholding and estimated payments. And, believe it or not, this is unique in much of the rest of the world – in fact, the Internal Revenue Service collects our taxes at a very low cost per tax return!

Some relevant history: the U.S. didn't have an income tax until 1913, and it required a Constitutional amendment (the 16th) to establish one. And because we started from scratch, we were able to create a model tax collector, with built in objectivity and the political oversight to prevent abuses.

When you compare this to what exists in many foreign countries, especially those with wide-scale political corruption, we can see the many advantages of a politically independent tax collector. Just imagine an IRS that pursued the political agenda of the ruling party. It would be the beginning of the end of our form of government – and we can therein see the wisdom of our forefathers when they initially prohibited the federal government from establishing a "direct tax" on incomes.

[See a collection of editorial Cartoons on the IRS Scandal.]

In many foreign countries, whether one pays any taxes of any kind depends on who one is, or how much graft is paid. How far are we from this sad reality when we subject political advocacy organization to increased scrutiny via the institutional pressures of tax audits and endless requests for information? The effect is the same - and the trend is totally unacceptable.

What action is needed? Congress must come down very hard on the IRS and the Treasury Department. It should assume that the whole of the IRS deserves an in-depth independent audit to ensure that its other sections and functions have not been affected – even indirectly – by the suggestions of political appointees and even senior career employees at whatever level. Finally, Congress should establish a specialized and secure channel for IRS employees to report – anonymously if necessary – any political pressures of any kind that have to do with any function of the IRS.

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