"Now there's no turning back. Reality is both fictional and fact."
Taxes are too complicated in the U.S. and there's too much paperwork involved. It doesn't have to be this way.
This week’s soundtrack: Municipal Waste - “Death Tax”
Next week marks the deadline to pay taxes, so it’s time to talk about administrative burdens that Americans face each year.
To talk about this, I need to explain my – and our podcast’s – obsession with government customer service (aka: how administrative burdens come down on Americans). Fairly early into the Biden administration, people high in the White house had finally started to realize that Americans – even those who were vaccinated – were going to need to get their hands on some tests (and that Americans like free things). But, as is the Democrats’ way, lots of steps – and insurance middlemen – were involved. As someone who had recently been overseas on a trip, I was shocked at how easy it was to get tested in Spain (I had to get tested before, during and after my vacation in October ‘21) and how hard it was to get tests here in the U.S.
Jen Psaki – who seems to me to be the embodiment of modern American out-of-touch liberalism – was White House Press Secretary at the time and did, well, what Democrats do. She condescendingly explained how hard government is. Baseball writer Lindsey Adler summed it up well.
That tweet sticks in my head whenever I have to deal with anything involved with government. Anyone who has filled out a FAFSA, tried to change an address or deal with any agency… they know that a paperwork mountain is sitting in front of you.
It doesn’t have to be this way. Here in D.C., it was (not anymore because everyone is over the pandemic, despite it still very much being a threat) very easy to get tested at libraries, rec centers and designated COVID centers in each ward of the city. D.C. Health gave them out free, so all a D.C. resident had to do was flash a District ID and get two tests a day.
“But, Ross,” you say. “Certainly D.C. is a small district and not a full federal government with intersecting agencies. It can’t scale.” Fair points, except that the White House realized this and changed course from the paperwork-heavy plan that Psaki mentioned and set up a site to get them by the mail about two weeks after her comments. People loved it, it was easy and the paperwork was gone. It was so successful that the government reupped it a year later.
Which brings us to the IRS. We’ve done two consecutive Money Monday shows over at the ranch about the IRS, both of which address administrative burdens in one way or another. Last week, I talked to Anna Massoglia about why it’s so hard to pay taxes (tl;dr answer: The lobbying and influence of the multi-billion-dollar tax preparation industry).
This week, I talked to our reporter Eric Katz about how the IRS is going to use Inflation Reduction Act money to hire people.
The latter applies here because IRS chief Danny Werfel really wants to make sure that the IRS is a “world-class” customer service operation. Anyone who has ever dealt with the agency knows that this is not true, but it’s hard to expect Werfel to come through on this promise. For one, the tax code is famously difficult, but the greater issue is that attrition has wrecked the agency for years.
The former is harder to do and is connected to the latter. The IRS is a very unpopular agency in the minds of Americans. No one likes paying taxes. Because of this, it has been the easiest thing in government to cut and Congress has done so (over and over and over). Depending on your metric or part of the agency, the IRS has lost between 10% and a third of its workforce since 2010, including the auditors chasing the biggest fish in the tax avoidance sea. The result has been a less-effective law enforcement and more automated audits.
Enter the private sector.
The tax preparation industry spends millions of dollars lobbying Congress to keep the IRS understaffed and the tax code complicated. Intuit and H&R Block promise to make taxes easy in their ads, but one immediately thinks about ITYSL:
To make the subtle more clear: The tax preparation industry claims free services for “simple” tax returns, but add-on services like auditing protection and anything other than just a W-2 might cost you. Intuit has been sued as recently as last year for deception in these services.
“We're all trying to find the guy who did this,” indeed.
Every presidential administration seems to talk about making government work for the people. They use terms like “modernization” or “customer service” or “cutting red tape,” but Psaki is correct in saying that government is complicated. It’s hard to cut government and it’s even harder to cut government jobs. At best, Congress can do what it has done to the IRS and let people leave via attrition over a decade and the knock-on effect is a bare bones agency that hardly works (famously, the IRS gets a great ROI when the government spends on it, but that’s not the story the IRS cutters want to tell.), even if it is tasked with taking in money.
I understand wanting to cut red tape for citizens, but there are ways to do this via better data sharing and, notably, more people behind the scenes. But, those people cost money; you have to pay their public service salaries and benefits or you have to spend even more money on contractors to do the work and have less oversight. Ditto customer service. I know guests on our show, futurists and most capitalists are all about AI/machine learning as the customer service solution (labor is a cost, after all), but people really hate it. Automated phone systems suck (we’ve all screamed “representative!” into a receiver or pushed 0 a hundred times, trying to get to a person) and chatbots are only valuable for simple problems. People need to be on the other end of those lines and in-person service centers are similarly important to make life easier for the American people.
But those things cost money and there’s a very large – probably the majority of us – contingent of Americans who think everything in government is simply too expensive. So, “cutting red tape” is just a nice turn-of-phrase of which Americans never see the benefit.
I want to end this section on a recommendation, of sorts, in that there is another non-Lindsey Adler reason that I am mildly obsessed with administrative burdens. Drs. Pamela Herd and Donald Moynihan wrote a book – Administrative Burdens: Policymaking By Other Means – that gives an easy rundown of how this sausage is made in government. They’ve been on our show to talk about the topic a few times, but the book (and Moynihan’s Substack, which I highly recommend) show how wasting people’s time is a way to make policy. Essentially, policymaking-via-burdens works. If a public service is not worth the time or too complicated or annoying, fewer people will use it. The opposite – the free tests sent by USPS – is effective policy. We covered this recently on our show with the Urban Institute and Dr. Moynihan talked about it on his Substack a few weeks ago.
It’s great to have idea about how to make government work, but if you can’t execute it and make it easy for people to access? You’re making negative policy.
Lulu Update
In late 2020, Lulu had her right knee ligament repaired. I don’t know how she tore it, but she had to get it done. It was a scary time, as bulldogs are kind of a wildcard when it comes to anesthesia, plus the rehab time is a full two months. Also, dogs don’t enjoy physical therapy. The surgery was a success, the rehab time worked and her knee healed (eventually). But, the surgeons did say that the vast majority of dogs have both knees done eventually (cascading injuries and such) and that I’d always have to keep an eye on her other knee.
She’s limping similarly on her left leg now, so it is pretty likely that the proverbial bill has come due on my girl’s other knee. It stinks, but it is the reality of a dog built like her with the psycho energy she has. I’ve inquired about setting up a surgery timeline, but I mostly just feel terrible for Lulu.
None of this has anything to do with the following photos. She remains exceptionally cute and very patient when I put dumb sports memorabilia on her or give her Passover-themed dog toys.