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IRS - THE UBER-BUREAUCRACY

May 30, 2008

Jim Maule is exasperated with Congress using the tax law as an all-purpose public policy tool:

I object to the Internal Revenue Service being turned into a institution that is focused more on the technical requirements of energy production activities than on administering revenue laws. I wonder why financial incentives to produce and conserve energy aren't administered by the Department of Energy.

This point is almost always ignored in discussing tax complexity. Every specialized tax credit - like the "agricultural chemicals security credit" included in the new farm bill - adds a little more to the power of the IRS. Thanks to these sorts of provisions, the IRS is a powerful public policy player in energy, housing, research and development, charitable giving, regulation of non-profits, employment policy, retirement policy, and now, fertilizer. Congress is well on the way to turning the IRS into a shadow super-agency with influence across the whole range of public policy. The IRS Commissioner is a bigger player in some policy matters than the cabinet secretary nominally overseeing the area.

It's hard enough for IRS agents to just determine somebody's income. Having them oversee research and development, or fertilizer, isn't very promising.

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