Magazine article The American Prospect

Don't Mess with Mother Revenue

Magazine article The American Prospect

Don't Mess with Mother Revenue

Article excerpt

LOTS OF CAREER EMPLOYEES AT THE IRS WERE annoyed at the partisan tone of the tax-rebate letters the agency mailed out in July. The IRS has a long apolitical tradition, and its workers felt uncomfortable with a letter that made them appear to be shilling for Republican policies.

We are pleased to inform you that the United States Congress passed and President George W. Bush signed into law the Economic Growth and Tax Relief Reconciliation Act of 2001, which provides long-term tax relief for all Americans who pay income taxes.

The new tax law provides immediate tax relief in 2001 and long-term tax relief for the years to come. As part of the immediate tax relief, you will be receiving a check in the amount of $--.

Some Democrats in Congress objected to the letter, and New York Senator Charles Schumer even tried to cut off funds for the mailing. But in the end, the XRS itself found a way to even the score--by sending out a second letter to 32 million tax filers who won't get any rebate. It starts with the same cheerful "We are pleased to inform you" paragraph, but then continues: "According to the information on your 2000 federal tax return, ... you will not be receiving a check at this time."

CHARITABLE CHEESE

As part of his "charitable choice" initiative, President Bush promised to let people who don't itemize on their tax returns nevertheless deduct their charitable donations on top of their standard deduction. The administration has defended this particular piece of tax complexification based on a fanciful study by PricewaterhouseCoopers that claims the new write-off would boost donations by $15 billion a year.

No matter that the new deduction would be worth a mere 15 cents on the dollar or less for the vast majority of affected taxpayers. Or that most of the $8-billion annual cost would merely reward contributions that are already being made. Or that such a tax break has been tried before, as part of Ronald Reagan's 1981 tax-cut act. And never mind that by 1984 Reagan's own Treasury Department was recommending its repeal, asserting that the effect on charitable giving was "not expected to be significant" because of the low marginal income-tax rates paid by most non-itemizers. …

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