Today in Capital Matters: Arizona Taxes and the IRS | National Review

Today in Capital Matters: Arizona Taxes and the IRS | National Review

Timothy Sandefur of the Goldwater Institute writes about the failure of an effort to raise taxes in Arizona:

That effort first began in 2018, when public-school teachers across the state led an illegal strike that shut down most public schools for over a week. Falsely claiming that the state’s schools were money-starved, school employees refused show up for work and instead stormed the halls of the state capitol building under the “Red for Ed” banner, demanding that lawmakers spend more.

The legislature eventually caved, agreeing to increase teacher salaries by 20 percent. But that wasn’t enough for progressives, who followed up by launching a ballot initiative called “Invest in Ed,” which imposed a new 4.5 percent income tax (euphemistically called a “surcharge”) on people earning more than $250,000 per year. Although the initiative’s backers claimed the tax would not fall on small businesses, the opposite was true: Proposition 208 made no distinction between personal income and the income of small-business owners. As a result, the proposition effectively doubled taxes on owners of small businesses, the largest engine of job and wealth creation in the state. Raising taxes in the midst of a drastic economic downturn — the pandemic combined with escalating inflation — is a formula for catastrophe. Indeed, a Goldwater Institute analysis indicated that the initiative would eliminate 100,000 jobs and drive away so much business that it would result in an overall reduction in state revenue.

Daniel Pilla speculates on the health of the IRS:

There is little doubt that the Internal Revenue Service is groaning under the burden of administering the tax code, which now exceeds more than 4 million words (up from 1.4 million, in 2000). The question is whether the agency will collapse under the growing weight of its concomitant processing and administrative problems.

Let’s consider a few sobering examples of what the IRS is up against, as identified by the National Taxpayer Advocate, Erin Collins, in her 2021 Annual Report to Congress. . . .

Dominic Pino is a William F. Buckley Fellow in Political Journalism at National Review Institute.

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Tony Beasley
Tony Beasley writes for the Local News, US and the World Section of ANH.