Tuesday, April 22, 2014

IRS Pays Premium For Tax Inefficiency

Oh, this is just rich (pun intended.  The IRS paid performance bonuses to underperforming employees.  I am quite familiar with the entitlement mentality of many federal government employees, especially the ones in unions.  These people wouldn't last a day in the private sector yet the government coddles them all the way to their retirement.  The quoted sums from that article work out to less than $1000 per IRS employee, which is a pittance when you consider that performance-based bonuses make up the lion's share of compensation for most financial sector employees.  Any self-respecting financial adviser or floor trader who was offered such a tiny bonus would probably quit in disgust on the spot.

Clueless tax experts should read my past articles on taxation.  I come out swinging in favor of a flat tax on all income, earned or unearned, with no deductions or other exceptions at all.  This is fair and it will stop all sorts of economic leeches from gaming the system.  The federal government typically collects somewhere between 17% and 20% of the nation's GDP as tax revenue, and making it harder over time with a more complex tax code has not raised that figure.  Simplifying things with a flat tax will make it easier for businesses to plan for growth.

Machine learning is on the verge of automating every routine business function.  Uncle Sam is slow to catch on to everything so I give the federal government a couple of decades to figure out how to automate its revenue collection.  Doing it automatically with a much simpler tax code means firing all of the IRS problem children and returning their bonuses to the Treasury.