Monday, March 21, 2005

A Taxing Riddle

The IRS needs more muscle?

According to The Baltimore Sun, the agency plans to outsource a chunk of its collections activities to private firms. "Under the plan, set to start by the end of the year," the newspaper notes, "the government would transmit Social Security numbers and other information on tax evaders to one of as many as 12 companies that land the contracts."

There are critics of the plan, especially a provision that enables some private contractors to keep up to 25 percent of the delinquent taxes owed. As the Sun suggests, "that could encourage aggressive tactics."

What are we missing here? Is the IRS typically all sweetness and Daffodils about overdue taxes? How could private contractors possibly be more intimidating -- er, aggressive -- than a flurry of notices courtesy Uncle Sam? Unless these private-sector collection agencies are utilizing numchucks, we think the critics need to chill on the Chicken Littleisms.

Our favorite aspect of the outsourcing, however, is what a mind game it is for the "privatization=good, taxes=bad" ideologues over at the Cato Institute.

From the Sun:

" 'In general, I support privatization, but in this case, I'm concerned about civil liberties,' said Chris Edwards, an expert on tax policy at the Cato Institute, a free-market Washington think-tank.'Taxation is something the government uniquely does. The government has coercive power over individuals to pay up. That should be a government function, not a private one.' "

If ever there was a Zen Koan for libertarians, this is it.


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