IRS Layoffs: A Libertarian Perspective
On February 20, the IRS fired 6,700 employees, many of whom worked in enforcement and compliance. Some warn this will weaken enforcement, deepen fiscal imbalance, and make evasion easier. Others see the firings as long-overdue rollback of an overreaching bureaucracy.
A different question of interest—especially to libertarians—is whether shrinking enforcement and therefore tax collections is an effective step towards limited government.
This approach, known as “starve the beast,” was popularized by Nobel laureate Milton Friedman, who argued that reducing taxes will curb federal spending, as when parental reductions in allowances help limit their children’s spending.
This perspective is not compelling on a priori grounds. By slashing taxes, the government might reduce the perceived “price” of spending, creating a “fiscal illusion” where voters demand more government. Empirical evidence confirms no negative relationship between government receipts and spending. Reduced enforcement mainly shifts who pays from rich to poor.
Thus, independent of debates over the correct size of the IRS, libertarians should focus on reducing non-IRS spending and simplifying the tax code. With lower spending, the need for every dime from taxpayers goes down. And a tax system with fewer loopholes would make compliance easier, while reducing the need for aggressive enforcement.
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Consumption tax. Remove the need for such a substantial IRS.
Don't take property, which is a tax to exist. Don't tax income, which is a penalty on achievement. Certainly, don't tax gifts, which are transfers of private property and beneficial donation. Each of these is an unfair tax or violation of rights AND they allow for the loopholes which you mention. Understandably, these taxes are spun to win support, as being fair because they tax higher income or more valuable property, more, than those with less. And while that might be true, a consumption tax does the same while empowering the individual to control their tax burden.
Wealth is inherently taxed more given the purchase of their more valued homes and properties, higher end goods, and more services such as security.
Poverty is inherently taxes less for the same, opposite, reasons.
No loopholes. No deductions.
This even serves the interests of families because families are started by younger people who naturally buy less expensive goods, and while starting a family will increase their expenses, they are empowered to have already purchased a home or to put it off until affordable and they're likely earning more - they control their tax burden.
THREE POSSIBLE tax exemptions come to mind that would serve society:
1. Healthcare isn't taxed
2. Education isn't taxed
3. Day care isn't taxed
Remove those from a consumption tax since they are net beneficial and shouldn't unfairly burden poorer communities and families.
All goods and service purchased should be taxed, eliminating a foreign loophole - if you buy overseas, you're still taxed.
Taxes are paid at the time of purchase, eliminating the need for costly tax services, filing, and staff.
The study you cite with empirical evidence seems to be weak. The idea that cutting spending does not change services demanded by the public is irrelevant. The public can demand that banks give them free money, but they don't. What seems to be missing is the simple fact that anyone can demand anything at any time, which does not mean it should be supplied.