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No EZ Fix For The IRS
meltoast writes "Apparently the IRS is storing all of the taxpaying histories of 227 million individuals and corporations in a system that still runs code written in 1962. CIO Magazine is running a story on the IRS's nearly failed $8 billion modernization attempt that includes missed deadlines, cost overruns of over $200 million and four CIO's in seven years."
What percentage of our income taxes paid in the US goes towards collecting those same taxes?
How much could be saved by moving to a flat tax and getting rid of all the exemptions and deductions and tax-breaks?
Income: xxxxxx
x 0.20
Tax owed: xxx
You could fire 99% of the IRS employees and get the operating budget to that of a Taco Bell.
What?
doesnt unix still run code from the 1970's or there abouts? just because its old doesnt mean it sucks. linux still runs code from its early days also. just a question anthony
That's exactly how Joe Congressman defends pork.
You work in the private sector -- where a CTO's responsibility is to implement the new technology and deliver results.
I can guarantee you that actually completing a project is not the goal of any government CTO.
In the public sector, the longer a project takes, the more favorable contracts can be handed out to friends and people from whom political favors can be extracted in the future. The more favors you're owed, the more power you have. The more power you have, the more people you can hire, the bigger your budget, and the more people who owe you favors.
If your goal is to decrease cost and increase customer service because there's competition that's ready, willing, and able to take customer dollars out of your pockets, those are bugs, not features.
If your goal is to increase cost and decrease customer service because there is no competition -- and the only way to get more dollars into your pocket is to increase your power, these are features, not bugs.
In brief: Government - working according to the parameters listed in its functional specification.
CTO I believe I would have canned the whole project and started anew as from the sounds of it
That's the right thing to do, of course.
Practically, though, doing this kind of thing is difficult in government.
Your first presentation is with the people that give you funding. You tell them you want to start from scratch.
They ask you "Are you telling me that the $8billion we've given you has been wasted? Do you have any idea how bad this will make us look in the press? If you ask for this kind of change in course, there's no guarantee we could get the funding at all!"
Meanwhile, lots of nice underlings busting their butts for you will be seeking hints as to whether they'll even have jobs next month...
Oh, and there'll be vendors promising magic bullets.
Bearing up under this kind of pressure will be why you're making the money as a government CIO.
"Provided by the management for your protection."
FairTax.org
That method, taxing goods and services only, is what the rich want. It is unfair to the poor and middle class because they spend the highest proportion of their income on goods and services. Frequently 100%. The rich spend a much smaller portion of their income this way and therefore would pay much less proportional to their income. This is akin to the highest tax rates being imposed on the poor and the lowest on the rich. Believe me, this movement is backed by the wealthy and would benefit them the most.
From the article, It cost 45 cents to process every dollar comming in. This number has been the same for over 20 years.
This is BS...We work more than a third of our lives for taxes and they have the efficiency of a MBA on a Winblows system. Come on, get with the system.
That's not a solution, that's an inefficient kludge.
The only reason why people commit crimes is that they believe they won't be caught, so the severity of the punishment is mostly irrelevant.
The evidence for this is very strong. Many countries have tried, at times, to apply the death penalty to an excessively wide range of crimes, but have always failed miserably at preventing their ocurrence.
Even if you could magically disintegrate all the criminals in the world, there would be more to take their place tomorrow morning.
Note the references to unclear goals and communication issues, lack of buy-in from internal staff, the assumption that the IRS team could have a thin team to work with CSC.... It doesn't seem the IRS learned from their past failures either. The article reads like a list of project management don'ts.
I don't want knowledge. I want certainty. - Law, David Bowie
Although government agencies (bureaucracies) are accountable to nobody, and as a result, the IRS would never support its own downsizing, you've hit at the real root of the problem.
If the Internal Revenue Code weren't so complex, the IRS would be forced to downsize, no matter how hard it screamed for self-preservation.
The revolving-door "in-house"/"contractor"/"in-house" system you describe is symptomatic of bureaucracy. But that bureaucracy wouldn't exist if Congress didn't invent it.
If every Congressman had to do his or her own taxes, with pencil, paper, and 4-function calculator, and with no assistance from anything but the IRS help line, web site, and published forms, the Internal Revenue Code would be fixed within a month.
Unfortunately, the odds of Congressmen having to face the monster they created are zero. As much as I hate the IRS - they're just the guys running the trains and seeing to it that the gold teeth are accounted for. The real villians in the story of high tax compliance costs are the ones who issue the orders that we get into the fucking boxcars.
There seems to be a big bias in our political culture against people of modest means accumulating any kind of money through control over personal spending and saving. There is a concern about wealthy people controlling all of the resources of the society by making it easy for those fortunate enough to even have a small surplus over their spending to accumulate wealth -- the kind of Huey Long concern. People at the top have access to financial advise, tax planning, and investment opportunities that one can only dream of, but people in the middle get hosed.
Exhibit A is the advice for people of modest means to put savings into the stock market. Traditionally the stock market was a high risk undertaking for the very wealthy with money to burn. In the 1920's, mass ownership of stock caught on and then people got burned in a bubble collapse. A cornerstone of Depression era economics policy was Federal savings deposit insurance -- the idea was for people of modest means to have a low earnings but secure place to save money, and it wasn't in the stock market.
Well, combine the 1970's and early 1980's inflation with regulated interest rates and taxation of savings interest and you had a negative rate of return -- your savings just kind of evaporated for being there. So first there was the money market mutual fund and then the stock market mutual funds as the answer to middle class savings.
And then there was tax sheltered savings in IRA's, only they put in a phaseout on the IRA contribution, followed with the Roth IRA, which inverted the role of principal and earnings in terms of what was taxed, only that had a steep phaseout (actually an income cap), oh, and we are allowed to have tax-sheltered savings in 401K plans, only a good part of your earnings are paying an insurance premium to some pirate, and some 401K's have proven to be scams (can you say Enron? I knew you could!).
Oh, and the answer to health insurance for the self-employed is the Medical Savings Account, which is another scam^H^H^H^H where you are allowed to save money if it is for some sanctioned purpose and is done in some restricted way.
I guess we are really afraid of giving people the liberty to save money. People who have any kind of surplus over what they earn are suspect because apparently everyone from SSI recipients to Michael Jackson are spending every penny they receive and then more on top of it. From the principal of compound interest, even modest levels of saving in a minority of people can create great disparities in wealth, hence the need for inflation, low savings interest rates, and taxation of interest earnings to keep such people in line. And apparently our economy is one big Keynsian bubble -- if people stopped living beyond their means and buying on credit apparently the whole economy would crater.
With savings there comes moral principles of self-reliance and disciplined appetites. One can save enough money for your eventual nursing home stay without having to go on Medicaid. One can have that fancy car but one has to plan ahead for it. With the war on savings, one can have one's fancy car, but one has to be on a credit treadmill, one can have that college education, but one must be a financial assistance supplicant, one can be treated in a nursing home, but one must receive Medicaid assistance. One can "save" money too, but only if for sanctioned purposes and by participating in the correct program.
I say the problem is not the taxing of earned income but all the restrictions on what one can do with that earned income that follow from this great fear of income inequality is the heart of the problem.
Wow. Is that a Holocaust metaphor in the parent? We're talking about the IRS and the bloat of the US TAX CODE here. Let's keep a sense of perspective...
The key problem here is the government pretty much always has to put this kind of thing our for competitive bids to the private sector. Its increasingly rare for civil servants do software or systems development whether it be NASA, the IRS or the DOD.
Dick Cheney was the trailblazer for contracting out everything at the DOD when he was Secretary of Defense. He conveniently went to work at Halliburton right after that, whose Kellog Brown and Root subsidiary has been the army's contractor of choice since at least Vietnam so his new policy was conveniently a bonanza for Cheney in his after life. Its led to oddities like Blackwater, an organization of ex SEALS and special forces who are essentially mercenaries, filling all the huge gaps in the regular army, thanks to downsizing and contracting, but they draw six figure salaries standing next to grunts not making anything close to six figures. Interestingly American troops in Iraq are fed by Saudi and Kuwaiti subcontractors to Halliburton. When your fighting a war against Muslims having indigenous Muslims feed your army is an immensely dangerous and interesting avenue for a terrorist infiltrator.
But to get back to the original point, since the government generally must contract out IT projects this has led to the creation of massive corporations who do nothing but bid for government IT contracts. Two of the biggest being CSC and EDS. IBM and other do to but they don't feed as quite as exclusively at the government trough.
The problem with companies like CSC and EDS is they are well honed killing machines when it comes to writing proposals for government contracts and doing whatever it takes to win them. At the point they make the kill, they really stop having any incentive to actually do the job well. The government does an exceedingly poor job of penalizing bad performance by contractors. As a result CSC comes in to something like this, they hire a required quota of warm bodies and they start going though a standard process of requirements, specifications, reviews, coding, delivering and billing. In the midst of all there is really no one who has a really strong incentive to develop a really simple, stellar solution quickly or cheaply. The solution almost inevitably becomes an exercise in unmanageable complexity, it overruns which is usually OK with the CSC, since they usually keep getting paid as everyone ever more desperately seeks an ever more elusive goal of completion. So what if the project is eventually cancelled and defeat is admitted. CSC is unlikely to be penalized in any meaningful way. It wont stop them from getting the next government contract up for bids. There is a chance they will be persona non grata at the the IRS for a while so maybe EDS will do the next attempt and they will most probably do no better and there are only so many big prime contractors to choose from.
A key point here is 8 billion dollars may sound like a lot and it really is to all the working people whose hard earn money is going in to taxes that are being squandered, but in multi trillion dollar Federal budgets its insignificant. Everyone is wasting this kind of money everywhere so who among the politicians, bureaucrats and contractor hogs feeding at the trough really cares. Its just a simple fact that the U.S. government has spiraled out of control, voting Democrat or Republican isn't going to fix it. At this point it appears impossible to fix it, because ordinary people have no way to unite, stand up in unison one day and say enough is enough. Of course lots of ordinary people are working at CSC and Halliburton and they REALLY have no reason to complain about the fraud, waste and abuse in the government contracting system.
@de_machina
If it were true that private sector competition was a tonic against bureacratic inefficiency, then companies like IBM, GM, financial institutions, and insurance companies would not be large, ponderous bureacracies. Yet they are.
The revolving door insourcing/outsourcing of IT has happened at many private companies, even mid-sized ones that should be small enough to figure out how to do better. Perot Systems and EDS have been involved in a number of these types of situations. If anything, in the current market government customers are less likely to be taken in because they've been fleeced so thoroughly in recent years already.
-Graham
We could fix that with a flat tax on ALL income over $25k a year, but that is a different thread all together.
Does that include inherited assets? What if the recipient is under 18? Does that include appreciation? Does depreciation count as negative income? What about taxes people pay overseas? What about money earned overseas? Dual citizens? Deferred earnings? Gifts to relatives?
The flat tax is a red herring. It's as if the additional math of a sliding scale is going to be a tremendous burden to the system. It's not. The system is complicated because of all of the various special cases involved in it. What about the parent who is earning 40k per year, but spending 20k on education for their children? Or the father making 70k but spending 35k on medical bills?
Make no mistake about it, flat taxes are a way that rich people can pay less, period.
Besides, the most byzantine part of the tax code is corporate taxes, which, it was recently revealed, %60 of all corporations don't pay. First of all, unlike people corporations only pay taxes on net income, not gross. So if they didn't earn any money, they don't pay any taxes. Of course, what qualifies as taxable income and taxable expenditures varies. Then you have exemptions and reductions for where you're headquartered, the types of workers you employ, what industry you are in, what kinds of R&D you do, employee training, and about a million other things. Add into that the problem of overseas earnings, and earnings at home from overseas labor. What about earnings passed up from wholly or partially owned subsidiaries? Do they pay twice?
A lot of these corporate special cases are desirable, because they encourage things that you want to encourage. To say that they must all go and be replaced with a "flat tax" is a gross oversimplification. You haven't even defined what a "flat tax" is in a multinational corporation. Is a man in Denmark buying a book on Amazon.uk using an American credit card to an american bank a taxable transaction?
With apologies to Einstein, it would be good to simplify the tax code as much as possible, but no further. The "flat tax" is not applicable to real-world situations, does not directly reference that which makes the tax code complicated, and does not solve the problem.
No disrespect to you or your family intended, but the flat tax is no solution. Personally, I wouldn't mind a total tax rewrite, but I suspect that in the current political climate that would open up a field day for all-new abuses.
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