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The I.R.S.: Who Are These Guys?

Internal Revenue Service Commissioner Douglas Shulman. (Photo by Win McNamee/Getty Images)

I’m sure, in view of recent events, that you are as happy as I am to be celebrating the 100th anniversary of the Internal Revenue Service. Back in 1913 the 16th Amendment was ratified and that gave Congress the authority to lay and levy taxes from United States citizens. American’s were taxed 1% on their net personal incomes over $3,000 and for those in the high incomes of $500,000 or more paid a hefty 6% of their salaries.

War and Taxes

You might think the IRS started in 1913 with the ratification of the 16th Amendment. But there were income taxes imposed over 50 years earlier during the Civil War. In 1862, President Lincoln and Congress imposed an income tax to help pay for the war. This tax was repealed 10 years later but Congress tried to impose taxes again, in 1894, and the Supreme Court ruled that tax unconstitutional.

World War I brought heavy rates to tax payers boosting the income tax rate to 77% to help pay for that war. The rates receded back to a manageable 24% in 1929 but went up again during the depression. Congress also added payroll withholding and quarterly tax payments during World War II.

Name Change

In the 1950’s The Bureau of the Internal Revenue became the Internal Revenue Service and began hiring career employees. Prior to that time employees found their way to the IRS through the “Patronage System.” Currently, only the IRS commissioner and the chief counsel are selected by the president and must be confirmed by congress.

Comprehensive reorganization took place with the enactment of The IRS Restructuring Act of 1998. It was supposed to create a “new, friendly, helpful, I’m from government and I’m here to help you, IRS. We can see how that worked out.

IRS As a Political Tool

Using the IRS as an intimidation tool is nothing new in America. Many presidents have used the IRS as their personal “Gestapo” style intimidation force. Nixon, Johnson, Kennedy and FDR are supposed to have used the IRS to put pressure on their political foes.

Paula Jones, during her sexual-harassment suit against President Clinton, alleged that an IRS audit had been directed by his administration towards her. JFK went after the John Birch Society, the Washington Post editor Ben Bradlee, Texas oil baron H.L. Hunt, and the richest man in the world at the time, J. Paul Getty.

During the Watergate Investigation it was confirmed that President Nixon tried to use the IRS to intimidate Senators George McGovern, Hubert Humphrey, and Ed Muskie. African-American Pastors were also targeted for conservative views critical of the administration and the tactics of the IRS.

Some Final Thoughts

In view of so many past indiscretions by the IRS, doesn’t it seem strange that this type of action still goes on today? Shouldn’t this kind of selective use of the IRS for political purpose have been abolished long ago? No laws passed when these past abuses came to light? Did people just get a slap on the hand for infringing on their power?

And who, given the shear power of the IRS, is going to be entrusted to carry out any kind of credible investigation, let alone doling out appropriate punishment. If history is any indication, the top tier offenders will get off easy and the underlings will end up doing time.

Congress will rattle its paper sword, have hearings, pass some more laws and life will go on. Just with a little less confidence in the people who are supposed to be treating us all fairly and equally.

The only glowing candle on this stinky cake is that this all came to light before the IRS is positioned and embedded in the Affordable Care Act due to be rolled out next year. Somehow I don’t think that will contribute to a better nights sleep. The foxes appear to be watching the hen house.

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