The new federal welfare agency

While I'm on the subject of the IRS today, let me say how sad I am that that agency will now be saddled with the task of sending monthly checks to lower- and middle-income families with children. I don't begrudge the families the money, not at all, but to run the cash through the tax system and have the IRS administer the payments is just bad policy.

It's phrased as a tax credit, but it's really just a welfare payment. You get it whether you would otherwise owe tax or not.

Why put the IRS in the middle of it, then? That agency has its hands full just administering the crazy-quilt tax law that the geniuses in Congress have concocted over the last hundred years or so. Put out the forms, issue some administrative rules interpreting the law, collect what the government's owed, chase down and prosecute the cheats. To me, that's what the IRS should be doing. And not much more.

But Congress has decided to lay all sorts of additional responsibilities on the revenooers. They collect child support and delinquent student loan payments out of tax refunds. They administer all sorts of tax incentives, figuring out stuff like whose railroad track maintenance is good enough for a tax credit, and whether your employer is obeying the Obamacare rules. Ditto on whether your employer is covering enough people in its pension plan; the IRS is one of the two federal cops on that (the other being the Department of Labor). It's the IRS's job to figure out which nonprofits are legit charities and which are scams. If you're late on a big tax bill, it's up to the IRS to flag you to the State Department and have your passport revoked. When it was stimulus time, the IRS got the call to run the show.

Now the IRS will be busy sending out what are essentially welfare checks every month to millions of people with kids.

With all that on its plate and more, is it any wonder that the IRS isn't doing its jobs well?

There are other ways to accomplish all of this. You can put Health and Human Services in charge of monthly family benefit checks and child support enforcement. You can hire social workers instead of IRS drones. You can put the Justice Department in charge of policing charities.

But guys like Ron Wyden, now running the tax system in the U.S. Senate, are enamored with using the tax system to reward good deeds and punish the wicked. And so the IRS gets one difficult job after another, and never enough money to do any of it well. Then it becomes everyone's convenient punching bag.

One of these days, the tax system is going to collapse. Lord help us. The federal government will grind to a halt, just like Reagan fantasized. And here you thought Covid was disruptive.