Fri Apr 1, 2011

I’ve never thought about the Reagan experiment in Keynesianism from the perspective of the revenuers. Cut taxes (for the upper brackets) and increase military spending. Tell people that the monies in the pockets of the entrepreneurs will create new wealth to fill the treasury’s coffers. This doesn’t actually happen, though. So the IRS is told to decrease the tax gap, the difference between what is owed and what is collected. (This figure is currently estimated to be around 290 billion dollars.) This means increasing audits and other enforcement actions, making the IRS even less popular than it already was. Furthermore, by diverting money from complex cases of tax evasion involving large amounts of money to many smaller cases involving far less, it recruits the IRS into a class war of rich versus poor while perpetuating the delusion that it is the IRS itself which is the problem. I actually had an opportunity to observe a consequence of this process when I was a child, though I didn’t understand the larger context then.

What economic recovery there was during the Reagan era is generally attributed to the stimulus effect of massive government investment in the defense industry, as I mentioned, but I had never thought much about the tax policy issues (at least not from the perspective of low-level workers involved in it) until reading the fragments and drafts collected as The Pale King. I haven’t finished the book, and this is not going to be a complete review. There’s a bit of speculative autobiography in it that was so convincing that I found myself wondering if it could be true. Parts of what he’s proposing there have been verified by other parties, as I understand it, and I found myself wondering about the possibility of an honor court hearing. The scenario he describes is quite plausible, I would imagine, but I don’t know how extensive the term paper writing actually was. A remarkable—even by his standards—piece of writing.

I haven’t investigated the matter thoroughly yet, but I do not think that there has been much literature yet devoted to the tax code. This quite possibly could have drawn him to the subject; I don’t know. I also haven’t ever encountered the concept of “psychic facts” before, and the absurdity of those examples must have been a lot of fun to come up with. The Pale King is much more coherent and seems closer to a final product in terms of the writing of its discrete sections, although not its plotting, than I had been anticipating. I’m most curious now to learn what there is to know about how long he intended the final thing to be, if there’s any evidence of that. I would hope that they release the documents in the HRC to scholars before too long; the sales figures on this book already seem to be quite impressive.

A full review will follow.