The Internal Revenue Code is the body of federal tax law enforced by the Internal Revenue Service. In these episodes it is treated less as a technical revenue statute than as a site of two recurring problems: Congress delegating hard choices rather than making them, and the code being used to reward or discourage particular behavior. Bob Zadek describes the Internal Revenue Service as the agency that enforces the Internal Revenue Code and other federal statutes dealing with taxation What the IRS’s Hiring Spree Means for You (2023).
Delegation and the separation of powers
Alex Nowrasteh argues that Congress has abdicated its constitutional responsibility to craft laws it knows how to enforce. He says that basically since the 1920s lawmakers have instead written provisions letting the president decide, and that the immigration code is full of them. He cites the travel ban issued shortly after Trump took office, the surging of Border Patrol to different portions of the border, and the reallocation of resources as actions spelled out explicitly in the immigration law that gives the president this power. In his account Congress has said it no longer wants the power, and he calls this an unconstitutional abdication that violates the separation of powers doctrine What Part of Illegal Immigration Are You Against? Alex Nowrasteh Returns (2019).
Nowrasteh says he reached this view over roughly a decade of policy work, watching President Obama and President Trump, and concludes the executive branch is the most dangerous branch of government. Congress, he says, has given these executives of both parties all the power they could want and is giving them more.
Zadek frames the same tension from the other side, describing a muscular executive and a dysfunctional Congress. He says the president is charged with seeing that the laws are faithfully executed, that the laws are impossible to faithfully execute, and that the president takes the heat for problems at the border. He calls this a monumental failure of Congress and attributes inaction to cowardice, stupidity or worse. Nowrasteh’s reply is that Zadek is being too lenient, not too harsh.
The corporate code and the Amazon case
Richard Rubin explains why claims that Amazon pays no taxes require reading the mechanics of the code. Corporate tax returns are private, and financial statements give only a close approximation. He gives the example of an audit of tax year 2012 that concludes in 2021: a billion dollars of additional tax shows up on the 2021 financial statements even though it has nothing to do with what the company did that year Auditing the Corporate Income Tax (2021).
Rubin distinguishes three explanations. The first is measurement and timing. The second is aggression: he notes Amazon had a long-running case in the US tax court about its transactions with its entity in Luxembourg, and says companies can be very aggressive with gray areas of the code, with the IRS questioning them and courts sometimes siding with the IRS, sometimes with the company, sometimes settling in the middle. The third is the way the law is written. Congress created a research and development tax credit that subsidizes private research on the theory that it creates spillover benefits, and Amazon’s research lowers its tax bill. Renewable energy is subsidized similarly. Rubin notes that if the same subsidy ran through a spending program outside the Internal Revenue Code, companies would appear to pay higher taxes and then receive government money.
Rubin also describes accelerated depreciation: companies can take deductions immediately for capital expenses such as equipment and factories, to encourage investment, so profits look lower on the tax side while financial statement costs are spread over the life of the asset. He calls this a mismatch between when tax deductions happen and when financial statement deductions happen, creating the appearance that profitable companies pay no taxes.
Zadek draws a broader lesson about the purpose of taxation. Beyond raising money, he says, taxation influences behavior: high cigarette taxes, high liquor taxes, subsidies for things government wants bought, taxes on sugared soda, child care tax credits. He says government makes value judgments about how people should live and rewards them through tax policy rather than directing them overtly. In his reading Amazon simply responded to a sensible governmental stimulus, spending on research and development and receiving accelerated deductions, and is then pilloried in the press for not paying taxes.
Enforcement and the 87,000 agents
Zadek says the Internal Revenue Code and the Internal Revenue Service have been given funding by the Biden administration and Congress to hire 87,000, give or take, agents to enforce the code, and that they promise not to collect taxes from anybody earning less than $400,000 a year Beware, the tax man cometh (2023). He states that the show will not cover the tens of thousands of pages of the code in detail but will cover what the administration has done to rearm the IRS, with funding already signed into law.
Ashley Varner, described as vice president of communications and federal affairs with the Freedom Foundation, explains why public sector unions belong in a discussion of IRS appropriations. She says government sector employees are the single biggest funder of radical leftist politics in the country and have a guaranteed revenue stream because they have a huge workforce. In her account most of those workers pay union dues because they do not know they have an option, and those dues become political spending; the 87,000 IRS agents are a guaranteed new crop of people paying into union dues campaign coffers What the IRS’s Hiring Spree Means for You (2023).
Zadek argues that public sector unions have an advantage no other workers have: to get a raise they need only have the legislature enact legislation, and the public has no choice. He asks listeners to imagine a private company able to enact legislation compelling people to buy its product, and asks Varner to explain the relationship between public service unions and the government. Varner describes a cycle in which unions take money from taxpayer-funded paychecks, direct it to politicians’ campaign coffers, and the politicians give money back to the unions and grow government, which means less liberty.
Across episodes: no development
The Internal Revenue Code appears in three episodes spanning 2021 to 2023, but the excerpts do not show the same question argued across them: Rubin addresses corporate tax mechanics, Nowrasteh addresses congressional delegation in immigration law, and Varner and Zadek address IRS hiring and public sector unions. The 2023-01-08 and 2023-01-10 episodes are two treatments of the same interview, with Zadek’s introduction and Varner’s account of the Freedom Foundation and union dues recurring in both.
What the sources do not cover
The excerpts do not describe the code’s enactment, its structure, or any provision by section number. They do not state what any court held in the Amazon tax court case, only that it concerned transactions with an entity in Luxembourg. They do not give the dollar amount of the IRS funding, the text of the legislation, or any figure for how much tax Amazon or any other company paid.