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In summary, six of the nine proposed planetary boundaries (phosphorous, nitrogen, biodiversity, land use, atmospheric aerosol loading, and chemical pollution) are unlikely to be associated with existential risks. They all correspond to a degraded environment, but in our assessment do not represent existential risks. However, the three remaining boundaries (climate change, global freshwater cycle, and ocean acidification) do pose existential risks. This is because of intrinsic positive feedback loops, substantial lag times between system change and experiencing the consequences of that change, and the fact these different boundaries interact with one another in ways that yield surprises. In addition, climate, freshwater, and ocean acidification are all directly connected to the provision of food and water, and shortages of food and water can create conflict and social unrest. Climate change has a long history of disrupting civilizations and sometimes precipitating the collapse of cultures or mass emigrations (McMichael, 2017). For example, the 12th century drought in the North American Southwest is held responsible for the collapse of the Anasazi pueblo culture. More recently, the infamous potato famine of 1846–1849 and the large migration of Irish to the U.S. can be traced to a combination of factors, one of which was climate. Specifically, 1846 was an unusually warm and moist year in Ireland, providing the climatic conditions favorable to the fungus that caused the potato blight. As is so often the case, poor government had a role as well—as the British government forbade the import of grains from outside Britain (imports that could have helped to redress the ravaged potato yields). Climate change intersects with freshwater resources because it is expected to exacerbate drought and water scarcity, as well as flooding. Climate change can even impair water quality because it is associated with heavy rains that overwhelm sewage treatment facilities, or because it results in higher concentrations of pollutants in groundwater as a result of enhanced evaporation and reduced groundwater recharge. Ample clean water is not a luxury—it is essential for human survival. Consequently, cities, regions and nations that lack clean freshwater are vulnerable to social disruption and disease. Finally, ocean acidification is linked to climate change because it is driven by CO2 emissions just as global warming is. With close to 20% of the world’s protein coming from oceans (FAO, 2016), the potential for severe impacts due to acidification is obvious. Less obvious, but perhaps more insidious, is the interaction between climate change and the loss of oyster and coral reefs due to acidification. Acidification is known to interfere with oyster reef building and coral reefs. Climate change also increases storm frequency and severity. Coral reefs and oyster reefs provide protection from storm surge because they reduce wave energy (Spalding et al., 2014). If these reefs are lost due to acidification at the same time as storms become more severe and sea level rises, coastal communities will be exposed to unprecedented storm surge—and may be ravaged by recurrent storms. A key feature of the risk associated with climate change is that mean annual temperature and mean annual rainfall are not the variables of interest. Rather it is extreme episodic events that place nations and entire regions of the world at risk. These extreme events are by definition “rare” (once every hundred years), and changes in their likelihood are challenging to detect because of their rarity, but are exactly the manifestations of climate change that we must get better at anticipating (Diffenbaugh et al., 2017). Society will have a hard time responding to shorter intervals between rare extreme events because in the lifespan of an individual human, a person might experience as few as two or three extreme events. How likely is it that you would notice a change in the interval between events that are separated by decades, especially given that the interval is not regular but varies stochastically? A concrete example of this dilemma can be found in the past and expected future changes in storm-related flooding of New York City. The highly disruptive flooding of New York City associated with Hurricane Sandy represented a flood height that occurred once every 500 years in the 18th century, and that occurs now once every 25 years, but is expected to occur once every 5 years by 2050 (Garner et al., 2017). This change in frequency of extreme floods has profound implications for the measures New York City should take to protect its infrastructure and its population, yet because of the stochastic nature of such events, this shift in flood frequency is an elevated risk that will go unnoticed by most people. 4. The combination of positive feedback loops and societal inertia is fertile ground for global environmental catastrophes Humans are remarkably ingenious, and have adapted to crises throughout their history. Our doom has been repeatedly predicted, only to be averted by innovation (Ridley, 2011). However, the many stories of human ingenuity successfully addressing existential risks such as global famine or extreme air pollution represent environmental challenges that are largely linear, have immediate consequences, and operate without positive feedbacks. For example, the fact that food is in short supply does not increase the rate at which humans consume food—thereby increasing the shortage. Similarly, massive air pollution episodes such as the London fog of 1952 that killed 12,000 people did not make future air pollution events more likely. In fact it was just the opposite—the London fog sent such a clear message that Britain quickly enacted pollution control measures (Stradling, 2016). Food shortages, air pollution, water pollution, etc. send immediate signals to society of harm, which then trigger a negative feedback of society seeking to reduce the harm. In contrast, today’s great environmental crisis of climate change may cause some harm but there are generally long time delays between rising CO2 concentrations and damage to humans. The consequence of these delays are an absence of urgency; thus although 70% of Americans believe global warming is happening, only 40% think it will harm them (http://climatecommunication.yale.edu/visualizations-data/ycom-us-2016/). Secondly, unlike past environmental challenges, the Earth’s climate system is rife with positive feedback loops. In particular, as CO2 increases and the climate warms, that very warming can cause more CO2 release which further increases global warming, and then more CO2, and so on. Table 2 summarizes the best documented positive feedback loops for the Earth’s climate system. These feedbacks can be neatly categorized into carbon cycle, biogeochemical, biogeophysical, cloud, ice-albedo, and water vapor feedbacks. As important as it is to understand these feedbacks individually, it is even more essential to study the interactive nature of these feedbacks. Modeling studies show that when interactions among feedback loops are included, uncertainty increases dramatically and there is a heightened potential for perturbations to be magnified (e.g., Cox, Betts, Jones, Spall, & Totterdell, 2000; Hajima, Tachiiri, Ito, & Kawamiya, 2014; Knutti & Rugenstein, 2015; Rosenfeld, Sherwood, Wood, & Donner, 2014). This produces a wide range of future scenarios. Positive feedbacks in the carbon cycle involves the enhancement of future carbon contributions to the atmosphere due to some initial increase in atmospheric CO2. This happens because as CO2 accumulates, it reduces the efficiency in which oceans and terrestrial ecosystems sequester carbon, which in return feeds back to exacerbate climate change (Friedlingstein et al., 2001). Warming can also increase the rate at which organic matter decays and carbon is released into the atmosphere, thereby causing more warming (Melillo et al., 2017). Increases in food shortages and lack of water is also of major concern when biogeophysical feedback mechanisms perpetuate drought conditions. The underlying mechanism here is that losses in vegetation increases the surface albedo, which suppresses rainfall, and thus enhances future vegetation loss and more suppression of rainfall—thereby initiating or prolonging a drought (Chamey, Stone, & Quirk, 1975). To top it off, overgrazing depletes the soil, leading to augmented vegetation loss (Anderies, Janssen, & Walker, 2002). Climate change often also increases the risk of forest fires, as a result of higher temperatures and persistent drought conditions. The expectation is that forest fires will become more frequent and severe with climate warming and drought (Scholze, Knorr, Arnell, & Prentice, 2006), a trend for which we have already seen evidence (Allen et al., 2010). Tragically, the increased severity and risk of Southern California wildfires recently predicted by climate scientists (Jin et al., 2015), was realized in December 2017, with the largest fire in the history of California (the “Thomas fire” that burned 282,000 acres, https://www.vox.com/2017/12/27/16822180/thomas-fire-california-largest-wildfire). This catastrophic fire embodies the sorts of positive feedbacks and interacting factors that could catch humanity off-guard and produce a true apocalyptic event. Record-breaking rains produced an extraordinary flush of new vegetation, that then dried out as record heat waves and dry conditions took hold, coupled with stronger than normal winds, and ignition. Of course the record-fire released CO2 into the atmosphere, thereby contributing to future warming. Out of all types of feedbacks, water vapor and the ice-albedo feedbacks are the most clearly understood mechanisms. Losses in reflective snow and ice cover drive up surface temperatures, leading to even more melting of snow and ice cover—this is known as the ice-albedo feedback (Curry, Schramm, & Ebert, 1995). As snow and ice continue to melt at a more rapid pace, millions of people may be displaced by flooding risks as a consequence of sea level rise near coastal communities (Biermann & Boas, 2010; Myers, 2002; Nicholls et al., 2011). The water vapor feedback operates when warmer atmospheric conditions strengthen the saturation vapor pressure, which creates a warming effect given water vapor’s strong greenhouse gas properties (Manabe & Wetherald, 1967). Global warming tends to increase cloud formation because warmer temperatures lead to more evaporation of water into the atmosphere, and warmer temperature also allows the atmosphere to hold more water. The key question is whether this increase in clouds associated with global warming will result in a positive feedback loop (more warming) or a negative feedback loop (less warming). For decades, scientists have sought to answer this question and understand the net role clouds play in future climate projections (Schneider et al., 2017). Clouds are complex because they both have a cooling (reflecting incoming solar radiation) and warming (absorbing incoming solar radiation) effect (Lashof, DeAngelo, Saleska, & Harte, 1997). The type of cloud, altitude, and optical properties combine to determine how these countervailing effects balance out. Although still under debate, it appears that in most circumstances the cloud feedback is likely positive (Boucher et al., 2013). For example, models and observations show that increasing greenhouse gas concentrations reduces the low-level cloud fraction in the Northeast Pacific at decadal time scales. This then has a positive feedback effect and enhances climate warming since less solar radiation is reflected by the atmosphere (Clement, Burgman, & Norris, 2009). The key lesson from the long list of potentially positive feedbacks and their interactions is that runaway climate change, and runaway perturbations have to be taken as a serious possibility. Table 2 is just a snapshot of the type of feedbacks that have been identified (see Supplementary material for a more thorough explanation of positive feedback loops). However, this list is not exhaustive and the possibility of undiscovered positive feedbacks portends even greater existential risks. The many environmental crises humankind has previously averted (famine, ozone depletion, London fog, water pollution, etc.) were averted because of political will based on solid scientific understanding. We cannot count on complete scientific understanding when it comes to positive feedback loops and climate change.

John Podesta and the IRS are racing to implement the climate law’s clean energy tax credits John Podesta’s résumé includes stints as chief of staff to President Bill Clinton and counselor to President Barack Obama. Now the veteran Democratic power broker is taking on what might be his hardest job yet: implementing President Biden’s landmark climate law. Podesta, 73, returned to the White House in September to oversee implementation of the Inflation Reduction Act, which authorized the biggest burst of spending in the nation’s history to bolster clean energy and curb planet-warming emissions. Podesta’s central task might seem dull and bureaucratic, but it’s incredibly important for U.S. climate and industrial policy: He must ensure that the Internal Revenue Service and the Treasury Department issue detailed guidance on how consumers and corporations can use $270 billion worth of tax credits to spur the deployment of clean energy nationwide. “In terms of people who have the skills, the expertise and the relationships within the federal government to tackle such complicated issues, there's no one like John Podesta,” said Christy Goldfuss, chief policy impact officer at the Natural Resources Defense Council and a former colleague of Podesta’s at the Center for American Progress think tank. If successfully implemented, the law’s tax credits could supercharge domestic manufacturing of solar panels, batteries, electric vehicles and other green technologies. They could also help the United States meet Biden’s ambitious goal of cutting greenhouse gas emissions 50 to 52 percent by 2030 compared to 2005 levels.

In the current political climate, it’s too soon to think our democracy is no longer under threat, but after this year’s midterm results, we can celebrate that predictions of its demise were premature. There were plenty of reasons to think it would die, particularly in a midterm election year after the Jan. 6, 2021, attack on the Capitol inspired by the former president’s refusal to concede a free and fair election he lost and his amplification of the “big lie” that has falsely convinced millions of Americans, mostly Republicans, that our election system is rigged. That led hundreds of election deniers to run for offices across the country in 2022. Some questioned whether the American people would be motivated enough by the intangible, largely esoteric concept of defending democracy to overcome the political headwinds of the economy, inflation and an unpopular president. Conventional political wisdom says midterms are usually referendums on the person in power in the White House and the party controlling Congress. But in 2022, American democracy became an issue outside the political norm for voters’ consideration. Some questioned whether the American people would be motivated enough by the intangible, largely esoteric concept of defending democracy to overcome the political headwinds of the economy, inflation and an unpopular president to stop what should have been a wave election for Republicans. Clearly, they were. States like Georgia and Michigan set turnout records, and for the third election cycle in a row, we saw increased Gen Z and millennial voter engagement affect races across the country, mostly in favor of Democrats. Add the exponential increase in female voter participation post-Dobbs, and you can see how democracy emerged as the big winner of 2022. But it wasn’t just the outcome of the election that signaled that our democracy was still holding on in 2022. It was the fact that the outcomes of races went largely unchallenged. That’s no small feat, considering that over 300 candidates baselessly denied the outcome of the 2020 presidential election. Many threatened not to accept election results if they lost. Thankfully, the majority of them did, with the exception of professional election deniers like Kari Lake, who lost the Arizona governor’s race to Katie Hobbs. She has vowed to continue to fight the results. Bless her heart.

The democratic peace has proved to be one of the most influential and durable findings in the history of international relations, if not political science as a whole. As with all influential findings, alternatives have been posed, for example, the “capitalist peace” (Gartzke 2007; Mousseau 2000, 2009, 2013), the “territorial peace” (Gibler 2012), or “political similarity” (Bennett 2006; Raknerud and Hegre 1997; Peceny, Beer, and Sanchez-Terry 2002; Werner 2000). Beyond such empirical challenges, the finding has also been criticized for not providing a fully convincing causal logic that explains the empirical finding (Rosato 2003). This puzzle of what makes democracies less likely to engage in conflict with other democracies still remains subject to a lively and inconclusive debate (Hegre 2014). Our purpose here is to use the new Varieties of Democracy (V-Dem) data, with its ability to more precisely disaggregate the components of democracy, to reconsider its causal logic in a more precise fashion and with a fresh perspective. We advance the debate by arguing that different forms of constraint on power holders help to explain why democratic dyads are less likely to engage in conflict. To date, the greatest attention has been focused on what we term electoral and horizontal accountability. Electoral accountability (sometimes referred to as vertical accountability) functions because elected politicians try to avoid alienating voters in anticipation of the next round of elections. Horizontal accountability operates through the ability of other branches of government and state institutions to check the power of the executive. We build on previous work that showed that greater electoral participation (Reiter and Tillman 2002; Clark and Nordstrom 2005; Bueno de Mesquita et al. 1999) and greater horizontal constraints on the executive (Reiter and Tillman 2002; Clark and Nordstrom 2005; Choi 2010) work to reduce conflict. An important part of our contribution is to add a new dimension—social accountability. It is provided by organized actors in civil society that have the ability to inflict audience costs on the executive in-between elections and to mobilize in support of opponents during elections. We also highlight a new measurement tool for capturing democracy as an aggregate and in its component parts in new and potentially fruitful ways. Whereas the vast majority of studies have relied on Polity to capture the degree of democracy among states, we use the V-Dem data, which have both better concept-measurement consistency and also allow us, because of the ability to disaggregate components of democracy, to directly test the different forms of constraint we discussed above. Our sample includes observations from 173 countries across the globe from 1900 to 2010. We test whether these three different forms of accountability—(1) horizontal, (2) electoral, and (3) social—restrain democracies from fighting with each other. When pitting the three mechanisms of accountability directly against each other, we find the weakest support for the form that has received the greatest attention in the literature—electoral. However, its effect becomes salient when it is combined with social accountability between elections. The democratic peace effect thus seems less a product of simple electoral constraint than on the ability of civil society, as well as other state actors, to constrain the incumbent. To our knowledge, this is the first time that anyone has tested the impact of civil society engagement on conflict behavior. In an Online Supplementary File (henceforth SF),1 we demonstrate that our main findings are robust in the face of contending theories and alternate specifications of our tests.

A world dominated by totalitarian states would be more incompetent, more war-prone, less cooperative, and more inhibitive of progress than one dominated by democratic states. Our current world is not particularly competent, peaceful, cooperative, or progressive—a totalitarian-dominated world would be worse. It would increase the risk of another collapse and extinction and could shape the future toward less desirable trajectories (Beckstead, 2013). Totalitarian states are incompetent. They are bad at forecasting and dealing with disasters (Caplan, 2008).16 This can be seen most clearly in the great famines of Communist China and the USSR, in which millions died (Applebaum, 2017; Becker, 1996; Dikotter, 2010; Snyder, 2010). In comparison, functioning multiparty democracies rarely, if ever, experience famines (Sen, 2010). “Established autocracies” (or “personal”/“sultanist”) are particularly bad, as there are few checks or restraints on arbitrary rule and the whims and ideology of the single individual, even from other elites (Svolik, 2012). From the inside, the “inner circle” around Mao, Stalin, and Hitler seems incredibly chaotic, with elites strongly incentivized to conceal information and encouraged by the autocrat to squabble and feud—so they are divided (Conquest, 1992; Kershaw, 2008; Zhang & Halliday, 2006). If totalitarian states are worse at addressing social, environmental, and technological problems, then a world dominated by them would likely be worse at responding to risks of collapse and extinction. A world dominated by totalitarian states is more likely to have major wars. States with near-universal adult suffrage rarely (if ever) go to war with one another (Barnhart et al., 2020), so a world dominated by democracies has fewer wars. Miscalculation might be a particular problem for totalitarian states due to personalization and disincentives for accurate information, leading to well-known strategic disasters such as Hitler and Stalin’s blunders in World War II (Bialer, 1970; Noakes & Pridham, 2001), or at a smaller level, Saddam Hussein’s rejection of diplomacy (Atkinson, 1993). War makes collapse and extinction more likely, by raising the chance of weapons of mass destruction being used. Linked to this, totalitarian states are less cooperative than democratic states. While cooperation is possible (Ginsburg, 2020), their internal norms are characterized by paranoia and treachery, and their lack of transparency limits their ability to credibly commit to agreements. This is bad for all risks that require cooperation such as pandemics or climate change (Tomasik, 2015). Finally, continued social and scientific progress is likely to reduce risks of collapse and extinction. Social progress could reduce global inequality and other risk factors. Scientific progress could help address natural risks and climate change (Sandberg, 2018), differentially increase defensive rather than offensive power (Garfinkel & Dafoe, 2019), and solve safety challenges in AI or biotechnology (Russell, 2019). However, as we will now discuss totalitarian states would likely inhibit social progress. A central question from a longtermist perspective is: Which values should shape the future? I would argue that we should prefer it to be shaped by liberal democratic values. This is not to say that the current democracy-dominated world is perfect—far from it. The fate of billions of factory-farmed animals or hundreds of millions of people in extreme poverty makes that abundantly clear. However, democracies have two advantages. First, democracies have space for cosmopolitan values such as human rights, plurality, freedom, and equality. These are better than those that characterize life under totalitarianism: Fear, terror, subjection, and secrecy. Second, they have within themselves the mechanism to allow progress. In the last 100 (or even 50) years, the lives of women, LGBT people, religious minorities, and non-white people have dramatically improved. Our “moral circle” has expanded, and could continue to expand (Singer, 1981). The arc of the moral universe is long, but given the right conditions, it might just bend toward justice (King, 1968). A global society dominated by these values, and with the possibility of improving more, has a better longterm potential. A totalitarian-dominated world, on the other hand, would reduce the space for resistance and progress—distorting the human trajectory. We should be particularly concerned about “bottlenecks” at which values are particularly important—where there is a risk of “locking-in” some particular set of (possibly far from optimal) values. While they are currently far-off, future technologies such as artificial general intelligence, space settlement, life extension (of autocrats), or much better surveillance could enable lock-in (Caplan, 2008).17 Conditional on them avoiding new catastrophes, world orders dominated by totalitarians could be quite long-lasting (Caplan, 2008). Democracies can undermine authoritarian and totalitarian regimes through the following ways: Control, including conquest; contagion through proximity; and consent, promoting receptivity toward democratization (Whitehead, 2001). Democracies can actively undermine these regimes through war, sanctions, hosting rebellious exiles, or sponsoring internal movements. Passively, through contagion, they offer a demonstration that a better, more prosperous life is possible. For example, in the final years of the USSR, ordinary Soviet citizens were able to see that the West had a higher standard of living—more innovation, more choice, and more consumer goods. The elites were able to read books from the outside, and travel—Gorbachev’s contacts and friendships with European politicians may have made him more favorable to social democracy (Brown, 1996). Democracies can undermine the will and capacity of the coercive apparatus (Bellin, 2004). However, in a world not dominated by democracies, all these pressures would be far less. A world in which, say, totalitarian regimes emerged as dominant after World War II (for example if the USA was defeated) could be self-reinforcing and long-lasting, like the self-reinforcing relationship of Oceania, Eurasia, and Eastasia (Orwell, 1949). Orwell’s fictional world is characterized by constant low-grade warfare to justify emergency powers and secure elites, and with shifting alliances of convenience as states bandwagon and balance, thereby preventing any resolution. A totalitarian-dominated world order could be rather robust, perhaps for decades or even centuries. A long-lasting totalitarian-dominated world would extend the period of time humanity would spend with a heightened risk of collapse or extinction, as well as increased potential for distortion of the human trajectory and the possibility that a “lock-in” event may occur. This example illustrates the possibility of a “negative recovery,” resulting in a trajectory with less or no scientific and social progress and a less favorable geopolitical situation, which would threaten the destruction of humanity’s longterm potential.

Democracy solves extinction

Tax Day is upon us, which may mean you’re presently cursing whichever age-old ruler came up with the whole idea that the governed should part with some portion of their hard-earned dough in order to support him (for the common good, of course). But if you love America and democratic forms of government—however strained they might feel right now!—then you should instead be raising a glass in that presumed despot’s honor. Forget what you may have learned about the Enlightenment: Modern Western democracy is nothing more than a byproduct of a series of tax disputes. While the Greeks and Romans had democratic institutions, most trace the beginnings of modern Western democracy to the 1215 signing of the Magna Carta at Runnymede. King John, the third of England’s Angevin monarchs, claimed lands in France to which the French also laid claim. John attempted to win them back to no avail. Wars are expensive, and John sought to pay for them by taxing England’s nobles, who did not take kindly to his attentions. They revolted and eventually forced him to sign the Magna Carta—which, among other things, required the king to obtain consent before imposing certain taxes. In other words, the nobles extracted a say in government in return for the king’s right to tax them, conditioning that right upon the consent of the governed. Over time the English built upon these agreements, eventually leading to the democratic parliamentary system that exists today. But what about America? Let’s fast-forward to the mid-18th century, by which time the New World has been discovered and the British had established colonies in North America. But the Spanish and French were also there, not to mention the Native Americans who predated all of them. Tensions eventually led to the French and Indian War (or the Seven Years’ War), during which the British incurred significant costs, among other things, protecting the colonists. Not surprisingly, the British thought it appropriate to recover those costs from the colonists. Thus came the Stamp Act of 1765, the Declaratory Act of 1766 (which gave Parliament the power to legislate for the colonies), and the Townshend Acts, which imposed taxes on glass, lead, oil, paper, and, most famously, tea. We all recall the Boston Tea Party, cries of “No taxation without representation,” the shot heard round the world, and ultimately the Declaration of Independence, which noted that it was self-evident that governments derive “their just powers from the consent of the governed” and listed among “the causes which impel them to the separation” the fact that the crown was “imposing Taxes on us without our consent.” The British attempt to tax the colonists without obtaining their consent wasn’t the only thing that led to revolution, but it certainly played an important role. Next came Washington crossing the Delaware (and apparently sleeping in every town up and down the East Coast), colonial victory in 1783, and, of course, debt. Have I mentioned that wars are expensive? As part of the war efforts, the Continental Congress had borrowed heavily from France, Spain, and private Dutch investors. They were in mortal fear that the British would attempt to retake what they had just lost and knew they would have to maintain good credit to have a shot at staying free. Repaying the war debt was of critical importance. Under the Articles of Confederation that the colonies adopted in 1781, each American state remained sovereign, and all decisions of the confederate government had to be unanimous. This government had no power to tax. Instead it relied on requisitions on the states, which the states were supposed to fulfill based on the proportionate value of the land within their borders. The government couldn’t force states to contribute funds, however, and had to rely on its powers of persuasion. This was about as effective as you might suspect. The last requisition was made in 1786. The government asked for $3.8 million. It collected $663—a princely sum that fell far short of what was needed to pay off the revolutionary debts. Two efforts had been made—in 1781 and 1783—to give the government the power to tax, but both failed, in large part because of the unanimity requirement. In 1787, the Congress of the Confederation authorized a meeting to try to fix the Articles of Confederation, but the attendees soon concluded they needed to start from scratch. Thus began efforts to create a new government for the 13 colonies. One of the most controversial issues was whether to give this new government the power to impose and collect taxes of its own. The drafters ultimately included this power in the Constitution and went so far as to allow the government to impose taxes directly on the people within the states, not just on the states. The founders claimed that the new constitution was based in large part on Roman precedent. No doubt—but we tax historians see things a little differently. The decision to grant the federal government the power to tax helps explain not only on the structure of the proposed government but also how the Constitution was framed and even ratified. Remember the Magna Carta? If a government is to impose taxes on the people, it must obtain their consent. Thus the new government was formed by “we the people,” who ratified it through special state conventions of citizens, as opposed to the states, which had ratified the Articles of Confederation through their legislatures. Imparting the power to tax, however, is different from imposing specific taxes. How do we get the consent of the governed to do that? The founders’ solution was to create a hybrid government, in which states and the people share power. Unlike the Articles, in which the states alone were represented, the Constitution provided for both a Senate, which represented the states qua states (senators were initially picked by the state governments), and the people’s House, where representatives were elected directly by the people. Such a body would clearly be able to provide the consent necessary to impose specific taxes. This also explains why the Constitution requires that all revenue bills must originate in the House. Other elements of the Constitutional design can be understood to reflect the concern that taxation be linked to consent. For instance, representatives were allocated among the states based on population, a clear effort to ensure that political power was matched to the people from whom that power flowed. Direct taxes were similarly allocated by population (in Article 1, Section 2). Tying direct taxes to political representation was so important that it was repeated in Article 1, Section 9. This provision ensured that representatives from populous parts of the country could not impose taxes on less populated regions without their consent or, at the very least, without bearing their proportionate share. The Constitution’s uniformity provision, which requires that all duties, imposts, and excises be uniform across the United States, can be viewed in the same light. The famed jurist Oliver Wendell Holmes Jr. once famously noted that “taxes are the price we pay for civilization.” I think he sold taxes short. Taxes not only are the price of civilization, but they also were fundamental in bringing about the democratic system of government that (for now!) remains a model for the world. Happy filing!

Public trust leads to greater compliance with a wide range of public policies, such as public health responses, regulations and the tax system. It also nurtures political participation, strengthens social cohesion, and builds institutional legitimacy. In the longer term, trust is needed to help governments tackle long-term societal challenges such as climate change, ageing populations, and changing labour markets.

Central to Americans’ confidence in our government is their confidence in our tax-collection system. Unfortunately, the Internal Revenue Service [IRS] has not always earned that trust, undermining this system of voluntary compliance and taxpayer engagement. Fortunately, this has been a bipartisan issue in the past, and we believe a bipartisan proposal exists to once again solve the problem and make the agency more responsive and accountable to taxpayers. Based on recent testimony before a congressional committee, IRS technology is outdated and the Taxpayer Advocate estimates that only 29 percent of the telephone calls to the IRS are answered. About 20 years ago the IRS had similar difficulties. Calls went unanswered by the thousands, and calls that were answered often were incorrect or unhelpful. Due to a lack of leadership and strategic direction, the billions of dollars that Congress poured into the IRS computer systems were largely wasted. The American public had lost faith in the IRS, and sweeping changes were needed to get it back on track. As a result, Congress created the National Commission on Restructuring the IRS. More from Straight Talk: We co-chaired that IRS commission, and we convened some of the best and brightest minds across industries and political parties to work with us on restructuring the IRS to better serve taxpayers. We published our findings and recommendations in a comprehensive report, which served as the basis for the IRS Restructuring and Reform Act of 1998, the first major overhaul the agency had undergone in 40 years. The law created dozens of new taxpayer rights, including the right to an independent appeal of an IRS decision. It restructured how the IRS was governed, by establishing an independent IRS Oversight Board to add needed experience, expertise and continuity to review and approve the agency’s budget requests and strategic direction. It also refocused the IRS’s long-term customer service and IT modernization strategies to better serve the basic needs of taxpayers. For a number of years following those reforms, there were substantial improvements at the IRS. The percentage of taxpayer calls that it answered was up from 52 percent in 1997 to 83 percent in 2007, according to the IRS. That same year, the IRS hit another goal by reaching a rate of 80 percent of taxpayers filing electronically. Customer opinion surveys showed that the IRS had moved from the bottom to the middle ranks of government agencies. The general consensus was that the 1998 IRS reform law was a success. Unfortunately, that period of sustained improvement at the IRS has unraveled in recent years. For example, according to the Taxpayer Advocate, the percentage of calls that the IRS answered bottomed out at a staggeringly low 15 percent in 2015. In addition, nearly 40 percent of taxpayers that called the IRS in 2017 felt they were not able to resolve their issues with just one call. Moreover, despite the efforts 20 years ago to include an independent appeal of a decision, appeals have declined because the IRS has chosen to settle more cases in tax court — at a higher cost to taxpayers. Finally, while the 1998 law intended the IRS Oversight Board to help set long-term strategic goals for the IRS, the goals stopped being met, and by the end of 2015, the board had failed to maintain enough members and has been shut down. The IRS is failing to effectively serve the American people, and it is time to overhaul the agency again. We applaud the efforts of Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., as well as the House for the solutions they have offered over the past couple of years to advance IRS reform. Much as we did 20 years ago, we believe more substantial reforms are needed, and we believe any solution should empower taxpayers of all types and income levels. We support legislation called the Protecting Taxpayers Act that will do this by focusing on strengthening protections for taxpayers, ensuring an effective taxpayer appeals process, revitalizing the Oversight Board and IRS strategic direction on customer service and IT, improving IRS taxpayer service training and helping low-income taxpayers interact with the IRS. This is a bipartisan proposal that will enact commonsense reforms to help the IRS better serve American taxpayers and achieve its critical mission. As Congress moves forward with new rounds of IRS reforms, it is important to reflect on what we learned 20 years ago and apply those lessons to help the IRS once again become a more responsive, effective agency that truly serves the people’s interests. It’s time to go through another IRS reform process to help restore taxpayers’ faith in America’s tax collector.

About 4 in 10 phone calls to the IRS go unanswered, staffing and budgets have declined, and the agency patches its databases together with software that dates back as far as the presidency of John F. Kennedy, IRS Commissioner Charles Rettig told members of Congress in hearings last week. The issue is not just an annoyance. It can mean lost time and money for American taxpayers. And finance experts say it can affect something near the heart of any democratic government: public trust in, and compliance with, the system of collecting revenue for public programs. In the United States, that trust doesn’t appear to be near a breaking point, but experts say it shouldn’t be taken for granted. Both a tax “compliance gap” and weak public ratings for the IRS signal that, at a minimum, there’s plenty of room for improvement. “You’ve got to have enough trust so that most people will pay what they owe, most of the time,” says Alan Viard, a tax-policy expert at the conservative American Enterprise Institute in Washington. ‘A delicate balance’ Even if citizens may disagree with elements of fiscal policy, that bedrock of trust hinges on people feeling the tax system created by Congress is “fair enough to be legitimate,” Mr. Viard says. It also hinges on the tax-collection agency being perceived as effective: reining in cheating while also being helpful rather than harassing honest taxpayers. “That’s kind of a delicate balance,” Mr. Viard says. “There’s a clear need here for additional enforcement and for additional service.” Many other tax-policy experts agree on that general point. Officials and workers at the agency say the same. “When I started at the IRS, we had approximately 35 revenue officers in the Milwaukee area. ... Today we have approximately six,” says Doreen Greenwald, a 34-year IRS worker who is also a local union president for the National Treasury Employees Union. “And from my perspective, our work has increased based on a lot of the complexities of the tax law, as well as the work itself is more complex.” This is a year of particularly high stress for the agency and American taxpayers alike. It’s the first tax-filing season under Republican-passed tax changes signed by President Donald Trump in 2017. While broadly cutting individual and business taxes, the law has also transformed the tax code in ways that many Americans are only now grappling with. And the IRS is still in the process of clarifying the tax law for taxpayers and accountants by preparing detailed guidance on the changes. Despite that, the positive news is that for millions of Americans the tax-filing process in recent weeks has gone smoothly. The gap between what taxpayers owe and what the IRS receives is large – about $458 billion a year, roughly 12% of owed revenue – yet the U.S. remains a leader on tax compliance compared with many other nations. “We have the greatest tax system in the entire world,” Ms. Greenwald says. “And it’s based mostly on a voluntary compliance system.” Signs of strain Surveys have found that the vast majority of Americans view taxpaying as a civic duty. And by some polls, the IRS has been edging up rather than down in public esteem. Still, signs of strain are clear: The IRS ranks near the bottom among federal agencies for its customer service. President Trump’s $11.5 billion budget request for the IRS would be a 1.5% increase (with a $362 million boost separately planned for enforcement), but the agency’s budget is down 18% since 2010 after adjusting for inflation. A seven-year hiring freeze starting in 2011 strained morale and has left a high share of workers near retirement. A six-year plan to overhaul IRS computer systems is underway, but the agency is beset by relentless cyberattacks on the Treasury’s troves of money and taxpayer information. Audits of questionable tax returns have plunged even more deeply than the overall cuts in staff. Some critics say the agency’s woes stem partly from a deliberate attack on its funding by Republican lawmakers, channeling the anti-government spirit of the tea party movement in 2010 and beyond. But some of the latest Republican rhetoric has been about improving the agency, not abolishing it (as Sen. Ted Cruz, R-Texas, had called for as a presidential candidate in 2016). Sen. Mike Enzi, R-Wyo., spoke in last week’s congressional hearing about how the closure of a taxpayer-assistance office was affecting his constituents. Commissioner Rettig cited “unexpected recent retirements” for the center’s closure. Sen. James Lankford, R-Okla., asked about whether the agency needed help in finding cybersecurity professionals (yes, he was told) and about the implications of the tax gap for public trust. Millions of taxpayers “want to get it right, and it really bugs them when someone is ripping the system off,” Senator Lankford said. Commissioner Rettig agreed, calling for an enforcement presence in “as many neighborhoods as possible.” (And in a separate hearing with House members, he acknowledged the need “to get the audit rates up for the more wealthy taxpayers ... by taking a strong look at the issues that I am aware of that wealthy individuals might engage in,” such as pass-through entities, which allow many firms to lower their tax rates by reporting income on individual returns.) Assistance deferred Better customer service is the other side of the coin. “Its not unusual for me to be on hold for an hour and half or more,” or to not even be offered the option of waiting on hold, says Deborah Bechtel, who says she often calls the IRS in her work as an enrolled agent helping taxpayers near Albany, New York. When she does get through, she says the workers are doing their best to be helpful, but getting an issue resolved is far from assured. For Ms. Lewis, the taxpayer from Norfolk, Virginia, the outcome of her efforts wasn’t a happy one. After failing to get through by phone, she ended up selling her late mother’s jewelry to enable payment of her whole remaining tax bill for 2018, she says in a text interview online. She, for one, would like to see the IRS get more funding. “I think the IRS could definitely use a bigger slice of the budget,” says Ms. Lewis, who works as an administrative assistant for a health insurance company. “I honestly feel that [the] system is tilted to favor the very rich while setting up roadblocks for the poor and working class.” She points to the way lobbying by the tax-software industry has – so far at least – put up roadblocks to the idea of a federal “free-file” system that would let all taxpayers largely rely on the IRS to prepare their taxes using information in its databanks (with the opportunity for individuals to amend IRS-prepared forms). “No one will ever enjoy paying taxes,” Ms. Lewis says. “But making it less onerous for consumers could help.”

The mission of IRS, a component agency within the Department of the Treasury, is to (1) provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities, and (2) enforce the law with integrity and fairness to all. While it relies extensively on IT to carry out this mission, IRS has reported that modernization is needed to improve its core tax administration systems, operations, and cybersecurity. IRS has also reported that modernization is critical to improving customer experience and providing the kind of service taxpayers have come to expect. For example, IRS has previously reported that modernization will help address business and technical challenges due to constraints with the Individual Master File (IMF) program it has been using since 1970.10 These challenges include the inability to get a real-time view of the taxpayer account, quickly respond to tax code changes, provide enhanced analytical capabilities, and provide additional taxpayer account information to more effectively combat fraud and identity theft.

The Build Back Better [BBB] Act would make transformational investments that improve the economic security of the nation’s families and advance solutions to the climate crisis that threaten the planet’s future. These investments would be fully paid for by sensible tax policies and budget savings that require the wealthiest Americans and largest corporations to pay their fair share. Preliminary White House estimates indicate that the Build Back Better Act will reduce deficits by $36 billion over the next decade and by more than $2 trillion in the subsequent decade. The bill reduces the deficit because it includes three main sources of budget savings, or “offsets,” that total $2.15 trillion: 1) The bill includes about $1.5 trillion in tax increases on corporations and wealthy individuals, according to the Joint Committee on Taxation; 2) the bill lowers the cost of prescription drugs in ways that the administration estimates will produce $250 billion in budget savings; and 3) the bill would modernize the IRS to enhance the agency’s ability to crack down on tax evasion by the wealthy and corporate tax cheats while improving service for ordinary taxpayers. This column focuses on the third source of savings: investment in the IRS. The U.S. Department of the Treasury’s Office of Tax Analysis (OTA) estimates that increasing funding for the IRS will generate $400 billion in new revenue after accounting for the added cost. This estimate likely will not be included in the Congressional Budget Office’s (CBO) official score of the bill for reasons that this column will explain, but the savings are real and potentially much greater. Therefore, the Treasury’s analysis must be taken into account when assessing whether the bill is paid for. Increased IRS funding would raise revenue, reverse long-standing neglect, and address inequities The Build Back Better Act’s tax compliance effort would reverse years of budget reductions and neglect that have substantially eroded the IRS’ ability to enforce the nation’s tax laws. This neglect has had serious consequences: Estimates of the annual revenue loss from taxes that are legally owed but not paid range from the roughly $600 billion estimated by the Treasury Department to the more than $1 trillion identified by IRS Commissioner Charles Rettig in testimony before the Senate Finance Committee earlier this year. Absent additional resources, nearly $1 out of every $6 in taxes will go unpaid over the next decade. The tax gap—the difference between taxes owed and those paid—worsens inequities in the tax code. Wage and salary workers typically pay taxes on virtually all of the income they earn because their earnings are reported to the IRS. Research shows that wealthy taxpayers are often able to avoid a large share of what they owe, with the top 5 percent of earners accounting for more than half of the tax gap. This disparity exists largely because high-income individuals are more likely to receive income that is subject to no or minimal reporting requirements and because of their use of accountants and advisers who help them avoid paying the taxes that they actually owe. Diminished resources and staffing reductions—the IRS has lost 17,000 enforcement personnel over the past decade—have particularly affected the agency’s ability to examine complex tax returns and address new sources of evasion, such as the cryptocurrency sector. While reduced resources have caused a sharp decline in audit rates of large corporations and wealthy individuals, enforcement efforts targeting low-income workers—those who file simple returns but claim the earned income tax credit—have declined at a much slower rate so that they are now audited at roughly the same rate as the top 1 percent. This only further exacerbates inequities in the tax system. The Build Back Better Act would explicitly provide new resources for efforts that address this inequity, giving the IRS the capacity needed to tackle sophisticated tax evasion and targeting new efforts at high-income individuals and corporate taxpayers. The CBO’s official score will likely exclude savings from tax enforcement due to scoring conventions The CBO’s topline estimate of the Build Back Better Act’s impact on deficits will diverge from the White House estimates because of how the CBO scores IRS enforcement. The most basic reason for the divergence is that the CBO uses scoring guidelines that exclude savings attributable to program management efforts—such as the tax enforcement initiative included in the Build Back Better Act—but include the cost of funding appropriated to support such initiatives. Following CBO guidelines, the score of the Build Back Better Act’s tax enforcement initiative would include as a cost the approximately $80 billion in new budget authority for the IRS over the next decade but exclude the increase in revenue that would be generated by that investment. The CBO may provide an estimate of the revenue gain; if so, it would most likely not be incorporated into the final score. Treasury estimates of tax compliance revenue err on the side of caution and should be taken into account, notwithstanding more conservative CBO analyses The Build Back Better Act would enable the IRS to invest in modern technology along with the staff needed to build the agency and improve taxpayer services and enforcement. The $400 billion estimate of revenue that would be raised by the compliance initiative—released by the White House and based on an analysis prepared by the professional staff of the Treasury Department’s OTA—concludes that investments in IRS enforcement, which the Build Back Better Act targets at high-income individuals, complex partnerships, and large corporations, would accomplish the following: 1) provide a high direct return on investment; 2) generate increasingly more revenue over time; 3) have a beneficial effect on voluntary compliance when coupled with investments in technology and taxpayer services; and 4) have a large deterrent effect that is not included in many analyses of the revenue effects of IRS investment. The Treasury analysis concludes that the proposed investment in IRS capacity would lead to about $640 billion in added revenue but cautiously assumes a net benefit of $400 billion for budget scoring purposes consisting of $320 billion from direct enforcement activities and $160 billion from increasing voluntary compliance, minus $80 billion in added costs. Other estimates, including a noted effort led by two former IRS commissioners, conclude that reasonable compliance efforts could generate as much as $1.4 trillion over 10 years—more than triple the Treasury’s Build Back Better Act estimate—through investments in technology, improved reporting requirements, and increased staffing. Moreover, the OTA analysis does not assume that the Build Back Better Act’s substantial investment in new technology will result in additional revenues, despite substantial evidence that modern technology and improved service boost taxpayer compliance. Lastly, an op-ed authored by five former Treasury secretaries, who served under both Republican and Democratic presidents, echoes the argument that President Joe Biden’s original enforcement proposal “if anything, is modest” and notes that former IRS commissioners have estimated that the agency could collect $1.6 trillion over a decade by investing in technology and enforcement. The CBO has previously underestimated the revenues that increased enforcement would raise. Research by former Treasury secretary and Harvard economist Larry Summers and University of Pennsylvania professor and current Treasury official Natasha Sarin examine the reasons why past CBO estimates have come in below those of the Treasury Department and other efforts: Past CBO estimates do not account for a deterrence effect; that is, the CBO does not assume that stepped-up enforcement will lead to greater compliance outside of specific enforcement activity. Its most recent analysis dismisses the effects of investments in the IRS on deterrence, stating only that the effect on voluntary compliance would be modest. However, evidence suggests that deterrence has a substantial impact on tax compliance, with one study finding that taxable income reporting increased by an amount equal to 2.9 percent of average income following an audit. The CBO ascribes minimal—if any—gains from improvements to the IRS’ antiquated technology. The IRS’ software system, which was developed in the 1960s, is the oldest in the federal government, and the agency lags far behind the private sector with respect to information technology spending. The CBO assumes, without evidence, that the return on additional investment will diminish significantly over time. While at some point, returns would no doubt fall, the magnitude of the tax gap makes a large drop unlikely in the foreseeable future. The OTA estimate, for example, projects that the Build Back Better Act will close less than 7 percent of the gap in tax collections forecast for the next decade, leaving a substantial share of the gap left to be closed. A September 2021 CBO analysis of the Build Back Better Act proposal suggests that the CBO does not fully reflect the administration’s plans to target new enforcement activity to wealthy individuals and large corporations, where the decline in audit rates has been most severe due to limited IRS capacity. The percentage of individuals audited with incomes in excess of $10 million, for example, dropped by 8 percent between 2010 and 2018, compared with a 46.3 percent drop for individual tax filers as a whole. Reversing that trend will likely have a major impact on revenues: Each hour that revenue agents spend auditing the richest taxpayers generates more than $4,500 in tax adjustments, according to the Treasury’s inspector general for tax administration. The CBO’s estimates are advisory in nature and are intended to help lawmakers assess the impact of legislation under consideration and determine whether it complies with congressional budget rules. Lawmakers can—and should—consider other sound evidence such as that provided by the Treasury Department’s professional staff. Stronger reporting requirements would boost revenues further Congress could raise even more revenue by including the Biden administration’s bank reporting proposal or similar measures to improve information reporting in the final Build Back Better Act. The administration’s simple proposal would require banks to report just two pieces of information to the IRS: the total amount deposited into bank accounts each year and the amount taken out. This would significantly strengthen the IRS’ ability to crack down on tax evasion and level the playing field between those whose income comes from wages and salaries and those whose income is less likely to be covered by reporting requirements. This provision was left out of the bill in the face of fierce and misleading lobbying by the banking industry. Conclusion Rebuilding the capacity of the IRS will provide a sound source of revenue that can support the ambitious and needed investments in climate, social and community supports, education, and health care found in the Build Back Better Act. Investing in the IRS will improve the agency’s ability to communicate with taxpayers on a timely basis and ensure that they receive the assistance and benefits they deserve. Importantly, by addressing long-standing problems of sophisticated tax evasion and other enforcement challenges, it will also foster a more equitable tax system that helps ensure that the wealthiest Americans and large corporations pay the taxes they owe.

Identity theft has been at the forefront as a societal problem for several years. The public has been made aware of the dangers of identity theft, particularly to personal and financial security. Many studies have been completed concerning the size and scope of victimization. The government, credit card and other financial service industries have responded by putting tighter controls in place. On the other hand, the insidious threat of identity fraud has not been similarly acknowledged. Both the public and private sectors must understand and confront the enormity of the identity fraud problem so that it can be solved. Identity fraud, which encompasses identity theft, is the use of false identifiers, false or fraudulent documents, or a stolen identity in the commission of a crime. It often emanates from a breeder document created from fictitious or stolen identifiers. The breeder document, such as a driver’s license or birth certificate, is used to spawn other documents, resulting in the creation of a credible identity which allows a criminal or terrorist access to credit cards, employment, bank accounts, secure facilities, computer systems, and the like. Once a criminal or terrorist has an established identity, he can use it to facilitate a variety of economic crimes, drug trafficking, terrorism, and other crimes. At one time, not that many years ago, a breeder document, such as a driver’s license, meant something; it could be used to establish a person’s identity with little or no question. Now, technology has enabled criminals to produce fraudulent documents, which can be used to procure additional fraudulent documents. Counterfeit documents, such as credit cards, used to be easily detectable; now it is relatively easy to produce a counterfeit hologram that usually passes for the real thing. Counterfeit documents are now readily available to illegal immigrants, drug traffickers, and international terrorists. Technology and the ability of the criminal element to adapt and defeat existing identification methodologies, predicated on breeder documents that are susceptible to counterfeiting, have made it necessary to develop different, more advanced identity authentication systems. Identity fraud is a component of almost every major crime and its presence is felt throughout the world. Therefore, it is absolutely essential that the importance of identity authentication is recognized whenever the potential result of misidentification is the commission or perpetuation of criminal activity. Government and industry leadership is necessary to facilitate the development of policies and technological tools that will assure accurate identity authentication.

The threat of terrorism has become the principal security concern in the United States since 9/11. Some might perceive that fraud isn’t linked to terrorism because white-collar crime issues are more the province of organized crime, but that perception is misguided. Terrorists derive funding from a variety of criminal activities ranging in scale and sophistication – from low-level crime to organized narcotics smuggling and fraud. CFEs need to know the latest links between fraud and terror. Credit card fraud, wire fraud, mortgage fraud, charitable donation fraud, insurance fraud, identity theft, money laundering, immigration fraud, and tax evasion are just some of the types of fraud commonly used to fund terrorist cells. Such groups will also use shell companies to receive and distribute illicit funds. On the surface, these companies might engage in legitimate activities to establish a positive reputation in the business community. Financing is required not just to fund specific terrorist operations but to meet the broader organizational costs of developing and maintaining a terrorist organization and to create an enabling environment necessary to sustain their activities. The direct costs of mounting individual attacks have been relatively low considering the damage they can yield. “Part of the problem is that it takes so little to finance an operation,” said Gary LaFree, director of the University of Maryland’s National Consortium for the Study of Terrorism and Responses to Terrorism.2 For example, the 2005 London bombings cost about $15,600.3 The 2000 bombing of the USS Cole is estimated to have cost between $5,000 and $10,000.4 Al-Qaida’s entire 9/11 operation cost between $400,000 and $500,000, according to the final report of the National Commission on Terrorist Attacks Upon the United States.5 Terrorist groups require significant funds to create and maintain an infrastructure of organizational support, sustain an ideology of terrorism through propaganda, and finance the ostensibly legitimate activities needed to provide a veil of legitimacy for their shell companies.6 However, don’t think that only large operations are needed for terrorists to carry out attacks; small semi-autonomous cells in many countries are often just as capable of conducting disruptive activities without extensive outside financial help – they just conduct smaller-scale frauds.7 Even though the nexus between fraud and terrorism is undisputed, there’s concern at state and local levels that law enforcement professionals lack specialized knowledge on how to detect the fraud-terror link because they’re more apt to investigate and prosecute violent crimes.8 A critical lack of awareness about terrorists’ links to fraud schemes is undermining the fight against terrorism. Fraud analysis must be central, not peripheral, in understanding the patterns of terrorist behavior.9

The critical issue is how a nuclear terrorist attack may “catalyze” inter-state nuclear war, especially the NC3 systems that inform and partly determine how leaders respond to nuclear threat. Current conditions in Northeast Asia suggest that multiple precursory conditions for nuclear terrorism already exist or exist in nascent form. In Japan, for example, low-level, individual, terroristic violence with nuclear materials, against nuclear facilities, is real. In all countries of the region, the risk of diversion of nuclear material is real, although the risk is likely higher due to volume and laxity of security in some countries of the region than in others. In all countries, the risk of an insider “sleeper” threat is real in security and nuclear agencies, and such insiders already operated in actual terrorist organizations. Insider corruption is also observable in nuclear fuel cycle agencies in all countries of the region. The threat of extortion to induce insider cooperation is also real in all countries. The possibility of a cult attempting to build and buy nuclear weapons is real and has already occurred in the region.[15] Cyber-terrorism against nuclear reactors is real and such attacks have already taken place in South Korea (although it remains difficult to attribute the source of the attacks with certainty). The stand-off ballistic and drone threat to nuclear weapons and fuel cycle facilities is real in the region, including from non-state actors, some of whom have already adopted and used such technology almost instantly from when it becomes accessible (for example, drones).[16]

Two other broad risk factors are also present in the region. The social and political conditions for extreme ethnic and xenophobic nationalism are emerging in China, Korea, Japan, and Russia. Although there has been no risk of attack on or loss of control over nuclear weapons since their removal from Japan in 1972 and from South Korea in 1991, this risk continues to exist in North Korea, China, and Russia, and to the extent that they are deployed on aircraft and ships of these and other nuclear weapons states (including submarines) deployed in the region’s high seas, also outside their territorial borders.

The mission of IRS, a component agency within the Department of the Treasury, is to (1) provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities, and (2) enforce the law with integrity and fairness to all. While it relies extensively on IT to carry out this mission, IRS has reported that modernization is needed to improve its core tax administration systems, operations, and cybersecurity. IRS has also reported that modernization is critical to improving customer experience and providing the kind of service taxpayers have come to expect. For example, IRS has previously reported that modernization will help address business and technical challenges due to constraints with the Individual Master File (IMF) program it has been using since 1970.10 These challenges include the inability to get a real-time view of the taxpayer account, quickly respond to tax code changes, provide enhanced analytical capabilities, and provide additional taxpayer account information to more effectively combat fraud and identity theft.

The effects of an explosion in tax cheating would be dire. The nation’s already soaring budget deficit would surge by hundreds of billions of dollars more, pushing it well past $1 trillion. Commissioners of the IRS, starting with President George W. Bush’s appointee, Douglas Shulman, have warned Congress about a crisis like this since the budget cuts began, in 2011. But after eight years, Republican lawmakers, who are chiefly responsible for the reductions, show no signs that they think the danger is urgent. By the time the danger becomes indisputable, immense harm will already have been done.

In sum, the official “tax gap” and the related problem of aggressive tax avoidance drain the U.S. government of hundreds of billions of dollars of needed revenue every year. The failures of tax enforcement increase inequality both directly—because high-income and corporate taxpayers are mainly responsible for the revenue shortfall—and indirectly—because the revenue could be invested in ways that enhance broad-based prosperity. The IRS does not have the resources to adequately enforce the tax laws, with the problem getting significantly worse over the past decade. And the IRS’ audit priorities are out of balance. Policymakers intent on addressing overall economic inequities must address how U.S. tax laws are enforced.

The United States collects less tax revenue as a percentage of GDP than at most points in recent history, in part because owed but uncollected taxes are so significant. The tax gap also has meaningful implications for fiscal policy. These unpaid taxes mean policymakers must choose between rising deficits, lower spending on important priorities, or further tax increase to compensate for lost revenue—which will only be borne by compliant taxpayers. Currently, an under-staffed IRS, with outdated technology, is unable to collect 15 percent of taxes that are owed, and a lack of resources means that audit rates have fallen across the board, but they’ve decreased more in the last decade for high earners than for Earned Income Tax Credit (EITC) recipients. For the IRS to appropriately enforce the tax laws against high earners and large corporations, it needs funding to hire and train revenue agents who can decipher their thousands of pages of sophisticated tax filings. It also needs access to information about opaque income streams—like proprietorship and partnership income—that accrue disproportionately to high-earners. The Administration’s proposals call for significantly increasing the IRS budget, specifically $80 billion of investment over the coming ten years in enforcement, IT, and taxpayer services generating an estimated $320 billion in additional tax collections over the next ten years. To further ensure that everyone pays their fair share, the Administration also calls for using information that financial institutions already possess—without imposing any burden on taxpayers whatsoever—so the IRS can deploy these additional resources to audit more sophisticated tax evaders. These changes to the third-party information reports are estimated to generate $460 billion over a decade. In the subsequent decade, once the overhaul of the IRS is complete, these proposals combined will generate even more revenue: an estimated $1.6 trillion in additional tax revenue, just from improved collection of the taxes that are already due. This revenue will be collected in a highly progressive way, as the tax gap is more concentrated toward the top of the income distribution. Why does misreporting rise with income? In part, tax evasion is concentrated toward the top of the income distribution because higher-income taxpayers have the ability to tap into the services of accountants and tax preparers who help shield them from bearing their true income tax liability. Because these individuals know enforcement authorities lack the resources needed to pursue them, the consequences of their underpayments are viewed as minor, and so voluntary compliance rates tend to be lower.

Failing to adequately fund the IRS would be particularly ill-timed, as President Trump and congressional Republicans intend to propose a broad revamp of the tax code that could create new opportunities for tax avoidance — and an even greater need for IRS resources to ensure compliance. In particular, GOP tax plans call for preferential treatment of pass-through business income that would invite massive tax avoidance by wealthy taxpayers, costing hundreds of billions of dollars over the next decade, according to the Tax Policy Center (TPC).[4] An under-resourced IRS would be poorly positioned to enforce the new statutes and regulations that would accompany a tax overhaul. The combination of increased avoidance opportunities and weakened IRS enforcement capacity would further reduce revenues and undermine the integrity of the tax system. The IRS performs a basic and essential function of government: collecting the revenue to fund our military and key domestic investments, including public safety, education, and health research, and programs that provide needed support to retirees, seniors, people with disabilities, and low-income households. An underfunded IRS poses a threat not only to IRS’s effectiveness, but to the public’s trust that the tax laws will be enforced fairly. Policymakers should provide the resources the IRS needs to do its job effectively.

To substantiate this construction of the contract Kraus seizes upon the word "and" in the parenthetical clause and invokes the conjunctive-disjunctive rules employed in the submission of tort cases and says, by reason of these rules, "the exception requires conjunctively that both conditions exist to authorize a variation from the lump sum contract price." The word "and" is defined and cases are cited to demonstrate that the word may not be changed or construed to mean "or," and therefore it is urged, before there could be any adjustment in the lump sum price or before the unit prices for estimated quantities became effective or into operation, they must have come about only as the result of additional, omitted or changed work as elsewhere defined and set forth in the contract. It is said that the contract is ambiguous and in support of the plaintiff's interpretation the auxiliary rules of construction are invoked (Paisley v. Lucas, 346 Mo. 827, 143 S.W.2d 262) and extrinsic evidence is resorted to and, finally, it is urged that the proof, particularly certain documentary evidence, is so plain as to admit of no doubt and established the plaintiff's right to recover on count one as a matter of law.