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tv   Politics Public Policy Today  CSPAN  April 17, 2015 5:00pm-7:01pm EDT

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people. we ought to be able because we have such an antiquated system, but as terry says, we shouldn't be at the cutting edge. just fast followers. my way of putting it i'd love to be in the 20th sempkry are i.t. rather than the 20th. it's all part of that kind of single package. >> good questions. yes, ma'am. >> hi karen with brookings. you mentioned you lost enforcement. i was wondering in making those cuts to the enforcement divisions, to what degree does return on enforcement activities inform those cuts. >> actually, what we have is we have to do statutory mandates. the second highest prior thety is to run the filing season and collect the $3 trillion, so we do whatever we can to make that
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work. that leaves us with enforcement taxpayer services and i. tchl. so when you take a cut, we've done the best we can to try to balance that. and our appripriations come in those buktds, so to come extent, we're constrained by where the proepuaters put the funding. we have probably 3,000 fewer people answering phone calls right now than we used to have to go along with the 5,000 fewer enforcement people and the 5,000 we put into identity theft, so we're making a balances decision to try to figure out how do i minimize the negative impact of the cuts i'm going to take. depending on how you measure it every revenue officer, criminal investigateor produces somewhere between $100,000 a year each. so we know when we ineffect leave money on the table, you can talk to any agent and they'll tell you we know it's
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not a question of guessing. when we look at returns we start with the returns that have the biggest problems and so, we're leaving on the table, tax cuts for tax cheats, there are people who have made mistakes in their returns consciously or otherwise, that we're not going to reach because we don't have the people. we put more into enforcement we'd have more miserable taxpayer service on our phones and walk in centers because we don't have enough people there any way. i said in my confirmation hearing, spend 20 years dealing with troubled bankrupt companies. i've never dealt with a company where across the board, there aren't enough people. in chief counsel, appeals in any of our operating divisions and it's just systemic and i learned not because the people were complaining just because i interviewed people getting ready, tfts clear across the board, they would zwrib how they
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were doing. i was just stunned there was no place that had enough people. >> one more, maybe two more questions. yes, ma'am. >> my name is linda riser. two quick comments and a question. in my dealings with irs by phone, i have almost uniformly found fine and helpful people who take their job seriously. there's an increase in fishing. i've gotten calls luckily, i was in another part of the u.s. and i didn't answer the phone, but someone pretending to be an irs person, you're in trouble and call me back. the person called me a second time, then i called the irs and they told me fishing once again. it's a naive question but i've been curious. >> those are the worst. you grab your wallet and say yes. >> we've heard of multi, multi-million dollar payments by corporations banks, that have
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not paid their appropriate taxes. manipulated. where does that money go and is there any way that the irs can get hold of some of that? we're talking probably billions at this point. >> every year. as i say, we collect 60 to $70 billion a year just in our enforcement activities alone. none of that comes to us. it goes to the general treasury fund. and in some ways, in fact in a lot of ways, it probably shouldn't come to us. one of the things that's clear in the way we run the organization, nobody gets measured by let alone paid a performance award by how much they collect, so people should be comfortable when they're negotiating or talking with us that the agent they're dealing with isn't going to get more or less pay depending on how much you end up oweing, but it is attractive. one of my recent hearings an appropriation hearing, somebody suggested, we're doing this, we
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could gif a little of that money to the irs and it would help our funding problem, but ultimately, we need to be funded directly and people ought to be comfortable that we're by being more aggressive, we're not helping ourselves by building the budget up. i would note as a closing point i now, i've been to 37 offices. i've held front line meetings with front line employees at every place. managers at every place. union people at every place. had lunch every place with 20 employees and when i go to call centers, the issue i get isn't that they're underpaid or everybody's harassing the issue they have is there aren't enough people to answer the phone and provide the service that our employees think taxpayers have a right to get and i talked to one woman who had been promoted out of managerial position who went back and she said she went back and reflects, the reason they're there is because they feel a sense of satisfaction. if you've got a question, they can answer it and they feel it helped you. so last year as i was wandering around seeing these 13,000
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employees and listing to them. one of the objection b i got from call center people is it was the year we had said because of the concern about the lines, we would answer sim fl tax questions. if you had a complicated question, you had to go to our website or some place else and the employees kept saying, but we know the answers. i had the to explain to them, we know the answer, but it takes longer to answer the question and therefore, the cue gets locker, so we had no choice but to say these are the questions you can answer. these are off limits and as i say, it's not good for taxpayers. they ought to be able to get that answer and in fact, we ought to reverse it. we ought to be answering the complicated questions. the simple ones you ought to be going to the website for. the bottom line is that the people who care most about that are in fact the people in the call centers who feel they could help taxpayers more if they had more resources. >> thank you very much.
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good afternoon. i wasn't sure the choreography, so i was just sitting here. so, thank you very much, howard. and thanks to the tax policy center. the urban institute and brookings. for inviting us here and featuring the irs budgetary dlim dilemma on tax day this year. perhaps they're doing it in the spirit that those of us associated with taxes are deaf definitely in a challenging endeavor and april is as good a time as any to commemorate that, so thank you. i'm also delighted to be participate wg this panel. well established tax experts. and eric and david as well, part of their distinguished careers were at the service. it is always a pleasure to be on a planl with nina, who is simply our most important trusted adviser and commentator.
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and nina is a black belt at keeping the experience for the taxpayer in the forefront. and i'm going talk about that today, too. but nina will be moredynamic. i'm an economist. this is in fact the issue of the day. and thank you so much for coming here you in the audience. you are our people. you've come here in april on a drizzly day to hear us talk about the irs budget. thank you. so, the commissioner talked about a more complete online experience for all taxpayers and that is in fact what the irs is focused on now and this is what we are working on and i'd like to take this opportunity just to put some bones on that and to explain what it is we're doing. these would be online taxpayer accounts. secure online communications. better infrastructure for telephone and tax assistance center people so they can fix things the first time around.
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better service delivery through all channels. and the taxpayers and the representatives, tax preparers, would be more in the driver's seat for issue resolution. three out of five taxpayers use paid preparers. taxpayers could arrange payments online. they could pay online. and a this would allow us to deploy people to work with taxpayers who want or need personal contact and many do and many will. they will persist. those people need to be trained better and they need to be given information technology to do the job. and a point i want to emphasize this afternoon is if we'll also reduce the cost of enforcement including the cost of enforcement to the taxpayers themselves the cost warned by the taxpayers, so, what's new at the service about this? pretty much everything's new about that image.
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but what's new with the service is that we're taking a comprehensive look at this. we have figured out what investment is needed in what order and we've translated that into budget initiatives. so, we can going forward describe what it is that we need to do to be a 21st century tax administration and we can put that forward to the congress and we can show how we would be responsible and accountable for the funding and the investment that will be needed for that. that will benefit tech savvy taxpayers, but it will also benefit other taxpayers as commissioner mentioned. it will reduce taxpayer burden. through exam for which over a million taxpayers have an experience every year. it will provide more cost effective enforcement which would raise net revenue for
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dollar dollar spent and it builds more bridges with tax preparers and software companies and we pleesh wrat the title of today, which is how budget cuts affect taxpayers in the tax system and this is the point that i would like to leave you with. i want to broaden the picture of who bears the cost of a low tech tax system. you should think of the total cost of compliance of having two parts, the cost to the irs, the cost to the administrative cost and the cost born by the tax pare. and the cost born by the taxpayers are unevenly distributed and overall far exceed the administrative costs of running an irs. so, the story in "the washington post" today is a story of taxpayers bearing the cost of a low tech irs. you can go online and change your address for ranger rick manager ranger rick magazine in a
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magazine. didn't get in two days running. that's not going to mars. that's that's like information technology number one. so we the irs are determined to move through this path towards better information technology and i'll give you two examples of how we think this will make a big difference. wemt to move and we'll be able to move issue identification resolution forward in time, for example, for many taxpayers, during the filing season, keep many mind that four out of five taxpayers are anticipating a refund. any delay in the adjudication of their return is a delay in a payment that to many of them is the largest single payment they will get during the year. so, if we can do that, if we can preemptively look at the returns and communicate with taxpayers say by e-mail, be able to say like the gentleman in the post
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story today as well. you've got a very big refund. that is exactly what we see in identity theft returns. could you provide some documentation for why that refund is so big? apparently, he had it in his pocket he was waiting to get in to talk to someone. it could be uploaded and sent to an irs online. in keeping in mind that traditional enforcement in our world is expensive. so, we can effectively lower the cost and i'll give an example of two ways. so for preemptive and quick outreach taxpayers, if we could deal with taxpayers online. over half of returns have at least one error. but it's not really cost effective to seek to evaluate all or even a majority of those because the apparent deficiency is less in monetary terms than the cost of addressing that where the cost of the approaches we have at hand is very high.
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and the cost to the taxpayers of that examination, should the taxpayer end up in exam, given today's irs technology and communications channels, often substantially exceeds the return to the fisk. so, if we were able to evaluate before we accept returns keeping many mind that for many of our enforcement responses, it's more than a year after the filing that the taxpayer hears about that. if we can deal with taxpayers digitally early, we will have many returns that actually never move into exam. and then the other aspect here again, i want to emphasize that we the irs look at the total cost of administration as including the cost to the taxpayer. these are not so apparent. it's not apparent when the irs is struggling for budget that much of this additional cost is
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being born by the taxpayers. so, if we invest to improve the taxpayer experience it will lower the total administrative and taxpayer burden cost per dollar of enforcement revenue and raise net revenue. here's a way to think about it. voluntary compliance revenue has a higher total rate of return. after you subtract the cost of the irs, the administrateive cost and the burden to the taxpayer then enforcement revenue, taxpayers just to file each year incur about $60 billion in costs. our estimates show that taxpayers who end up in exam, they're another 10%, another 6 billion in costs and many fewer people, a million, million in exam and maybe seven or eight million in various stages of accounts receivable bear all this cost.
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so, the cost of compliance to the taxpayers dwarfs the cost that the irs is expanding, so this is where much of the burden of a low tech irs rests. it rests with the people standing in line in dallas that you read about today, but also with taxpayers trying to come into compliance in a low tech world. so, where are we now? at the first steps. if commissioner mentioned get transcripts. there are online payment agreements, but they have to be handed off to the irs and the irs gets back to them. so, we know we have a long way to go. we know this requires investment. to move anything like an interactive irs is going to involve quite a bit of investment. we are developing comp hen sooif plans of how we will deploy that investment, how we will get there. we have translated that into budget initiatives so we can be accountable for that. we're taking first steps now.
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because we must demonstrate that an investment in the irs is not just going to reduce these long lines from four hours to two hours. no one would invest in that. it would bring the irs up to an organization like any other financial organization or indeed, you can order a sandwich online. there's a lot of things that you can't do with the irs because of our information technology. and we'll allow new ways of working with our partners, such as software companies, pay preparers. so ill turn the podium over to the others on the panel. i'm interested in hearing what they have to say and we'll be looking forward to taking your questions.
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>> i'm eric taylor with the tax policy center. make sure i know how to work this. okay. good. i want to thank the commissioner for coming and speaking to us on our tax day event and thank rosemarry and others for helping to organize this. i'm probably the outliar in this panel. my organization deals with tax policy, not tax administration and as the commissioner pointed out, there's a division of labor in the u.s. government, the elected officials in the white house and the treasury and congress make the tax laws, the irs administers the tax laws. it's of course very important for us to remember that distinction, but we also should understand division is not as clean as we like to think it is. tax administrators operating with scarce resources inevitably influence policy outcomes by their choice on how much to spend on enforcement, how much to spend on service.
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who do audit and how intensively to audit particular issues on tax returns so, the outcomes of policies do depend on what the irs does. and of course from the other side, the policies that the president and congress enact are not going to work unless the irs can effectively enforce them. so there is much more of a link between the two than we commonly think. i'm going to comment on three areas a little bit on trans enter irs resources and i'll be a little bit repetitive of what the commissioner and rosemary said. on changes in irs workload that have happened. that have accompanied the nongrowth in resources. and those are really coming from two sources, one demographic changes, changes in the economy, which one of us can do much about an the other from policy changes, which we have done
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something about and finally, i want to make a few comments on whether not tax reform would help matters. so let's start with the data here. the upper left hand quadrant shows real irs operating costs in millions of 2014 dollars and that you could see has gone up only slowly. over time. and then dropped pretty sharply. after 2010. all these pictures look the same with this big break after 2010. operating costs on the top right as a percentage of gdp i could have also shown operating costs relative to labor costs or wage index that would have looked similar. and that's actually been declining gradually over time. the irs budget is a shared economy has been shrinking, but again, there's this more precipitous drop after 2010. the bottom left shows average
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irs employment again dropping, but really plumeting in the last few years. and as the commissioner mentioned, there are also the demographic issues that the irs with the ageing of the workforce and the increasing number of experienced people who are retiring or eligible for retirement. and finally the last one actually doesn't show the same picture. that's operating costs for a dollar of collection. that's bounced around. that hasn't moved up and down much but that's really being driven more by collections than by operating costs, the fluctuations are due to revenues going down when there are tax cut, going up when there are tax increases in their economic booms, so the important thing about this figure is the level, not the trend, about four tenths of a cent it costs the irs for every dollar it raises in
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revenue, which as the commissioner said, is very low in terms of international comparisons. so, just a little bit of data. while irs funding has been level or declining, individual tax returns filed have grown. between '98 and 2005, the number of itemizers grew. the characteristics of returns have also changed. you have more returns with business income, which are more complicated to examine. you have more returns with partnership or escort income. you have more returns filing amt, although that's a low number and it's more or less stabilized and you have more people filing the earned income tax credit. those are from the individual area, on the business side, there have also been changes. there's been the growth in internationalization and the increased tax avoidance both by individuals and corporations, which the irs has to deal with
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transfer pricing all those complex international corporate issues and on the business side there's been the very large growth over the past 20, 30 careers in the share of businesses that are organized as s corporations and partnerships instead of a c korpts and that creates the additional issue that you not only have to audit theville taxpayer with that form of income and see whether they're reporting correctly what they entity is reported to them, but you have to make sure the entity is reporting it correctly and reporting it correctly to the right taxpayers, so that makes the job very complicated. these are entities that don't pay any taxes themselves. but what they report affects individual tax revenues a lot. finally, i'll get to the policy issue on tax expenditures. it's very clue ji. i resent it when people try to
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add up the number of tax expenditures and here i am doing it. it really depends on how you group provisions and the treasury does things differently. in defense of myself, i would say i use treasury figures, which i adjusted to make them consistent for the changing back and forth in the way they reported different things differently during the bush administration. and since it's all coming from the treasury it's a consistent measure and what you can see is every year the number of tax expenditures grows so this is something that is growing. the dollar value volume of tax expenditures as a percentage of gdp, back to the last chart at the bottom, i have refundable credits, which have multiplied by a factor of 500, going from one to five. that might seem like a pretty small number even though it's a large growth, but again, these credits could be a major headache. and now, talk about the revenue
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loss from this is just from individual tax expenditures including this focus of talk is on individual taxes. and that's individual tax expenditures that are including those that individuals collect, claim on business income. and those numbers have been gradually rising over time and the bottom of that chart, the top black box shows dark blue shows the revenue losses the bottom shows the portion of that tax expenditures which comes from the refundable portion, refundable credit in budgets and note that's really gone up from again a small number and from .26% to .58% of gdp and if you look at the next chart, the refundable credits are really scheduled to soar primarily because of the premium
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assistance credit under the affordable care act, but also, the earned income credit even though the this chart from treasury assumes the expansion, elimination or the expiration of the expansions enacted in 2009 the earned income credit still continues to grow over time. so, why is this matter? one, the tax expenditures create a lot of boundary problems between activity that is do or do not qualify for tax break, so that multiplies the compliance issues and administration issues for the irs, the e things that need to be checked and finally, refundable credits as nina has reminded me create additional opportunities for refund fraud and that's a serious threat to the system. so, i would make one more comment about this when you look at the dollar revenue per dollar collected, the four cents .4 cents per dollar, it should be
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more like .3 cents if you were to count the tax expenditures and that back into revenue in saying what the irs is really doing is not collecting 18% of gdp, it's collecting 24% of gdp and giving 6% back in terms of program attic pollies. so, the job is a lot bigger than it seems. so, let me make a few comments on tax reform because some say oh, the solution to this problem is tax reform. if you went to a flat tax the commissioner, would have a very very different kind of tax system and a different kind of economic policy. so you can't just evaluate that in terms as a solution. that is a very, very big change
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for this countyry. the more modest tax reforms such as 1986 are represented dave camps would eliminate or reduce tax expenditures and lower rates. tax reform is trying to reduce the cost of the tax system, but what are the costs of it? the economist would say the biggest cost is the excess burden. because there are taxes, it causes people to behave differently, reduces economic efficiency, output. so, everybody who talks about tax reform says reducing those costs are helping economic growth are the biggest reason for the tax system. those are the biggest costs. the second is the compliance cost for individuals and businesses in comply wg the tax system. that turns out to be about 10 to
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15% of the cost of tax, of revenue raise, which is maybe less than the excess burden, but still a substantial cost. then you get to the cost of administration, which are way less, about .4 cents per dollar. so, if you're thinking of tax reform as a purpose of reducing the cost of operating the irs, that is the last thing that matters in tax reform. tax reform is about other things and because it's the last thing that matters i think it's very doubtful to expect that tax reformers, when they get through all the other goals of tax reform, are really going to care about that. so, my bottom line is no matter what you do with tax reform, you really have to adequately fund the irs. and i will turn this over to.
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just the forward key. more complicated than i can handle. i am technology challenged on powerpoint. i never use powerpoint slides, but this is a special occasion. i'm using powerpoint slides to make my point. today, i'm going to talk about trust and power and how it relates to funding cuts of the irs and particular how it relates to the funding cuts of taxpayer service as i think we talked about in the beginning, the irs is the most powerful creditor in the united states today. it has awesome pour pours to assess tax and collect tax and many instances without giving the taxpayer the right to go to the united states tax court
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before they pay the tax and certainly, we don't have to go to any court of law to do most of our collection actions. we don't have to ask a judge to let us grab money from their checking account, from your from your wages or anything like that. we don't need to get a kurt's opinion to file a lien, a federal notice of tax lien and i think this power cannot, we not think about budget cuts until we, unless we keep in mind this power of the irs. so, if you have an enter thety, and that sort of triggers some of the visceral reactions that people have to the irs and that you hear in some of the presidential statements. you know this the irs can angel actually take your hard earned dollars and so, if you have a power like that you want that power to be very very regulated and careful. you want it to be used legitimately. so, you want the employees in the irs to be trained.
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and you want the irs to be accessible by you. you want to be able to get through to that power and say, don't do this to me. you got it wrong, irs, and i've got the information to tell you. i'm entitled to that dependsy exception or earned income tax credit. i switched the digits on my return. listen to me. fix them. let me get that $3,000. you want due process in that tax system. the ability to come in what we promise, the right to challenge the irs and be heard. so, let's look at how the irs is doing as the taxpayers attempt to reach. i have been practicing for four decades. i thought about whether to say four years or four decades. two score i have been practicing and involved in the tax system and i have never ever seen anything like this filing season
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on the phones. this is just the roll up, the customer account services are really all of our taxpayer help lines and so a year ago, we were able to answer seven out of every ten calls and this is the filing season, so it starts from january 1st and today, we can't even answer four out of ten calls and you have to wait on average, 24 minutes. now, let's look at some of the lines. the top line is the 1040 number. the number the taxpayers call 25% of the calls that want to get through to a call to a live sister are getting through. after the privilege of waiting 22 minutes. now, i just want to note to you all that actually, the irs has changed some toll pis is sort of these numbers mask. as bad as these numbers are are they mask what the taxpayer experiences because the irs and i think rationally made the
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decision, wu if you're look at on average, 22 minutes of sitting on a line, we're going to, we know what volume we're getting in and there's no way that a human being is going to be able to pick up to thatphone so we do the courtesy disconnect at the very beginning of the call. and this year to date in the filing season, we have, through fiscal year 2015 this one is, 6.8 million calls at the beginning of the process. and that is seven times more this year to date as it was last year to date. that's extraordinary and shows you what the, how much the limited access the taxpayers have. now, just keep going further i want to talk about what it actually people are supposed to be doing when they reach us on the phones. they can ask us about math error corrections. i gave you the example of the switched digits on the social
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security number. they asked for penalty abatements. i was sick. i could not do x. i relied on my return preparer that we're pushing people to rely on more and more even though they're unregulated and there's no minimum standard. they can ask to enter into installment adpreemts so we don't grab that money from their account and if they can't get through, guess what we're going to do? it's all automated, folks. if we don't hear from you, we are reaching out, scheduling that touching your tax, your account or your wages and then you're going to have to get in cue to ask us to return the proceeds because you can't pay for your food or your medicine. this is happening every single day. happening while we're standing up here. you can call the irs and get them on these phones to put you into currently not collectible status. which says i cannot afford to pay my basic living expenses if
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you take my money. you can't get through to the phones, then we can taking your basic, not extraordinary or extravagant, basic living expenses. no food. no housing. that's what we can do. that's the exercise of the power that the irs has and it is not a legitimate it looks to the taxpayer like an illegitimate exercise of power. while you're standing in line or waiting on the phones for anywhere from on average 25 minutes, but maybe not more if you're a low income person and you have a lunch break that might be a half an hour, you know, you cannot wait for 25 minutes. it might be that you've got the 45 minute wait. you're going to have to hang up and then bad thing rs going to happen to you and dwen, that drives even down to the more expensive use of resources on the collection side or the enforcement side or the taxpayer advocate side, the organization i head because anytime we get a
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case in, there are two employees working that case. my employee and the irs employee that we're making do the right thing. you can see the downstream consequences of failing to fund the phones and there is no answer to the phones except more human beings. it is just a math problem. and no matter how much we drive to the online process there is an unmet demand. an irs research and my own office's research show there is an unmet demand for people who have problems that cannot get through to the irs and it cannot be solved online. they need to take to a person and they cannot get to that person. so, as we move people to other things, the phones have not dropped. we've had more hits on the refund online product and yet our phones are still getting the calls. it's just a different group of taxpayers with a different group of issues. including those 6.8 million that
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couldn't even get through. so, let me come back to power a minute. you can't, taxpayer trust in the irs and the legitimate use of power is i am more and more believe ing believing is what drives voluntary compliance and as we walk away from the ability for taxpayers to talk to us, and the ability of us to hear what taxpayers are saying our actions look increasingly arbitrary and capri shouse and the illegitimate use of power and that more than the absence of the decrease of audit tors and collection personnel, that is what i believe is going to drive the compliance rate down because taxpayers will take every opportunity they can to not report income. to not engage in us. with us. to not feel like they're part of
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a greater civic hole and that taxes play a role in government and a legitimate role in government. the government is sending a message that we can't talk to you right now. we're busy. we're busy answering other calls, but you're busy and your call doesn't get through and how that feels to the individual taxpayer and how that feeling translates into their actions going forward is to me the crisis in our tax administration system today and i will just say one last thing about this point about power. that as the irs moves to online and as the irs moves to automated enforcement activity and active where there's no personal engagement between the irs employee and as the irs moves away from a physical presence in the states, there are today you know, 13 state ss with where there is no one located in that state to conduct outreach and education to small businesses
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businesses. okay. no one person in that state. all right. that's a quarter of our states. as we become more and more remote, then it is the, it is likely that the only interaction that taxpayers will have with an irs employee is when they are trying to do something bad to you. they are trying to take your property. there's no one answering the phone to talk to you about why they shouldn't be taking your property, but there are people who will come knocking on your door to take your mott. what does that mean for the taxpayer's relationship and trust in the most powerful creditor that we have in the united states? just some things to think about.
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>> i'm dave williams. i'm the, i actually of the folks on the panel, i've worked at the irs the longest. believe that or not. i've had a career both working in the u.s. senate and then working in tax administration at the irs. the first tax bill on which i worked is the 1986 tax reform act. just came out of tax school and got to work on the provision. that act lives in legend as the holy grail of tax reform. at least in myth. i don't think in fact. that's the case. i was able also when i went to the irs to have the privilege of working on the running the earned income tax credit program, which for me, to this day, is a really high honor because of what the program does for people. it is run through the tax code
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and therefore, it has challenges, but i don't, the ability to say i was able to run one of the largest means tested antipoverty programs in the world is a pretty cool thing. which is part of why didn't mention it, about working at the irs, has to you have to think about it as if amazing things that you can do for and with people. and not just as a job. so, with that fame, i left the irs a couple of years ago, went back to capitol hill briefly and then went to work for in to it and just a comment about the company before i make a few comments. most folks think of it as the turbo tax company, so the diy world, you might find it interesting to know we also sell tax software to more than 100,000 tax companies professionals, small small companies, but we also think about ourselves and are beginning to articulate it more as a full service company, so some of the comments you'll hear me make are intended, ooip still
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getting into that frame, the industry as a whole. i'm going to make a couple of comments. one is about the challenge to the irs. a brief comment about that. the technology enablement is where i want to focus. i'm heartened to hear some of the things rosemary was talking about about what's coming to the irs. one of my other jobs at the irs was the director after the electronic tax administration and i think the commissioner may have used or rosemary may have used part of my speech from ten year rs ago when we made some of those same predictions and comments. that is not a criticism. it is, it's one of the things i always found challenging at the irs. there were things, the program of the future and they also would be. and it is my hope that we are, we have passed across that aruba con, however you want to think about it and we are at a point where we can gibb begin to move forward w. that frame, just a, the reality that you've heard from the other, i think i've experienced and we need to
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recognize it and that is the irs is big and continuely growing mission. not just growth in the population. not just growth in complexity. it's complexity in our lives and in things that this year have been particularly noticeable like the growth in tax fraud. and i will talk a little bit about that now and just say it is a threat. i think that threatens the very fabric of the tags administration ecosystem. it does not affect one company or one actor. it affects everybody and it affects our ability and will affect our ability to administer the tax code going forward. more on that later, but i think the recognition of that leads me to believe there is not a solution that can be just by the irs to many of the problems or challenges that i just mentioned or by industry and there's an actor that's not here today that actually is becoming more and more apparent all of the state departments of revenue who also
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have an incredibly important role in what i would tlik call the tax ecosystem and i think anything we talk about in terms of impact in the irs, we need to recognize there's a whole ecosystem out there of actors who are affected by changed in the environment in which we all have to cope and also, environment specific here in washington. i would note that the commissioner, this is not the first time the commissioner's talked about using technology to help meet the irs' objectives. as the guy who now works in industry after a long career in government, i am going to talk about technology because i believe it will make an enormous difference in the ability of the irs and the entire tax ecosystem to meet customer needs. whether on the service or compliance side. i think those are incredibly important. i want to ask though how many people in the audience have a flip phone? don't be shy. you can put your hands up. wait, wait, no one. both of you. back there in the corner, right? i see, when i think about a flip
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phone, something jean is checking. is that a flip phone? i don't remember. because i don't use it that much. i want to, when you think about technology, i want you to think about how quekly it moves and you think about the word innovation. i think one of the challenges the irs in many places face is the speed with which technology evolves. it was a challenge when i was there. and what has happened since that time is that technology has sped up. and so, when i think about how we can help the irs and what the challenges are that are facing the irs and i think about technology, i think there is obviously there is an incredibly important role that industry can play in helping the irs and in fact, the entire tax ecosystem meet the challenges it faces. we've talked about them. heard about the challenges from everyone else. i fundamentally believe that the only way some of these challenges can be met, whether it's in the constrained budget
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we find today or an expansive budget environment that was probably in existence about the time i worked in the irs, where the budget continually went up to meet continuing needs. i don't believe that irs can succeed without industry and partnership and cooperation. i know that there are folks who have concerns about how one involves industry and i want to talk about that a little bit. it is very important that when we talk about par ner ship, there are principles which i would articulate and will articulate about how the irs, the states and ecosystem should work and specifically expek expectations of industry in order to help. so when i asked you about your cell phone, that was not just a joke. it is, it brings to mind the fact that this device, which most of you probably have seen how many of you have an iphone 6 plus because the plus really matters. this thing is already out of
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date. literally out of date because it's been surpassed in the past two months alone by two other devices and this was the biggest christmas present around, right? people and i think the commissioner had it right. the expectations that people form in their daily lives are are the ones they bring to their interactions with government. so if you're used to the iphone 6 and you think that's new and you're still looking at a flip phone, it's a real challenge to break that barrier and communicate with people so i think industry can help irs leapfrog, deliver benefits and experiences that the irs wants to deliver to its customers to its taxpayers in ways that actually meet their expectations. i do have one area where i just, before i articulate the principles, there's one thing that i just want to mention and i actually have come to believe this more and more and it's probably one of the areas where nina and i will somewhat disagree. we disagree on a lot of things, but we are still quite good friends, i will say that.
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i think in general people do not want to interact with the irs. i just i don't think that's a hard concept to gras b. i think it's pretty obvious. it is why virtually everyone either employees tax software or a the exception of nina olson and i suspect others that take perverse pleasure in doing theirs. i think if you recognize that reality you should think about how we bridge our relationships to enable tax agencies to do what they need to do to provide the service and compliance they need to provide and in that context i think industry can make a huge difference but with guiding principles so let me just articulate some of the principles as you think about how the irs should engage with industry. number one is clarity of goal. what are you trying to achieve? and the more specific you can be the more effective you can be because if you say better service, well, we can all nod and smile but how does one
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actually make service better? what is it that we're trying to achieve? is it reduced time on the phones? is it average speed of answer? what are the metrics we use and the more clear you can be about what you expect the better industry can help you with it. secondly, clear roles and responsibilities. and i think that's absolutely important when you think about let's say tax fraud, for example. irs is the law enforcement agency. the industry cannot be a law enforcement agency by law, so understanding what it is that is expected of industry, what the role and responsibility of industry and players in it has to be defined by the irs and by the state departments of revenue but clearly understanding who is doing what in this system very important. i have 33 seconds, i'm seeing a thumb pointing to the time. no worries. it also should be as you think about what you might want to require of industry or ask, it should be standards based. trying to deliver services through tax practitioners, it
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shouldn't be specific about exactly what they should do. you should be looking at the outcome or objective you're trying to achieve. better service what specifically are you trying to achieve and enable industry to innovate to try to meet that. and lastly and this is one that i think is a principle often raises concerns when one talks about participant in industry which is that taxpayers should be and recognize to be the owner and controllers of their own data. it is not industries and for that matter it's not governments. it's theirs. and to the maximum extent possible in all of the system when you're thinking about empowering taxpayers through industry or any other way, you should be thinking about the irs' part of it. excuse me, you should be thinking about the control, the data as part of it and that the irs should recognize that so i've actually had my ten minutes so let me stop right there. i think we're moving to a panel discussion at this point. okay. [ applause ]
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nina let me ask you to respond to dave on this question about technology. were you saying that this is a bad idea or just that we have to be very careful in how we do it and to his principles, how should the service think about this sort of new technology without getting into the kind of trouble you're worried about? >> i think there's one thing the commissioner referenced and glad to hear him say it. i've been a broken record. my office did research to look at who the taxpayers were what about the taxpayers who are eligible for a program the irs administrators tall the clinic program and taxpayers so low income congress has said you are eligible to get assistance from federally funded programs in irs disputes. 250% federal poverty level. 46% of the individual taxpayer base is at or below 250% federal
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poverty level. that's from our data from 2013. that's extraordinary. and we did a profile of what are the characteristics of these taxpayers. this is the population we're going to say go online. this is the population that we are saying, give their preparers the ability to go online and do transactions on their accounts. these are the preparers who are un unregulated, often unaffiliated with large chains so there's no training that they have and we're opening up our accounts for them to have that information. and my concern about that is in our rush to go online that we are not thinking about the characteristics of these taxpayers. we are not coming up with a migration strategy so that they're not dropped on the floor, you know, without any services provided to them and then you go to the cost, we are taking things that were previously free for these taxpayers because the irs provided them and we are shifting them to generally
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preparers, because a lot of them don't have access to online themselves and so intermediary and nobody will do that for free. there is a cost involved in that and it's regressive as one of our folks out in the audience was saying in the administration of the system. so i don't view it as a bad thing. i actually think that technology is a great enabler but i am saying that and this is one of the consequence of the budget is that it drives us to drop services before we have a strategy to replace them and what happens to people in the meantime? and the commissioner himself said -- i've said it a lot. trust lost is almost impossible to regain. how do you bring them back into the system after that? so we have to have a migration strategy and we have to use data and psychology and sociology and all those skills to understand what the consequences of our actions are and this shift to the future. and we're not.
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i'll say this last thing, we're not a bank. you know we're not an airline. we are the internal revenue service -- we can do a lot worse things to you than you missing your plane you know so you know, we just have to really keep that in mind when we talk about eliminating services for taxpayers. >> rosemary you talked about putting this together in a budget. can you talk about how much it would cost to create this new system? >> well, a lot. but right now not exactly sure how much. i wanted to respond to a couple of eunice's points. the last thing we need to worry about right now is rushing. because it is a very long process, i mean i think nina is exactly right. we've really been forced to drop services before the vision comes and david, i'm very brought up short how many times this has been said but it will be a
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fairly major investment and it will take a long time and nina -- one of nina's points i agree with all of them really critical one it really does involve a lot of work to figure out who are these taxpayers, why they behave the way they behave. we have no impression that everyone will gain from technology. what we're trying to do is get ahead of the such low tech response that we're inefficiently using people like in "the wall street journal" -- "the washington post" article where trained advisers were giving out deli line tickets to people who are trying to get into a tax assistance center. so nina is exactly right. we do have to figure out a migration strategy and the idea is to bring -- to free up the people and train them who are really needed and people are needed in a lot -- phones require people and the hope is
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that we can actually routinize the things that are not the things that matter and then get people on the things that do matter. it will be a major long-term investment. >> so this is what worries me when i hear long-term investment with the irs. i remember back in the 1970s talking to people at the service about technology, and the process is so slow that -- design is built and rfp is put out and before it's completed the technology is obsolete. how can, david i'll ask you this -- how can this service make this transition in the careful way that nina was talking about and rosemary was talking about without getting caught in this trap of building a system that's already out of date? >> so a couple of things first of all i think the irs actually
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does a remarkable job with technology. despite what i'm about to say which is that speed matters i really do believe we don't have a long time to wait. i think the irs has fundamentally demonstrated its ability to manage technology and the best example of that is to look at the aca implementation this year. i mean the predictions of cataclysm that were accompanying every discussion about aca right up until the filing season vanished when you realize that the irs figured out most of the major problems and dealt with them in advance. that said, i actually think speed matters a lot and i think that is where partnering between business and government can make a difference both on the service side and i actually agree both with nina and rosemary about the notion that not everyone is going to move immediately to technology. there are segments that will or already are so you need to think more carefully but on the compliance side places where industry can partner. i'll give you an example.
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i never let go of wanting to solve some of eitc challenges so i vined the treasury and irs earlier this year late last year to work on an experiment where key could use behavior economics to prompt eitc taxpayers who might be willing to fudge a little bit to make the right choice in other words to actually run a realtime experiment very quickly to determine whether we could help the irs with a small meese of a very specific goal and i think there are lots of those opportunities out there where and this can be done on the tax practitioner's side, as well. many places where we could be working to think about interesting ways of innovating against the goals that the irs and the states have articulated using technology and there's just one small example of it. >> let me switch gears a little and ask about this compliance issue and asked the commissioner about it. he said he had not yet seen any real evidence of change in compliance. i talked to other people out
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there who say well, taxpayers are getting more aggressive. because they know they're much less likely to be audited. what's your sense rosemary? are you beginning to see compliance problems? >> when you see what the service had to do this year in responding to taxpayers, you have to worry. when you asked if i can see it, it's a hard thing to measure. it's measuring against it. you can't really see so it's hard and there's enough error around your measure so it's hard to see small changes but we are very, very worried about that. if that really is the engine of the revenue production for the u.s. government it's high, it's effective and as commissioner said you don't come back after you've lost that so you really are worried. we will be doing another estimate we're doing one now and as commissioner said, if we pick
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up a change it'll be a noticeable change so it's obviously a really big worry and goes to what nina is saying this is the heart of really alien nation of taxpayers. >> if i can say something here, 2%, only % of the trillions of dollars that the irs brings in is directly attributable to enforcement actions, okay. 2%. so all the other dollars are coming in, you know either because of taxpayer service or because of the indirect effect of the enforcement action. the perception that the irs is going to come out and get you and that is, you know or that they might. they might find you and that is -- it's hard to suss out exactly what the ratio of that is but we have polled the numbers over the last -- since -- before 1998 through today on the -- on just the pure
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collection revenue looking at how many revenue officers people had, how many acs people that automated people they had, how many liens they were issuing and i'm here to tell you it is inelastic. it doesn't matter. the years after 1998 when our collections people just went down like this and stopped issuing liens and levy, the revenues are just like this. that's inflation adjusted dollars and in fact you just look at that and think, doesn't matter recession, doesn't matter anything, the collection activity regardless of your staffing, regardless of your enforcement, it's stable. i have no explanations for that. and, you know, that 'one of my holy grail like can i figure it out finally? so i don't know what the impact is going to be of us not having a certain number of auditors and collectors. i do know that the conversations about the irs being a toothless tiger might have some risk taking particularly at the greatest -- the population that does the greatest risk taking because that's the hardest for
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us to find and that goes back to the regressivity, deer in the headlights people because we can find them but not after the people doing the most aggressive stuff because we can't find them. we don't have the resources, we don't have the training. >> nina is making a big point. it's $50 billion out of 3$3 trillion. but what is that bigger picture is the perception that the service is on the case of tax fraud all the time. i mean one of the things you learn when inside the irs is the breathtaking amount of the temps for fraudulent tax file -- just breathtaking. and so the perception that the service is not holding out against fraud where the fraudsters are using high technology is a very big issue and for the 2%, nina is right
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we can slice those a thousand names and they're flat. 5 and 6 years to resolve a lot of the big cases, so as i say enormous inertia in that. the corporations put them on unesco and we get it at the end of six years. that 'not where the action but perception and reality you're actively protecting the fisk from a breathtaking level and as david and others have said a growing level of fraudulent activity and internally you realize how serious that is and how important that reality but also that perception but it's not the going after the person in exam. that's a million taxpayers a year. they bear a very high cost. we would really like to be able to deal with those taxpayers who since we can address so few are highly likely to owe taxes. but we aren't a punishment
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agency. we're the tax administration and those taxpayers are paying very high compliance costs. many of which are related to our low technology. >> let me ask you the policy question you discussed a little bit in your presentation. so we're talking about all of these expensive complicated ways to make this system work. is this just kind of getting chewing gum and rubber bands as long as the tax code itself is so complicated and as long as the service is being asked to do things that really have nothing to do with collecting tax revenue? >> no, i actually don't think so. i think that the -- you know, obviously it costs a lot more to administer a complicated tax code than a simple one. but the tax code is complicated because we want the law to do certain things because we want to deliver social programs in a certain way. and given that level of
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complication we're spend ging 0.4 cents on enforcement for every $100 of revenue that comes in. we can afford to spend more if we want to have a tax system that is a social welfare agency and accomplishes those goals. it's just a misdirection of resources. in my view. now, whether the irs has -- how much the irs is capable of doing a better job with more money that's something my colleagues on the panel can probably address better than me and there are certainly -- have some doubts about that in my mind but certainly with less money than the cuts they cannot do an adequate job. >> let's give you all an opportunity to ask questions and maybe we'll come back. len, let's start with you. >> i actually want to get back to the flip phone. my mother worked for the irs,
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service center in philadelphia in 1967. they were doing a major overhaul of their i.t. systems and telenovelas ten years later they were done and had a state-of-the-art 1967 computer system and every, you know, photographer since then that's been the case that eventually just because of the way that the system works is that they're always behind, behind in this, when i was at treasury, charles was there, a tech expert somebody with proven ability to get this kind of stuff done, as far as i know the problem we still have the flip phone problem. it seems like they need to do something fundamentally different and maybe you're getting at that. how can they solve this technology problem even if they had the resources? >> you're asking me? >> i guess i'm asking all of you. dave, dave sort of implied -- >> that's just evil. >> first of all, i do think the
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commissioner is right. he's not trying to be the leader in this but we would like to get into the 21st century and would certainly like to get out of cob coba cobal so that would be a good start. you know i've been privy to so many conversations about this over the year and i do -- years and i do feel like the irs is making progress in this area. i think that it is very hard -- part of the problem is getting people to understand that you're going to have to invest some dollars and you won't see the immediate return on it. you won't be able to -- there's -- in our budgeting environment, where you have to sort of show that you've got -- there's no cost to you investing those dollar that's just not going to happen. so i think that it is a challenge for the irs, i want to go back to something david said about the aca. i've been privy to all of the planning on the aca, for the last three years and one thing i saw which was really different from other programs that the irs has been given we had three
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years to get our act together and deliver something and it's amazing what the irs can do when it's given that time and it's able to put a structure around the planning and putting a structure and having the oversight of contractors, et cetera, and our side of it has gone off -- there's glitches but relatively without glitch, which is huge for this program. as opposed to the first time home buyer credit where you get in the middle of the filing season, how do you do that? you know, programming as people are filing their returns. so, you know i think that's part of the clue. you have to have a short lead -- three years is still a short time, but i don't know. you pick it up from there. >> so, no i actually -- i think particularly in government we often get boxed in this is how government works and it takes time. and that is true. i mean, when we at the irs had critical pay authority in which
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one could bring executives in and there were two categories of executives, those who were ready to run things because they just knew how it worked and those who recognized that this is an objective function with more constraints. and who actually tried to optimize within those constraints and the ones who couldn't see the constraints failed nine times out of nine times and the others were more effective and so what i'm about to say is not meant to be criticism of the agency but i do believe and this is based on my two years of experience in the private sector so take it for what it's worth, i work in an industry where innovation happens at the pace of hours. literally hours where one can test in an environment a change, certainly in the diy space but even in an assisted which is the term we would use for that space, literally try to change things with a matter of weeks and days and running controlled experiments in that space. that mind-set of having to innovate and move very quickly
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is not something that will be grafted on to government as an immediate thing however bringing people in who are -- who understand the limited objective function but also see problems differently and are inside trying to actually think about solutions bringing what he know from the private sector is absolutely critical and actually i will propose taking some of the executives in the irs which they can't afford to lose one of but taking some of them out and exposing them to a different world. that cross pollination would help at the margins and, frankly, i believe at the margins is what we're talking about, slowly over time that adds up to significant change. we just have to continue to do that process. >> thanks, bill, tax policy center. i'm wondering what we can learn from other countries in this discussion. it's been very focused on the irs. united kingdom for example just announced they're going to
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a file-free system. everything will be on line. probably two dozen countries around the world do populated -- prepopulated returns. i'm wondering do we know -- do the tax administration systems in europe use computer systems from the 1960s? why, if not why can they do it and we can't? >> i'm -- i'll take a stab at that. i mean first of all the irs had many opportunities in the past to decide whether they would do an online account and for one reason or not they did not so we're behind the rest of the countries. think about uk and many of the other countries that do have prepopulated returns is that they have a pay as you earn or pay as you go system. so they are getting in realtime throughout the year all of the data about withholding and wages and even how many hours you're working because they administer some of their credits based on how many hours you're working and they're dealing with it in that way. they have an amount of
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information that actually and it's coming -- they had a lot of cross government agency information and so one of the ways uk is going to this return and australia is looking at it is just creating these huge multiagency databases, now i don't know that the united states has an appetite to have the government have all that information in one repository. that's a little bitter fieing for folks and i don't think that the employers of this country are willing to take on more responsibility other than the withholding that they're already doing so you would convert to a pay as you go which is essential to being able to do that kind of administration. because otherwise we don't know what the family makeup is. we either have to get it from another agency, so we actually did a little bit of a research to see how many taxpayers you could actually do a plain vanilla return that don't have, you know a credit involved with it where they have to tell us who is in their household, et
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cetera and it's actually not a lot of taxpayers. so everybody is going to have to tell us something more. what i have recommended is that you can get -- if you have accelerated information reporting, so you can get your wages, you can get it very early in the system. you could -- and you could maybe move back the return filing time start of the season, people could download the information we have into their software, give it to their preparer, download it on to free fillable form, whatever, or archaic like me and look at the plain tax returns and fill them in but, you know you could do that and that would be a big advance, you know. >> so just a couple of thing, i chaired oecd taxpayers services group for 3 1/2 years. and i would tell you that the tax systems and the cultural systems in the countries that have either return-free or
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versions of it are extraordinarily different than ours and nina touched on it. i'll tell you a story because it still tickles me. i was visited by members of the korean tax administration who were interested in setting up an earned income tax credit for korea and so i spent a lot of time extolling the virtues and talking about how it lifted millions out of poverty and how eel really how important it was and said there is a downside which is that, you know about 25% of the money goes out the door erroneously through one form or another and they said, why. i said well, there are taofeek two major elements that determine most of the value. that is who you live with and where and for how long. it's three. the residency and relationship requirements and how you are related to them and the guy looked at me and goes it's not a problem for us. [ laughter ] that was south korea by the way if case you're wondering. [ laughter ] but in all seriousness, we have
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attention this our system that is borne out in every nrp that's done that says the more third party information reporting that occurs the more compliant the taxpayer which is not a surprise but when you build a system in which the critical elements of determining eligibility are unknown to the government and cultural maybe not -- there's not a high comfort level with it then you've set up opportunities for problems that mean that the citizen actually has to be more in control of his or her tax situation and i actually believe and obviously i work for industry but i believe this always that there is something very important about the tax time moment in citizen engagement and it should not be lost and i could talk about other concerns i have but i actually fundamentally believe it's one of the few times people actually even look at how much they're making what's happening, what does that mean and we've already kind of -- we've made it easier for them but i think we should be leveraging it which is why we're
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look ging at -- partner with treasury where we try to prompt folks to look at their refunds and save some of it. can we get them to do it and actually now the cfpb is working with the tax industry to troy to do the same thing so i think there may be opportunity there is we don't want to lose. >> you know, in sweden the tax agency is the most respected government agency that they have, and there's a direct connection -- but it's a completely different culture you know and there's a sense of what you're getting back from the government, the government is giving you incredible benefits and the way thaw get those benefits is by complying with the tax system and that's a sign of being a good citizen. and that's why i started with my conversation about trust and legitimate power and things like that. i think that really relates to how much a tax system can do really. >> but wait a minute here. the tax system we have is so opaque, how can anybody trust something that completely can't
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understand? >> that maybe is another reason why you do want tax reform. it may not make a difference with the irs burden but i think trust -- trust, transparency is a big role in terms of increasing trust and trust is linked to compliance. i'm trying to get the hard data to show that but stands to reason. >> if we had systems like universal health care that they had in other countries instead of the kind of health care credits that we have, which are incredibly complicated to administer and to irs doing a great job but they're complicated. it's a lot of work for the taxpayers. if we had individual filing instead of family filing a big determinant of making it predictable and how much an individual owes on their tax returns for constitutional reasons and state reasons we got into this with 1948 with the community property stuff, we had to move away from individual
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filing but that was one reason in new zealand why the system was so simple. you had two rates and had individual filing so withholding got you to the right answer. didn't have to worry about what your spouse was making. if you didn't have all of these benefits going through the tax code yes, but i don't see us having that kind of reform because we're not going to eliminate these benefits and move all these things to the spending side of the budget. we're just not going to. that's the problem. we can make it simpler but it's just not going to get to that level. >> and i -- all those points are well taken but short of the veil of tears here i want to make some basic points about what the irs is really proposing to do. it is to have ef authentication and allow taxpayers to do secure
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transactions with the irs, change their address, do things that are really not as commissioner said going to mars, and there's something that i think has been behind what people are saying here that is quite powerful. ten years ago, even if you invested in these ability -- these communication abilities the service did not handle its incoming information and its tax return information rapidly enough to do it. and i think something that is dramatically different, i think both david and nina alluded to this is that the service is now really handling its data in a very impressive way so-called behind the button, the data is there and now we're dealing with -- i mean a flip phone would be a step up. [ laughter ] with some of the things that we're dealing with and so we can make that kind of a step. but i think as everyone has pointed out and the point len
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made it's a long series of investments and the service must be very explicit about what they're for and have to be broken down. no more of these and i think both nina and david know the thing that's going to come online in february 2017. never comes on line. you never know what it is and so we've learned that. we've stepped back and have a lot of small moving parts but we can do this basic transformation, but it will take investment. we're really not -- what was it -- close followers. >> close followers of the term. >> what was it. >> fast followers. >> fast followers. that will be a step up. >> i just want to -- on the point about the opaque system and i actually think that's really very true and when i was talking about engagement of the tax time moment, part of the way you get engagement it isn't opaque. you can kind of understand the connection between the things that are on your return and what's essentially -- what's causing the outcome. so i believe that tax
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simplification neath need not be as broad and wide scale as some -- it wouldn't be the 86 act even if we could do that but i do think there are places where we've got multiple policy objectives being -- multiple credits that basically are aimed at education or you know, you got 15 of those and there may be places where you could still sort of preserve the policy objective but simplify some of the complexities the tax pairs face, again, that's not -- you know, we administer what is there but i believe there are opportunities to look at places where there are multiple credits or deductions or breaks -- >> i agree with you totally. you're absolutely right. there are lots of things that can be done to eliminate unnecessary complexity without compromising policy objectives and that should be a priority for reform. all i was trying to say was you're not going to get to the return-free filing or any of that kind of -- with any
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foreseeable changes. >> unless you're in korea. >> and we're mott and eric just had the last word so let me thank david and nina and rosemary and eric for coming in especially rosemary for all those years of service and good luck. [ applause ] >> thank you. at the white house david president obama held a news conference with the prime minister of italy. the president was asked about loretta limp who nominated for attorney general five months ago ago. >> and yet what we still have this crazy situation where everybody believes is qualified who has gone after terrorists and worked with police officers
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to get gangs off the streets who is trusted by the civil rights community and by police unions as being somebody who is fair and effective and a good manager, nobody suggests otherwise, who's been confirmed twice before by the united states senate for one of the biggest law enforcement jobs in the country has been now sitting there longer than the previous seven attorney general nominees combined and there's no reason for it. nobody can describe a reason for it beyond political gamesmanship in the senate. on an issue that's completely unrelated to her. this is the top law enforcement job in the country. it's my attorney general who has to interact with his italian
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counterparts or her italian counterparts in dealing with counterterrorism issues, in dealing with interpol, in dealing with our national security. in coordinating with our fbi. what are we doing here? and i have to say that there are times where the dysfunction in the senate just goes too far. this is an example of it. it's gone too far. enough. enough. call loretta lynch for a vote. get her confirmed. put her in place, let her do her job. this is embarrassing. a process like this. thank you. [ laughter ] >> the new hampshire republican
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party's first in the nation leadership summit is live on c-span today and it continues tomorrow with speeches from declared and potential republican presidential candidates. tomorrow morning remarks from senators rand paul, ted cruz and lindsey graham and also speeches from wisconsin governor scott walker john kasich and mike huckabee and begins at 10 eastern live on c-span. then sunday on c-span. debbie wasserman schultz will talk about the 2016 race for president, the republican cades in new hampshire and hillary clinton's campaign at 10 owe a.m. and 6 p.m. eastern. at age 25 she was one of the wealthiest widows in the colony and while in her mid-40s she was considered an enemy by the british who threatened to take her hostage. later she'd become our station's
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first first lady at age 57. martha washington this sunday night at 8:00 p.m. eastern on c-span's original series, first ladies influence and image. examining the public and private lives of 9 women who filled the position of first lady and their influence on the presidency. from martha washington to michelle obama sundays at 8:00 p.m. eastern on american history tv on c-span3. as a complement to the series c-span's new book "first ladies:presidential his yorians on the lives of 45 american women" creating an illuminating entertaining and inspiring read. it's now available as a hard cover or e-book through your favorite book store or online book seller. this weekend as full of live event coverage on the c-span networks with politics on c-span, l.a. times festival of books on book tv and historians discuss the end of the civil war
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on american history tv. on c-span saturday morning at 10 eastern live all day coverage of the new hampshire republican party first in the nation leadership summit speakers include texas senator ted cruz wisconsin governor scott walker ohio governor john kasich and kentucky senator rand paul. saturday at 1:30 p.m. eastern on c-span 2 book tv is live from the university of southern california for the los angeles times festival of books with panels on journalism and publishing and author programs throughout the day. some you'll hear from include scott berg. tavis smiley and hugh hewitt. our live coverage of the l.a. times fegs value of books continues sunday afternoon at 2:00 with panels on crime and u.s. history with journalist sam quinn joanis and richard reeves and authors taking your calls throughout the day. c-span3 saturday morning at 8:45 eastern, for an all day event on the end of the civil war
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speakers include harold holzer caroline janney, james mcfear condition and barbara gannon. sunday at 8 and 10 p.m. the 150th anniversary of president lincoln's assassination with the ceremony at lincoln's cottage. recreations from ford's theater and we'll take a tour of peterson house where the president died. get our complete schedule at iraq's ambassador to the u.s. spoke at the middle east institute in washington recently about the political security and economic challenges facing his country. after a brief introduction he spoke and took questions for almost 90 minutes.
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>> thank you. thank you. [ speaking a foreign language ] good afternoon. my name is daniel serwer, a professor here at johns hopkins as well as a scholar at the middle east institute so it's a particular pleasure for me to welcome ambassador luqmaan filey and a co-professor here to this
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session on the future of iraq. we are meeting at a time of particular sensitivity for a country that many of us have been engaged with one way or another another. for many years i made many trips into iraq from 2004, 2010. i know others may have been on the ground as troops there. other s others are native to iraq and i think it's fair to say that we are all concerned with this country's future. let me introduce abbas and then he will introduce the ambassador. abbas is a colleague at sais at
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the foreign policy stooit. berkeley ph.d. former professor at the naval postgraduate school former employee at the iraqi embassy. but most importantly for today, a real expert on sectarian and ethnic relations in iraq which i think it's fair to say he doesn't think are always bad. >> that's good for me. >> and it's a pleasure to have abbas with us and he will introduce the ambassador, the ambassador will make remarks and then we'll take "q" and "a" from the audience. abbas. >> thank you professor serwer for this introduction and for putting together this timely and important panel and also for inviting a man who is really i
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kneel great respect and appreciation of.fkneel great respect and appreciation of.neel great respect and appreciation of.eel great respect and appreciation of. dr. serwer has asked me to wear a couple of hats on this panel. i will do that. first ambassador faley comes from a long line of the excellence of iraqi diplomacy when we think about it from the days of the monarchy until these days we have names that are to be proud of as iraqis and one can think of people like said like adnan patchy and ambassador fali has a long and impressive cv. i'm not going to go through because it is already in the announcement. i am going to just highlight a couple of things just to mention
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that he combines both the work of previous position to dictatorship and oppression in iraq where he spent a lot of his time. he has lived in the uk for over 20 years doing two things, one of them again, currying the causes of iraq as they are on his shoulders meanwhile doing a lot for personal excellence where he pursued very impressive agenda of kaejeducation and his biography also including degrees in the mathematics and business management, he is an engineer and of sorts and he also has served in the diplomatic field and first and japan between 2010
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and 2013 doing an excellent job. you always get given a harder job, so his award was the hardest job of any ambassador who would have being an ambassador to the united states of america and it is an honor also such recognition doesn't come to many people. he came in 2013, started i believe july of 2013 as an ambassador. i am biased towards the ambassador. i worked with him between 2013 and 2014. getting close to him personally i found him to be an intellectual of a genuine type. he is a real intellectual when you talk about the good intellectuals and those are rarity s rarities in the middle east these days also he is a highly
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professional, very good and demanding in the positive sense of demanding of his team and crew. he's also an amazingly kind man and down to earth and a good family man, i must say also. having known that side of him. he also is the only one i know of among those ambassadors to the united states who runs a marathon, so you know you are talking about someone who is very hard to catch if you are trying to chase him in any way intellectually or in the athletic field. it is my distinct honor to sit next to him and to introduce him to you and after he speaks we will start the rest of the panel. thank you, mr. ambassador, for coming. >> good afternoon, everybody. [ speaking a foreign language ] first much all let me ask
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professor dan for his introduction and the opportunity, i was the recently speaking to his own special class, one of them up there and we discussed iraq and i was saying a very diverse focused and productive with the students. with students usually enjoy the session because you never know what are the normal -- how -- when the complexity of what they read in their literature. so thank you, dan and thank you, abbas for your introduction for the music to my ears. i do want to stop. that's the reality of life. i'm honored in a number of ways "a," talk to a diverse audience also for the media and also to talk about it in just a week before the prime minister's visit here. we hope for our prime minister to have his first official position to the united states.
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next within for a four-day visit in which he will have discussions around the topics which we are talking about today and i'm sure "q" and "a" will highlight that which is where are we going with iraq? it started as a project in 2003 in relation to as far away from dictatorship as possible and as near as possible to democratic free market economy driven defined by a unified constitution, highlighting federalism, talking about freedom freedom, expression, democracy and all those features which a lot of nations take for granted. which was what i must call a dream to any iraqi to think that he can even have such a discussion. let alone for him to practice it. that has been a key feature for us. over the last 12 year ss what have we done so to define how we move
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forward? obviously talking about the future of iraq is a very difficult topic for anybody even for myself. mainly because there are so many parameters which control the path of a nation it's not just that what resources they have or remaining to have or the region how supportive or not it is or how much focus in the country is for the unity of the country, or what national project we have all which we can talk about nation states or nationalism and others, or the international supports we have or we will get or precondition to get for us to develop with the future. if anybody can tell you the future of iraq within a decade or more then i'm afraid he will move more into the fiction an than the reality. these are so many parameters. i can also make you -- assure
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thaw those iraqis involved in 2003 project may not have the same beliefs they do now based on the reflection of that country. not in relation to the dream, that's always there. the iraqis' dream has been what i must call the catalyst of why we have been able to survive so many tsunamis in the political/economical sense we've had over the decade or 12 years. bearing in mind also that dream is there and will always be there. simply because the nation who got us off whether it's the borders we talk about and people say this is only 100-year border, as a communities, they have more or less every day realized more and more that they have interdependency among each other. the kurds were talking about having their own country.
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post-isis, i would doubt that now. certainly in the immediate -- within the next decade or so. that's the last. the majority of the shia that they can govern post-isis they are certainly finding out that the inclusion aspect, the requirement for the nation to suffice its key foundations of the adherence to the constitution in spirit and literacy is a key challenge. majority of the remaining societies such as minorities and others, if they thought that they may not need to be involved in the politics and that should keep them safe and found out with isis, with icesil and others in the region that they cannot feel safe by their own. they need to be part of the political discourse. and let's not forget what people in d.c. call the arab sunnis.
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that, as well. they are trying to find a new social contract with each other. if somebody asks me, do you really need to have this discussion after 12 years of post-saddam? i will say, well, we've just started that discussion. at the very high cost and the stability, the politics of iraq true we're not doubting that. but when you look at the nations what is a decade in terms of nations? what is a decade in terms of a vision of a country where they're talking about moving as to the other end of the pendulum with the heritage of saddam hussein? here i'm not blaming anybody. but all -- i'm also aware and wary that after a decade post-saddam hussein's rule majority of populations do not know about saddam's rule because if born after 1990 which they have something like 60% of all
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population are young, then they wouldn't know saddam hussein. we as in governing iraq we cannot go and put the blame on saddam hussein. even if he is blamed we know he's blamed because of the social engineering hindered in what we see in the disputed territories or in the dictatorship or in socially destroying the fabric of society by cultural foreign violence. we know that. nobody is disputing that so for the academia it's clear-cut where are the foundations and whose -- who supported it or not but for the society our young ones who seek to be employed and who seek to have a job and so on and by the way are very active in social media so they have a very good awareness of what's taking place in the region and elsewhere, they have that question. we in iraq need to answer that question. post current and future generations need to ask that question. i will talk about it in sort of five parameters and i think i
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should finish in about ten minutes, first is i will give you an observation of my trip. i came back yesterday, eight-day trip in iraq. i saw quite a few people and had our ambassadors' conference so able to get a good grasp from all the top officials would came to the conference as to the status of the country. i will also talk about the current recent military operation in the city of tikrit. and finally i will talk about the five what i call the government focus or vision moving forward. those five are in relation to inclusion or decision-making and the relation to military capabilities, relation to combating corruption and developing economy national reconsideration and finally our foreign policy relation issues which we will highlight by next week's visit by the prime minister.
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in my visit which i came as i said only yesterday and i have been there about three months ago, as well so i was able to do good compare and contrast it was clear to me that the country in a very ironic way with all the isis and media, the country at least in baghdad and a lot of other cities felt that they are at the safest point they have been for a long time. very few car bombings assassinations no clear militia or anybody in the streets free what you might call curfews no longer there and removing a lot of blocks, concrete blocks so free traffic. that was one of the key high loop its i realized from day one. obviously being sort of the spring, the weather was the best part of the year so that help, as well. so it was important that everybody talked about not just
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tikrit and where the ally come in or not but what is the post-isis scenario? and to me this early on in our engagement with isis with them still having occupying mosul and anbar, i will say healthy discussion to have. i started having it six month ago but for the majority of the people who are not politically savvy enough to talk about what's the scenario pirate-isis in relation to national guard and everything else i think that's a good healthy political position to be in. the other key point was how do we all stabilize and strengthen the government? the prime minister is new to this position. he certainly doesn't have what you might call healthy environment to start governing from because he came in in the trail of the mosul and elections
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and everything else. so how do we -- how can we help him? that was one of the key issues. majority of the politicians were sometimes frustrated by their not lack of ability but that they sometimes try to offer help but it's not materialized because of the politics. so that was what i might call a positive sign of frustration. the tikrit operation it was also clear as an ambassador coming from the united states people would ask me why the united states not doing x, y and z and that we can talk about what these are but primarily looking at united states as a prime partner in our fight against isis here we're talking about iraq, by the way. the american perspective might be the geopolitics of the region and syria and everything else. to the iraqis they don't appreciate that. they say, we have a problem with isis. you need to help us now.
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syria, everything else, may good. we need to resolve that but we have an immediate threat because isis, we cannot co-exist with isis so help us now with your military, with your training with your munition, with everything else. that is another issue to take into account. obviously the politics of ec is not an interest of them. congressional discussions, that is not their concern, and i think they are right in that sense, because of them menace of isis. that's an area which i think is important for people to appreciate. so in that sense, the tikrit operation was what you might call a roller coaster. and primarily done with iraqis and volunteers and people in organization forces and obviously support from our neighbor and the advisers and so
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on. then there was a halt and then the u.s. campaign and others playing part, a significant part an effective part and more or less everybody working together with the liberation of the city of tikrit. the key concern for the government was in minimizing collateral damage and iraqi forces not just people, properties and so on. isis was able to booby-trap hundreds of houses and posts and other type of things so it was not an easy terrain to work in. what keys we took away from the iraq operation was that we need to have a closer cooperation with our neighbors, that each theater is unique, and, therefore, what took place in tikrit may not have to be copied in other places but we have to learn from.
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and, thirdly, we need each other. but the good news out of that was primarily that the tribes in the region, primarily the arab tribes significantly worked with the popular mobilization forces and the iraqi security. so there was a clear engagement. and also, even a few days after the liberation, it was handed over to the provisional government and the civil society to manage, and those proper mobilizations and sometimes i hear them called militia pulled out of it. we'll talk about that wording of "militia," i hope later on. the third point, which is a five-point vision, and that i would finish, he government issues are about to make sure that the government is inclusive. the prime minister does seriously believe in decentralization and he seriously believes in cabinet-making decisions. he seriously sometimes delays
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decisions to the frustration of partners because he says i have not got the buy-in of x, y, or z. he will not make the decision by himself and say tough luck to the rest. he's not that type. that i think has been people are appreciative of that. as i said, the sense of urgency sometimes people want him to make that decision and he usually says i need to be more inclusive to mitigate the risk in the day-after scenario. and that's one aspect. as to the military there has been major restructure more to come, i can assure you of that in the military and in the interior ministry, minister of interior. there has been more hands-on role for the prime minister and the military. they certainly have tried to outreach to the trainings of the tribes where the anbar tribes or others as well. there are discussions in
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relation to the national guard has taken place, first draft. more to do. people ask me, one senior official once asked me to talk about the national guard, de-baathification -- forgot the english name for it. accountability and justice. he asked me about that, where are you with that? we want the science. and i said the de-baathification is a history aspect. national guard is the future. people no longer talk about de-baathification. if they do, it is because of unhappiness, it's no longer a show stopper. national guard, no, that key issue of how do we mobilize
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those at the peripheral, whether the volunteers or the military establishment in iraq and how do we integrate them into the government and how do we let the commander-in-chief, the prime minister, to manage that? that is the way to future is, and it will take time. i kept saying we would not do it to your timeline, to our own timeline. so in that sense, reforms are taking place providing weapons to the tribes and others. it's not to the pace because we don't have the weapons ourselves. it's not that we have the weapons and store them. it's not politics with that. and it's also a financial crisis. we don't have the luxury of the funds and we cannot just buy any weapons in the markets. there will also be a secure and reduction -- a significant reduction in and violence. people want to take advantage of
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the security lack and do ransoms and kidnapping and so on. that is significantly reduced. now three other points before i'll finish. it has to do with the economy. the budget was signed, and we still do one year at a time budget. it's not a five-year plan or anything like that which means that unfortunately we still catch up. we're still in a catch-up mode. that is not helping us in our development. there have been signs of economical development. corruption is still a major challenge. we have more or less now only touched the surface of. that it is an issue of culture, structure, it is an issue of processes need to change and certainly legislations have to be there. and we need to move away from the current three methods of monitor into more what you might call an integrated approach and
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i can talk about that later on. however, what has taken place as well is major steps from the prime minister's initiative and relation to the decentralization and administrative reform. that will certainly be the way forward. including what i might call the taking away some ministries and merging them into the local authorities. that is also a plan. as far as reconciliation the prime minister came yesterday from arab yan the first trip he did as a prime minister. the steps he has taken was very positive, but they are all in what i call the theme of confidence-building measures. we will do one step at a time rather than having packaged solution in which we all sign it in blood. that's not the culture in iraq now. it's more of like step-by-step because after mosul and after
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the new -- the new formation, an issue of trust had to be regenerated. the communities of iraq now realized they have interdependencies, but at the same time the majority of the politics has not allowed for a predictability of that politics, and i can talk about that. so you have to be cautious and you have to think twice and you have to take into account a myriad of issues rather than a few parameters for any decision-making. and that is one of the complexities of iraq. as far as -- also human rights abuses and so on that has been a major focus for the prime minister. he has really opened up and called for organizations to be on the ground and support as possible. and we're not saying that abuses are not taking place.
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we are saying that we are there to monitor and once an abuse takes place for us to be aware of it in fact in figures, not in perceptions or rumors, for us to do something about it. at least we have that understanding, and i will call it we have that big chest where we can say tell us what you have taken place, and we will look into that rather than say whatever is driven to whatever sort of negative con notations we have towards the national media or others as well. we are saying that is not the case. at the same time, these bear in mind our war is a messy war. all wars are messy. but what we have is not a trench war. we have a street war, an enemy who does not wear a uniform, who does not show themselves, and who are conniving and have more or less broken every rule of engagement or any ethics of any war to achieve their objectives. this is the type of fighting we
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have to do, and unfortunately, casualties are there. it is unacceptable. there has to be zero tolerance. but please bear in mind that is the environment we are working in. the final point is with the relationship with foreign countries and others. the prime minister and cabinet have been very active in doing an outreach to all countries. he has done a tremendous job going to all the major conferences where i know for a fact that previous prime ministers didn't for language barriers and other things but prime minister abadi has done a tremendous job of reaching out and more so by accepting delegations. and his trip to the united states is one sign of that. the key message we have is we know we have relationship with neighbors we need to address. we know there are camps where there is pro-iranian, pro-american pro-saudi, pro others.


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