Why does the Internal Revenue Service encourage us to file our income tax returns electronically? The answer is quite simple. Because they can process electronic returns faster and less expensively than paper returns. But that begs another question. If it is less expensive for the IRS to process electronic returns than paper returns, why do we have to pay extra to file electronically?

E-filing costs ten dollars or more whether you pay it directly or it's included in the cost of your tax-filing software. Filing by mail only costs about a dollar for most people (postage, envelope, paper and printing). E-filing is more convenient for most of us too, but that doesn't justify our having to pay about ten times the cost of filing by mail.

Each year I prepare and file three returns: my own, my mother's and my wife's mother's. It took me less than an hour to print the returns, address the envelopes and mail the returns. I saved about 27 dollars. Until the IRS lowers the cost of e-filing to about that of filing by mail, I will continue to file by mail.

The current charge for e-filing is just another tax.

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Paul Krugman, a Princeton professor and New York Times columnist, recently won a Nobel Prize for his work in economics. You might think he's a pretty smart dude when it comes to economic stimuli and other money matters, but his recent column doesn't support that in my humble opinion. He attempts to convince his readers that in jump-starting the economy it's much better for the government to spend money directly than to put money in the hands of the people, through tax breaks, and let them spend it. I don't buy his arguments. Here's one of the three points he makes:

Write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

I'll give Krugman the benefit of the doubt and assume that he believes government is the best judge of how to spend the people's money only part of the time.

Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.

Do you suppose Krugman doesn't know the difference between income taxes and user fees? Most people don't complain as much about user fees as they do about income taxes. They know that if we are to have a national highway system it has to be paid for somehow and a tax on fuel is a reasonably fair way to do that. The same is true of the air traffic control system. If you don't fly you don't pay the fee. Those who do fly pay for the ATC system. If you drive less than others you don't pay as much for the highway system as the others.

Further, Krugman wrongly assumes that a government-run ATC system is the only alternative. He assumes that the only alternative is midair collisions. Not so. One alternative is for the airlines to cooperatively operate their own ATC system. But no matter how it's done there is a cost and the air travelers will have to pay it.

The people are more likely to object to their income taxes being used to provide a 50 million dollar stimulus of the National Endowment for the Arts.

The point is that nobody really believes that a dollar of tax cuts is always better than a dollar of public spending. Meanwhile, it’s clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts — and therefore costs less per job created — because a large fraction of any tax cut will simply be saved.

Krugman keeps slipping in the "always" modifier. Perhaps nobody does really believe that a dollar of tax cuts is always better than a dollar of public spending. But a lot of people believe that it usually is.

Krugman casually dismisses the value of money saved. He apparently believes that the money must be spent in order to help the economy. But I thought we were in a credit crunch. It seems to me that, provided the savers aren't stuffing the money in their mattresses or burying it in their backyards, the saved money will become available to borrowers who will then spend it on things they need. That is, those that don't need to purchase something are making purchases possible for those that do.

This suggests that public spending rather than tax cuts should be the core of any stimulus plan. But rather than accept that implication, conservatives take refuge in a nonsensical argument against public spending in general.

Me thinks Krugman's arguments are a bit nonsensical. They are clearly not Nobel-winning-professor caliber.

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