worked. two days after tax day and we're hearing about tax foul juts. the inspector general giving away millions in tax breaks and missing billions in tax receipts it should have collected. with the tax hikes coming and a bigger workload for the i.r.s., is this more signs the taxpayer is about to go toast? i'm charles payne in for neil cavuto. scott, i.r.s. giving money it shouldn't, not collecting money it should and the role is expanding. >> what a great situation, we're hiring more auditors to go after

guess who, it is individual. we're taking down corporations with 1250 mol -- >> 250 mlt the do you think it's right individuals should be worried? there are reports businesses are sitting on more money than before, banks are sitting on more money. households sitting on a ton of money because they're not sure what's happening with the tax situation. >> first let me say i don't think the i.r.s. is incompetent tent. they do a fine job and there's always slip age but i believe the code is what is screwed and that's coming from the legislators, it is code is skewed against the consumer, the individual, the american, both in how much to pay and how to pay. if you ever looked at the book, it's an encyclopedia of the writeoffs and rules and it's almost impossible in the amount

of time accountants spend, it's crazy. it will get worse with the rules. >> who is it getting worse for? we've seen reports the last few years that the i.r.s. backed away from a auditing big businesses. is it going to get worse for the individual? >> it might. nobody would look at the tax code and say this is awesome. >> gary said -- >> he said the i.r.s. it's complicated, it's a thicket of problems. it's difficult to manage. it's a beast. i think it's going to affect everybody, corporations as well as individuals. you know, a big reason people are sitting on cash is because we're in a recession. >> but dagen, the white house has a lot of initiatives they're putting through that may retire the i.r.s. to serve as enforcers. healthcare law, they're going to make sure people are complying,

you have whatever the clean energy stuff is. their role is expanding, almost storm troopers, that's a tough description but people are intimidated. >> but you hit it, charles. it is what the i.r.s. is being made to do. and what is it really disguises? let's lay it out. all the tax credits and breaks, if you want to change taxes, you cut rates period and clean it up and level the playing field. this is just government spending under a different name. this is spending that's going out the door. our public debt is taking over the size of the economy. this is spending, period. pure and simple. don't call it a tax break. >> dagen's making a great point. there's just too much stuff.

too much money gunshot this way and that way. too many credits and debits and it's mass confusion. typically when all is said and done, the average american will get screwed with too much in rules an regulation. >> they don't have money to stands up to the i.r.s. if you're a corporation, you can fight that. if the i.r.s. knocks on your door and you're joe off the street they beat you up. >> it gets in the way of smooth separations but there's 47% of people not paying federal income tax. they're almost half of americans figured out just fine how to work the tax code. the reason that number is high is because all the breaks and exemptions. >> you mentioned the recession, 47% of americans not paying federal taxes. why are we building an army of i.r.s. agents? >> maybe we should add them to the census. we talk about the rules and regulation, some of them really help the economy.

if you think about the deductions for mortgage interest payments, that's helping in this climate when we're in a housing crisis and need to lure buyers. retirement savings, some are important to the wait picture works. so it's easy to -- >> what about the implications -- we're making -- this is an agency that gary says they're doing a good job but the i.r.s., people are intimidated. >> if they say you -- sorry, if they say you owe them money, they'll freeze your bank account. if you make direct -- have direct deposit, if you owe money, they'll freeze your bank account and good luck getting it back. >> go ahead, gary. >> i'm saying they're not going to automatically freeze it. i wasn't to answer the main question about my more i.r.s.

agents. more money. you have be a administration and leadership spending like drunken sailors. you use it is i.r.s. to do it. >> it's power of government, you know, flat tax that's very simple and you have a much smaller government. the more complicated you make t the more power is in the hands of the people who work for uncle sam. >> itthe government can't file their taxes correctly. >> scott, we started with you, any positives outs of this? it just -- as much as we go back and forth with it, it seems, again, to be something that's spooky on the horizon. >> charles, it's scary, one positive i guess is that there are a few more jobs out there as lee initiated but i don't think there's much good. people get worried and don't spend money and hoard cash and i don't think that's good for the economy that's trying to recover. >> you seem pretty upbeat. >> well, do i think a thousand more i.r.s. acts are good?

no. waste in the system? yes. propose a better solution. i don't think the flat tax is it. >> it's -- >> go after more corporations. >> that's a great idea. i have to be honest, i think the sec made the same thing, intimidated by the bernie madoffs and large corporations. by the way, speaking of the government, nonunion shops need not apply for government contracts. another pro union rule from the white house that someone warns is not only discrimination, it's damnation for the job market. (announcer) we're in the energy business.

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in every tasty bite -- frrrrrrosted mini-wheeeeats! didn't know i had it in me. good morning, everyone. from america's news headquarters, i'm jamie colbiy. new warnings about the iceland volcano. scientists say it shows increased signs of activity. plumes of ash are creating chaos. thousands of flights cancelled today over concerns the ash could damage plane engines and impair visibility. with so many airport in europe shut down, many are flooding car rental agencies. despite the travel problems, president obama and scores of other world leaders are planning to attend the funeral for the polish president. memorial services are under way today, thousands of mourners filling the main square. the president and i say wife

were killed when the plane went down in heavy fog. the funeral mass will be held tomorrow. back to cavuto on business. want a big government project? you better be in a union shop. it steers federal contracts to union friendly companies. nine outs of ten workers are not in a union and that's way you say it's bad for jobs in america. >> unions are getting their money's worth. charles, 85% of construction worker force is nonunionized but they're telling that 85% to take a hike. whatever happened to a better bid or a better company who can construct something better? what ever happened to the level playing field that this administration talked about before they came in? all they're doing is give aways to the good budsies, total

favoritism and cronyism a will hurt the construction industry. >> it is transparent, you have to admit. >> quite. >> scott. >> economically, what would -- listen, here's the thing, we had the stimulus plan, shovel-ready projects yet unemployment amongst construction workers 25%. so economically, what is this going to do for the industry? >> isn't that funny, charles? when those things dried up, the construction industry is adding jobs. once the government got out of the way -- it's it. the economic impact is terrible. it's higher costs, lower profits and at the end of the day, fewer jobs by the corporations. so it doesn't work out well. the fact that the union -- nonunionized is so high, it's best to leave it the way it is. >> this exemplifies, charles, something even more dangerous we've talked about on this show. that's the vicious cycle developing where the unions

enrich the democrats and democrats enrich the unions. you grow the unionized workforce in government. they get more money and then they give that money to -- the democrats give it back with more power. this looks like just again a slice of what is card check with a mustache on. it's card check in disguise, away for unions to get more power. there are more union workers in the government than in private. >> we're getting tired of the lipstick analogy. >> thank you. >> is there anything you find fair? >> these are highly controversial and it's surprise this hasn't gotten more headlines. but in theory there's a positive benefit. they're supposed to -- the contracts go -- it is jobs go to people in the community to sport local community. the people who work there, live there, spend money in the community. the problem is that in a job market like we have, there's people everywhere.

in a tight job market, sorry, in a tight job market you can't find enough people. >> what if people living in the communities don't know how who build a high-rise? >> i'm not defending them. >> now you're on a construction job? >> this is not just -- this is not just highly controversial, it's wrong. it's absolutely wrong to crowd out the private market and crowd out the free markets. it's nothing more than favoritism, handing over because you gave me money for a campaign. if george bush was doing it, some cable stations would be having a coronary. >> most economists looked and i3 >> most economists looked and it and they say is comes down political issues. >> gary brings up a great point. we're continually moving away from the free market to the point where it gets back to the original issues. people are giving up on the system because the white house is going to determine winners

and losers in this society, period. >> that's right. it seems we're moving that direction. hopefully the white houseod.uns out of time here, butod.ight, look at two recent examples, airlines and autos, how are those unions working out? not very good a great blueprint. >> speaking of autos, wall street journal pointed this out, andy star, the outgoing head, gave an interview to the journal a month after president obama was elected. he had a list of priorities. stimulus for the economy and ecato industry. uniform healthcare and a card check bill. guess what's left? >> andy stearn, the number one visitor to the white house since president obama's been in there, all right, guys, thanks a lot. hiking taxes on gas price,

15 cents gallon to pay for a new global warming bill. the latest d.c. money grab that has folks say why stop at as cents? >> forcing citizens to do government work for free. i hope you'reod.eady to cut gras and pick up trash. . ♪

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i wish neil was here for this one. cities across america slashing costs by slashing services like

colorado springs cutting out cutting grass and picking up trash in city parks. now it's atingingod.esidents to volunteer to do it. dagen, you say this is not bad idea. >> it's not a bad idea bececase it puts the burden or -- even if you want to call it a burden, on the individinul and it tpeaes te power out of the hands of the government. you see -- it's easy to dismiut it locally. like in colorado springs, but if you have everybody in the country starting to think the same way, then you could put the power -- you tpeae the money and the power out of the hands of politicians. >> how do you tpeae the money ou le >> hopefully, if you put a cap on spending which is what happened in colorado, they said okay, government, you can only spend x and when the money wasn't there to spend it on these types of things, then the people had to step up and tpeae care of it. >> do you have the right clothes to do this? >> i do not. >> you a alays look smashing whn i see you, so i'm wonder, do you have the -- the city could

provide you. >> well, look, i have no problem with a jumpsuit and volunteering but it'sod.idhesulous bececase i wouldod.ather pay a tax than clean a streetlight. i value my time and -- if i'm going to volunteer, i would rather volunteer for something i want to dene like teach journalism to kids or help the elderly. >> making your neighborhood or making your city doesn't -- >> i would love to make my neighborhood feel good but it fails tood.ecognize the economis of human laziness. you have don't have enough people and you'd have a lot of freeod.iders. i don't see how it would work and you wououl get enough labor force. i would rather pay a tax than spend an hour doing that. >>od.ight now there are 40 million americans getting food stamps in this country, up 8 million in the last yeatar sometimes things like this give people pride, instead of sitting home feeling sorry for theeemelf

like it's hopeless. >> right, charles. some incentive. i'm going to colorado springs tuesday and i packed work boots. >> did you? >> yeah bececase i thithin it'sa good thing. i'll see if they let me on a john deere, people in the city itself wanted this. they voted for this. this is something they wanteted so that's the iut ue is they wat to give it back to the people and don't want the government mining arounted sure there's a lot of free riders, the top 10%ers, like the income tax, but it gets the government out of the way and that's what people want. >> the other problem is there's a lot to be done in a town. you're not going to have the resources to do everything. if we did it in new york, i might want the subways to be taken care of, but you might wantod.ose bushes in central park. >> don't forget, if somebody's o yeaning the white sidewalk ans their knee, here comes the lawyers. this is all well and good on a

local level a community level level. we need to clone government or states and one person in the white houseod.eally doing something ouoout cutting government and not taking crap from anybody, saying this is how much wrouve been spending an how much we're going to spend. feet me on it. that needs to be done. remember, bill clinton's last federal budge was 1.8 trillion. this year it's $1.6 trill wasn defi. >> dt. what did we get for the $2 trillion? >> i hear where you're coming from and i'm a chris cristie fab fab -- fan but people expect the streets to look a certain way. do you think it's a good idea to say if it takes me jjuping in and putting on a jjup spsuted, will you please stop spending? could the citizens go that far to teach the government a

lesson. since i will personally o yean, terrific. >> how about changing your way of thinking and show a willingness to give up things we think are ourod.ights. >> like what? >> everything. >> everything, everythin r if it is streets aren't clean, it's our fall. >> you're willing to pay more money to keep those things. lee, most people aren't in a position to do that. >> i don't want to be fo geed to volunteer and do something i don't want to do. >> i want -- i want a d i carte prhesing, rather than send money to the government. then those people in power de. >> dde how to disburse it. i say we have meters on the streetlights and if you want it lit, you have put a quarter in. i'm not kidding. >> are we in crazy town now? >> scott, you're going to colorado springs to help this or is this a side iut ue? >> it was pre or daneed but it's

a fun issue. the other issue is look how much it cost the government to pay these people to pick up the trash and mow the lawn versus a . >> dtizens. you're saving tons of money. >> is costs someone a job. >> that's a whole another tophe. that might be a whole business block special. >> uharle sam, we have companies not wasting a dime while makingb investors a mint and those names are up nab t. [ worker ] well, . last week he told my team about fedex office print onne for our presentatns. upload it to fedex office, en they print, bind, and ship it. the presentation looks good, right? yes, but -- you didn't actually bring carl with you. good morning! but i digress. [ male announcer ] we understand. you need presentations done right. and right now save 20% on all online printing purchases. visit fedex.com/print.

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we're back with the names showing the government how to cut cost while making money. gary k.? >> well, i go with federal express. look, we got the post office run by the government, federal express run by fred smith making tons of money, doing fantastic. fred smith took over the postal service it would be profitable. the stock is going higher over time. >> hard to argue with this one. >> it is, even though i love to argue with gary. this is a cyclical company that does really well when the consumer economy rebounds, which it's about to do. it's a smart buy. it's appreciated a lot in the last year, over-appreciated the dow. be careful of that. >> are you waiting for a pull-back? >> no, no, no. i like the company. i don't think you can go wrong but i don't think it's going gangbusters from here but i think it will continue to rise. >> it's okay to agree with me. [ laughter ] >> fred smith has a college thesis, and he got a "c" on it for federal express.

>> we like chp bulliton, the largest mining company, from big growth in china it will benefit and has a great balance sheet. little to no debt. >> you don't think people rely too much on china? >> maybe. you can say that. >> scott, you like this one? >> it's not bad, charles. rising economy, more consumer demand. it looks good to me. you're right. reasonable valuation is something else to throw in there. >> which do you like, scott? >> i like philip morris, charles. great dividend, people still smoke. earnings growth in the next two years and i think philip morris is the way to go. >> a gutsy call. gary? >> a cash generating machine but the government keep raising taxes on it and i wonder when they will hit the wall and hurt companies going forward. so far, so good. >> quickly, market up or down