Who’s Cheating Whom?


Most Americans think tax laws are too complex and tax rates are too onerous.Not a bevy of politicians and journalists, however. They want to give theIRS more money and power.

There may be no more fundamental issue than one's view of taxes. Thetraditional American attitude, reflected by the colonists who made arevolution more than two centuries ago, is that taxes are the price of anuncivil society.

Because people are fallen, we need government to create a framework forimperfect human interaction. But people's very sinfulness requires that wekeep government small and limited, and thus taxes low.

The other view, now predominant among American elites, is that people areperfectible. Thus, government is necessary to undertake endless socialengineering schemes.

All income properly belongs to the state, to be divvied up by legislatorsadvised by public-spirited experts and activists. Taxes should be high foreveryone.

In the latter opinion, the falling number of IRS audits is a matter of notjust concern, but horror. Time magazine's Frank Pellegrini complains thatonly one in 204 returns was audited in 2000, half the rate of 1998. Even theworking poor, he writes, ''could roll the dice 161 times without coming upaudit.''

The IRS naturally wants more money for audits, computers, personnel andmore. A nine-member IRS Oversight Board recommends an extra $800 million for2002.

Pellegrini would go quite a bit further. ''Throw a couple of hundred billionthe tax man's way,'' he writes about 21 times President Bush's recommended$9.4 billion. For ''an effective tax man is the government institution onwhich all others are built.'' If we don't do so, beware: ''Just look howwell Russia's doing without one.''

Actually, why stop at even a vastly wealthier, more intrusive IRS? Why notgo back to the old Soviet system? Let the government collect all revenue,paying out only as much as it deems appropriate. That would kept cheating toa minimum.

No one really knows the scale of ''cheating.'' Bruce Bartlett of theNational Center for Policy Analysis estimates a $145 billion tax gap.

But responsibility for the gap doesn't lie with mendacious taxpayers. Itdoesn't lie with squeamish tax men. It lies with irresponsible congressmen.

To finance all manner of wasteful expenditures ranging from wars oncountries that have not threatened the United States to loans to politicallyinfluential small businesses Congress has raised the tax burden to thehighest level since World War II. The Tax Foundation figures that TaxFreedom Day, when we effectively stop working for the government, will beMay 3 this year, the latest ever.

Proposals to lighten the tax burden ever so slightly have generated a hewand cry among the special interests that live off of the productive. Evensome Republican Senators are willing to undermine President Bush's modesttax cut in order to increase federal spending.

Politicians have poured special invective on higher-income taxpayers, whopay the vast majority of taxes. Indeed, just 1.7 percent of peoplecontribute 40 percent of income tax revenues. Yet, they are constantly told,they deserve nothing back even as the government ruthlessly overchargesthem.

The financial burden of taxes is exacerbated by the complexity of the taxcode, which has itself become a vehicle for social engineering. In 1945,instructions for the 1040 tax return form ran four pages. The form required52 pages in 1985, and 117 pages today.

There are more and more complex forms. The forms take much longer to fillout. The vast majority of Americans use professionals or computer programsto complete their forms.

Even Pellegrini admits this is a problem, calling on Congress to simplifythe tax code though in part to make ''cheating easier to spot.'' But hewould also like to make it easier to comply.

If legislators refuse to do so, they should not be surprised that taxpayersdecide to resist, even illegally. Americans are being plucked like chickenand are forced to pull their own feathers. All the while they are subjectedto sanctimonious harangues about how they are greedy and uncivil if theyattempt to deny even one dollar to spend-thrift politicians who worry farmore about the next election than the next generation.

Public anger has focused on the IRS, and the agency has committed more thanits share of mistakes and abuses. But the real culprit is Congress. It hasgiven those who work at the IRS the impossible task of fairly implementingan unfair tax code and unfair tax rates.

Does Congress want to cut cheating? It should be frugal with taxpayers'earnings. Give everyone the tax cut that they deserve. And simplify the taxcode.