Monday, April 13, 1998

Week of 04/13/1998

Target: The IRS
Reforms Won’t Work
- by David Matthews 2

It’s tax time again, boys and girls. Time, once again, to fill out those pesky 1040 forms, sign your W2 statements, and spend more money going to H&R Block, or the local accountant, or just to your local post office to mail out those 1040 forms, or their extension forms.

For those international readers out there, you’re probably clueless as to this annual madness that we call April 15th.. otherwise known as Tax Day. Let me take the time to explain it you folks why we Yanks are so angry at our government right now.

Before America took part in World War II, we had to pay all of our taxes by April 15th in one lump sum. Uncle Sam would tell us we owe "X" amount, we’d write a check to Uncle Sam and that would be it. But then we got into the war and the government needed some fast cash to finance the war. They couldn’t wait until April 15th for the money to come in, so Uncle Sam decided he’ll take it out of our paychecks a little at a time. Our employers had to take "X" percent out of our paychecks, match it out of their own funds, and send that money in. End of the year, we get a statement (the dreaded W2 form) from our employer stating how much money they sent to the government. Then WE have to fill out the forms to state how much we "paid" and if the amount is equal to what the government says we owe. These forms have to be postmarked by April 15th, or we get penalized.

Now, I hope my fellow Yanks have been paying attention as well, because that is how our tax system works. The next time someone asks you how much you pay in taxes, all you have to do is check your pay stub and do the math. Don’t lie to yourself and the person you’re answering and say that you "didn’t pay anything" if you are getting a refund check. Because that’s all that you’re really doing - lying to yourself.

Truth is, the average working American is getting A LOT of money taken out of their paychecks to pay for Uncle Sam and his fifty spoiled brats. Most of us don’t know this because it’s not only taken out in piecemeal, but before we even see one penny of our own money. And in addition to that, there’s also state income tax as well.. unless you live in New Hampshire or Florida. That means you have to repeat this same procedure all over again for the state equivalent.

Well, every year, we hear the same thing over and over again. Taxes are too much. The forms are getting too complicated. We don’t like having to do our taxes. And every year, our politicians keep talking in 100% pure methane about what they’d like to do about taxes. They promise to make the tax forms simpler, and instead they get more and more complex. Then we keep electing the same yahoos into office because we’re told that the alternative to them would only make matters worse for us, which they become anyways thanks to those aforementioned yahoos. (By the way, we have a word for this outside of the Washington beltway.. it’s called hypocrisy!)

But now things are a bit different. This past year, we’ve been hearing all sorts of horror stories about the Internal Revenue Service, the agency in charge of all those nifty tax forms. Not just stories for the media, but for congressional hearings! Apparently enough people have complained for Congress to demand changes. And, equally apparent, changes are forthcoming!

Breathe a sigh of relief, right? I mean, the monster has been tamed, right?

Guess again!

The plan, as proposed by Congress and the Clinton Administration, would involve establishing an "advisory board" to oversee the IRS and hear any complaints about their tactics. That and a few "taxpayer rights" would supposedly turn the IRS into a "kinder, gentler" monster.

And if you believe that, I’ve got prime real estate at the bottom of Lake Lanier to sell you!

Let’s get brutally honest here - the proposed "reform" of the IRS is nothing more than more bureaucracy with a candy coating to quell the public outrage. Washington has no intention of really fixing the IRS, they just want some means there to appease us!

You want real reform? Let’s start with holding the IRS to the same burden of proof as any other agency has to. Hold them to the legal belief that the taxpayer is considered innocent until proven guilty in a court of law! You think they’d be so flippant about seizing funds if they had to take their claims to a judge and jury first?

While we’re at it, let’s not forget that the IRS doesn’t deserve the full and complete blame in this situation. They may be a monster, but Congress made them so. Who do you think came up with the increasingly difficult tax levels so that the more money you make the greater percentage of taxes you have to pay? Congress. Who were the ones who made the concept of income redistribution real? Congress. Who do you think gives all those tax breaks to both the rich and the middle class like they’re Christmastime gifts? Congress. Who do you think created the "marriage penalty?" Congress. Who do you think is responsible for making the tax codes into the literal reincarnation of the Gordian knot; so complex that not even ten accountants can fill out the exact same tax forms and get them to match? Congress! Guess who elected Congress? We did, either through our vote, or our non-vote! (Don’t think you apathetic non-voters get off so easily!)

You want real reform? Let’s get off this self-centered notion that there’s a group of people who aren’t paying "their fair share," especially if you’re covering yourself by some deduction or tax credit yourself. Guess what Blinky? YOU’RE not paying your "fair share" either! You want to know the only people in the whole USA that are paying their "fair share" of taxes? Try those folks who are single, without kids, don’t make $100,000 a year, don’t own a home, don’t own their own business, and aren’t full-time students. In other words, the folks who can’t claim any deductions, dependants, or tax credits. I know they’re out there, because I’m one of them!

Once we get off this crackpot notion of people not paying "their fair share" of taxes, let’s talk about setting up a tax system that is equitable for all parties. There are two being proposed - a flat tax or a national sales tax. While either of them won’t get rid of the IRS in its entirety, it will cut down the need and scope of much of that agency to where cases of abuse of power will be kept to a minimum. There wouldn’t NEED to be an ineffective "review board" instituted by politicians then.

Libertarian candidate for president Harry Browne once offered the American people if they would be willing to give up their favorite federal program if it meant never having to pay federal income taxes again. I give you this offer - would you be willing to give up your favorite tax deduction if it means paying less in taxes? I think most of us would. One of the reason why the tax system is so convoluted and penalizes people for making more money is because of the number of tax deductions and tax credits out there. People complain about taxes, they get more deductions. More deductions mean less money. Less money in the coffers mean they need to put more taxes on "the rich." More taxes mean people complain about them. See how that works?

There are plenty of reasons why things are the way they are in terms of taxes. I’ve pointed them out here and in previous articles. But just because our tax system has seemingly taken a life all its own, it doesn’t mean we shouldn’t try to fix the problem. The problem we have is not just with the IRS, but with how we look at taxes.

You want real reform? That’s where we have to look!

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