Recently, the Senate Finance Committee held some of those hearings typically designed to showcase the senators’ deep concern about a problem they intend to do nothing about.
Suffering taxpayers and whistle-blowing Internal Revenue Service employees came forward to reveal the many ways in which the agency abuses the very people it is supposed to serve. The hearings had everything: weeping victims, indignant senators, even agents testifying from behind a screen to protect their identities and prevent the retribution customarily visited upon truth-tellers in the nation’s capital.
There were plenty of colorful tales, like the agent who said she was sent to smoke out allegedly poor taxpayers whom her thick-headed supervisors believed to be hiding income. She found that these suspected high rollers were somehow not able to hold on to enough of their earnings to afford air conditioning, which qualifies as a necessity during Houston’s steam-bath summers.
David Burnham, author of an unflattering book about the agency, got no argument when he characterized the IRS as “abusive, sloppy, improperly political and occasionally corrupt.” By the end of the week, Acting Commissioner Michael Dolan was before the committee confessing the agency’s sins, uttering his sincerest apologies and pledging to do better.
The spectacle made for several days of incriminating headlines and emotional TV footage. And usually, that’s all members of Congress want. But this time, the hearings may also lead to change. Congress is showing real signs of wanting to make the most hated institution in the federal government a little less scary.
Trying to make the IRS lovable is like trying to make oral surgery pleasant. Under the best of circumstances, being relieved of your hard-earned income is not something to look forward to. But the experience of dealing with tax collectors can certainly be made less excruciating than it often is.
In June, a House-sponsored commission issued a report calling for a variety of commendable changes. They included upgrading the agency’s antiquated computers, bringing in a board of directors with needed expertise and the power to hire and fire top management, and making it easier for taxpayers to get compensation when they are treated like pinatas.
The House Ways and Means Committee will soon finish work on legislation adopting many of the proposals and may vote on it this week, with full House action expected by the end of the year. President Clinton reportedly plans to urge the creation of an independent review board to field complaints about the IRS. House Republicans are also reviving talk of a tax overhaul that would address deeper issues.
Many of the agency’s shortcomings involve mundane organizational defects. “The IRS is a bureaucracy run by the bureaucracy,” says David Keating, executive vice president of the National Taxpayers Union and a member of the commission.
It has few political appointees answerable to the president, and those it gets rarely have much experience running big, unwieldy organizations. So it functions pretty much as its entrenched culture dictates. An outside board of directors would make the agency’s top managers accountable for the successes and failures of the IRS.
Some of the commission’s recommendations ought to go without saying. Present and former agents say supervisors judge performance by how much money they extract from taxpayers–not by, say, whether they collect the amount those hapless wretches actually owe. The commission said it is important that “personnel measurements take into consideration the courteous and fair treatment of taxpayers and that personnel are rewarded for emphasizing the collection of the proper amount of taxes.”
But to a large extent, the tax collection system will remain oppressive no matter how many rules are written to keep IRS agents off the throats of taxpayers–because the oppression lies in the nature of the income tax. Financing the government largely by this means dooms us to the huge and unending invasions of privacy needed to assure compliance with a complicated set of laws. Anyone with income has to reveal all sorts of personal information to an agency that does not have the taxpayer’s well-being at heart.
The most promising answer is to make a bonfire of the Internal Revenue Code and replace it with a national sales tax–allowing the vast majority of Americans to pay their taxes without having to open their secrets to government scrutiny and without the specter of an audit.
We have come to accept the vast intrusions and perpetual fear that accompany the existing system as the price of living in a civilized society. But a society that can’t do better than the income tax falls a bit short of civilized.
