The horror stories told at the recent Senate Finance Committee hearings on the Internal Revenue Service are acting as a catalyst for reform of the IRS–and reform is sorely needed. IRS employees have unquestionably been abusing their authority in their treatment of innocent citizens.
But there is more to it than that. The hearings were designed not just to expose abuses and force reform of IRS practices, but to create a climate of fear and loathing of the tax collector in which the nation’s tax structure could be overhauled to the benefit of traditional Republican constituencies. The actual result may be quite different, however.
The IRS is one of the two instruments of governmental authority with which most Americans regularly come into contact. The other is the police. It is interesting and revealing of the motives of everyone involved to compare the political establishment’s response to evidence of misbehavior by the IRS with the response to evidence of abuses by the police.
Consider the beating of Rodney King by Los Angeles police officers, or the brutalization of a Haitian immigrant in a New York police station. Public figures of (almost) all stripes did, indeed, condemn these acts. But the conservatives among them warned against using these isolated instances of wrongdoing to force changes in police procedure that would weaken the forces of law and order.
All but the most liberal politicians and commentators accept occasional abuses by the police as the price we must pay for effective law enforcement. But now, faced with high-handed behavior by enforcers of the tax laws, the most ardent law-and-order types have been born again as uncompromising civil libertarians. There is reason to doubt the sincerity of their conversion.
It is not a coincidence that the most frequent targets of police authority, both legitimate and abusive, are the poor and the powerless. IRS authority, on the other hand, is directed at everyone, but especially at the haves in society. The senators at the hearings went out of their way to highlight instances of IRS abuse against ordinary, non-affluent citizens, and such abuses no doubt do occur. But this should not obscure the obvious fact that–like Willie Sutton, who robbed banks because that’s where the money was–the IRS takes the most money from those that have it.
The affluent are natural enemies of the tax collector. But the affluent alone do not make up a political majority. The Senate hearings were intended to bring the ordinary Joe into the anti-IRS camp, to create a consensus for destruction of the present system of tax collection, so that it could then be replaced with a system under which the affluent would pay less and the ordinary Joe (poor sucker) would pay more.
Various schemes for overhauling the tax code are being promoted by the Republicans: A simple flat income tax; further reduction, or even the outright elimination, of capital gains taxes; replacing income taxes with value-added taxes or other consumption taxes. All those changes are offered as means of simplifying the tax system and, thus, reducing the power of the hated tax-collection bureaucracy.
But all of these and other GOP schemes for changing the nation’s tax structure have something else in common: They would reduce the progressivity of the U.S. tax system, which is already among the least progressive in the developed world. They would result in the affluent paying less and the middle class paying more. In effect, tax “simplification” as proposed by conservatives is just another term for tax reduction for the wealthy.
The Senate hearings were just another maneuver in a long GOP-led campaign against effective tax collection. They followed years of budgetary and operational constraints against the IRS. Perhaps in response to the spare-the-rich mood of Congress, the proportion of over-$100,000 tax returns audited by the IRS has been reduced in recent years to a small fraction of what it once was. America is becoming safer for tax cheats, or at least for wealthier tax cheats. Of course, the public hearings played down these changes and focused on IRS mistreatment of middle-class and poor Americans.
The complete overhaul of the tax code sought by the GOP, an overhaul clearly favoring the wealthy, remains a long shot. It is hard to imagine that the Democrats would be so politically inept as to make it possible. The most likely outcome is modest revision of tax-collection regulations to reduce the power of the IRS. (The “bipartisan” IRS restructuring bill now moving through Congress would do just that.) Cheating will become easier.
But there is another possibility: Imagine how deliciously ironic it would be if the ultimate result of the Republican attack on the IRS was a leaner, cleaner, more effective tax-collection agency, one that was gentler and more considerate in its dealings with the average citizen (as demanded with such righteous indignation by senators at the hearings), and one that focused its sternest efforts toward those that have the most money–traditional GOP constituents.
