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Scrap Tax Code? It's Not So Easy

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Politicians' proposals for tax "reform" prompt a goodly number of skeptical remarks by tax experts.

Taxpayers, they say, shouldn't count on being able to send in their tax returns on a postcard for many years to come, if ever.

"These are all political signals being sent out that they want lower taxes and simpler taxes," says Martin Sullivan, an economist with Tax Analysts, a tax publisher in Arlington, Va. "There is no chance ... of anything happening soon."

Late last month, for example, Senate Republicans introduced The Tax Code Termination Act. It would, essentially, put an end to the Internal Revenue Code by Dec. 31, 2001. Introduced by Sens. Tim Hutchinson of Arkansas and Sam Brownback of Kansas, it has 25 cosponsors.

The House faces a similar bill.

President Clinton last week called it an "irresponsible scheme to eliminate our tax laws without any system to replace them."

"A crazy idea," echoes Joel Slemrod, a tax expert at the University of Michigan Business School in Ann Arbor. "It is not going to happen. It is a totally political debate."

"I'm surprised Clinton dignified those proposals with a response," says Mr. Sullivan. But he also, by the way, charges the president with "being AWOL on tax reform."

There is ample agreement that the American tax system is too complicated.

"There is no question the tax system could be simpler," Mr. Slemrod says. The code fills two volumes, each about 2.5 inches thick. Six volumes of tax regulations and thousands of tax cases and rulings add to the mess.

Reasons for complexity

But there are reasons - good and bad - for the complexity:

* A desire by Congress to make the system fair to more taxpayers.

* A need to prevent smart tax lawyers from finding loopholes that enable big money to escape taxation.

* A quest to subsidize desired programs without hiking taxes.

* Moves by legislators to give special tax favors to special interests.


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