Ironing Out the IRS
Thanks to the Senate Finance Committee, Americans are this week being shown the darkest side of their federal tax collection system. The stories of maliciousness and malfeasance by Internal Revenue Service agents in pursuit of unpaid taxes should disturb all citizens.
The IRS, after all, touches more lives more regularly than any other agency of government. And its touch, if misdirected by bureaucratic zeal, can devastate individuals and businesses. But as Finance Committee chair Sen. William Roth (R) of Delaware emphasized, the purpose in airing all this ought to be the encouragement of better government, not the public demolition of the IRS.
For some critics of the IRS, demolition is exactly the right course. A number of Republicans in Congress are proposing legislation to do away with the current tax code and the agency that enforces it by the end of the year 2000. In their place, presumably, would be a simplified flat tax or national sales tax system. Such radical restructuring, however, is a long way from political realization, and it raises its own set of problems regarding tax equity and sufficient revenue.
More to the point are steps suggested by the current focus on IRS failings. Clearly, the kind of abuse of power exposed by the Finance Committee hearings requires quick correction by management. Acting IRS Commissioner Michael Dolan has promised that. Corrective action should include elimination of collection goals for the agency's regional offices. Such "productivity" goals - ironically pushed by Congress itself - lie behind the untempered zeal of some IRS agents.
Another area of concern is the recent targeting of poorer Americans by the IRS. Does this, as some charge, spring from a strategy of picking on the taxpayers least likely to challenge the agency? Or from congressional demands to ferret out fraud in the use of the earned income tax credit, which benefits low-income families? Whatever the case, the tactic is misconceived and ought to be dropped. It paints the IRS in even darker tones.
Those who would throw out the whole current structure have one thing right: The complexity of the federal tax system is excessive. It benefits only accountants, tax lawyers, and politicians who love to tack on breaks and incentives. Every new tax bill (witness this year's tax-cut effort) makes a joke of "tax simplification."
So let the tough oversight continue. Bring on new management, such as the independent board recommended by a recent federal commission that studied the IRS. Put the emphasis on service, including thoughtful response to complaints and questions. Maintain fair and tough enforcement. And try to move toward a tax system that's understandable (and thus less intimidating) to the average citizen.