ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Friday, April 25, 1997 TAG: 9704250036
SECTION: EDITORIAL PAGE: A-13 EDITION: METRO
SOURCE: ROBERT RENO
IF YOU paid your taxes April 15 with the sinking feeling that a lot of other taxpayers were whistling past the system without paying, prayed that the IRS mail room would be choked with returns so they wouldn't be able to cash your check until you had covered it with sufficient funds, and shuddered at the thought you might be audited, your instincts were correct.
Yes, a lot of rich people aren't paying any taxes. The IRS is understaffed and underfunded. And while the rich are being audited less, the rest of us might have a greater chance of getting hauled in to explain ourselves.
New figures from the IRS show that in 1993, the latest year for which figures are available, 2,400 Americans with incomes in excess of $200,000 paid no federal income taxes at all. And these were just the legal ones whose incomes were known to the government. In 1977, only 85 people enjoyed this fortunate tax status. We can assume that this trend has accelerated since 1993. The same report shows that 18,000 Americans in the over-$200,000 bracket paid less than 5 percent of their income in taxes, hardly the backbreaking rate the wealthy are always complaining about.
In 1995, only 3 percent of people earning more than $100,000 got audited. In 1988, 12 percent of these people got audited. But the audit rate for poor taxpayers earning under $25,000 rose in 1995, to 1.04 percent. If this trend continues, the IRS will soon be more likely to audit a poor taxpayer than a rich one.
These are appalling figures. But what do they mean? What is the remedy?
If this many rich are getting away with murder, is this really the time for Republicans and some Democrats to be talking about lowering estate and capital gains taxes, which give us the best crack at the pocketbooks of the wealthy? Or if so many wealthy people are paying no taxes anyway, and 18,000 are paying at a rate of only 5 percent, shouldn't we go to a flat tax, a system with zero loopholes, less incentive for evasion, which would finally force these fat cats to cough up?
Do these figures prove the IRS is an evil empire that must be pulled up by its roots? Or do they merely mean the IRS, starved of resources and intimidated by threats from Congress, needs to be strengthened to do a fairer job of collecting taxes?
These are the questions that ought to frame the great tax debate now taking place in Congress. Unfortunately, the multitude of tax proposals being floated is top-heavy with ad hoc, pandering tax cuts that are antithetical to deficit reduction and pursuant of every social aim from college education to teen-age smoking to corporate subsidies to capital investment.
The flat taxers, if they had been more concerned with simplifying the system and making it more intelligible and less obsessed with lowering rates on the rich, might have carried the day by now. As it is, the final result is likely to be a sticky gumbo of cross-purposes with little improvement in those deficiencies in the system which are most glaring.
ROBERT RENO is a columnist for Newsday.
- L.A. TIMES-WASHINGTON POST NEWS SERVICE
LENGTH: Medium: 61 linesby CNB