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Thu Aug 28 2008

Columns

Molly Ivins

Tax Code Woes
April 15, 2002

AUSTIN, Texas -- Did anybody vote for this stuff? I mean, aside from Congress.

Just to make Tax Day even more exciting than it usually is, we have been treated to a series of recent reports that the Internal Revenue Service is busy cracking down on poor folks, while letting an estimated 1 million rich folks and corporations move to Bermuda to avoid taxes.

If you are a worker poor enough to apply for the Earned Income Tax Credit, your chance of being audited is one in 47. If you make over $100,000 a year, your chance of being audited are one in 145.

This is not only unfair, but also stupid, on account of rich people who cheat on their taxes tend to owe a lot more money than poor people. Thus, their cheating leaves a larger hole in federal budget, which all the rest of us then have to make up for by paying higher taxes. We also pay through all that bad economic stuff that comes with big deficits about which Alan Greenspan is always worried.

This situation came about during the unhappy reign of the Gingrich Republicans, who were fond of comparing the IRS to the Gestapo. The R's held some widely publicized hearings during which various citizens claimed to have been harassed and persecuted by the IRS -- at least one of those citizens is a chronic cheater. Nevertheless, they were held up as blameless victims of the tax Gestapo, and the Republicans passed a law in their behalf. It should have been called the Let's Hamstring the IRS So It Can't Make Rich People Pay What They Owe Law.

In addition to the silly and punitive focus on poor people, Congress has also grossly underfunded the IRS for years, so that it can't do a good job. And now Congress is complaining about the results. That nice Republican from Iowa, Sen. Charles Grassley, is really upset and raising hell about American corporations moving to Bermuda. He quite rightly denounces them as unpatriotic. On the other hand, Grassley voted for the Republican "reform" bill. It's so Republican to vote for something that makes it hard for government to function and then complain that government can't do anything right.

Congress has been playing the same game with the Immigration and Naturalization Service, and with truly tragic results on Sept. 11. Great outrage and denunciation followed the INS's peerless bureaucratic blunder in sending student visa approval for some of the Sept. 11 highjackers to a Florida aviation school a good six months after the tragedy. As an "ooops," that's in a class by itself. On the other hand, one reason the INS doesn't do a good job is because Congress never gave it the money to get a computer system. Then everybody complains about the results.

Just when you think the Republicans have gotten over the worst of their Gingrichian phase, along comes something like last week's effort to undo what little progress has been made on campaign finance reform. Their plan was to dilute the required disclosure of names to political organizations that are exempt from taxes. The one part of campaign finance reform Republicans keep saying they favor is full disclosure of who gives money to whom, but suddenly, even that's out the door and here they are trying to piggyback this nasty item onto to yet another "taxpayers' bill of rights." The D's fended it off.

I used to consider taxes among the most boring subjects on earth. My attitude was, "Just tell me how much I owe; please don't make me listen to the details." But taxes are kind of fascinating, in a slow car-wreck way, because you get to see how much the rich and especially big corporations have gamed the system in their favor.

Lots of people noticed that under the Republican "economic recovery package," Enron, which had paid no taxes in four of its last five years, was due to get a tax rebate of $254 million. That was an attention-grabber. But people are far less likely to notice The Wall Street Journal's this-news-is-no-news headline, "Bush Sides Squarely With Business Over Stock Options."

Curbing some of the tax benefits of using stock options to pay employees was one of the post-Enron reforms optimists thought might actually pass. Since stock options, unlike wages and salaries, are not treated as cost to companies, they are in effect a way of pumping up a company's reported earnings figures. (You might think a company would want to lower its profit profile for tax purposes, but you would, of course, be hilariously wrong -- no problems in Bermuda.) Instead, the SEC has gone not very far out on a post-Enron limb to require companies to explain "in plain English" more about the stock option plans it offers. Boy, they're really cracking down over there, aren't they?

To find out more about Molly Ivins and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com. COPYRIGHT 2002 CREATORS SYNDICATE, INC.

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