Struggling with our income tax return is hardly the most pleasant way to spend time, but imagine how annoyed we would be if we knew that every one of us is being overcharged by 25 percent. But this year, someone whose fair share for living in this country is $8,000 will actually be forced to pay $10,000.
It's estimated that 20 percent of what honest Americans pay in taxes is to compensate for the amount that does not get collected from those who don't pay their fair share.
Think about what we pay in taxes each year and imagine how much more we would have today in our retirement plans if we could have deposited 20 percent of what we otherwise paid to the government.
If President Bush was serious about "privatizing" efforts to save for retirement, he could start by allocating resources to stamp out tax evasion. Instead, the current administration has been systematically gutting our revenue collection agency and has plans to "privatize" much of it.
Picture that polite revenue agent, our public servant, replaced by an army of private bounty hunters chasing down tax delinquents and keeping a third of the money. Privatizing the collection process will just dump profits into the hands of private industry -- profits that could have paid for more government agents.
And think about this: If you make an honest mistake on a tax return, do you want to be hounded by someone from private industry with a profit incentive to make a mountain out of a mole hill? I would prefer an organization of government employees backed by a beefed up army of Eliot Ness types -- an army that directs its efforts against the evildoers and makes them pay their fair share.
I recall a Medical Economics magazine article back in the early 1970s that cited the number of doctors languishing in Lompoc Federal Prison because they had taken cash payments from patients they then failed to report.
The IRS in those days had the manpower to spot-check medical practices. The sleuthing work was simple. They would take a copy of one month's appointment calendar and call all the patients asking how they had paid. Those that paid in cash were then compared to what the doctor had reported as his month's income. Voila
We suddenly had a candidate for what today would have been the book, "Who Moved My Soap -- a CEO's Guide to Surviving in Prison," by satirist Andy Borowitz. It's a good bet that any local medical community didn't need more than one of such doctors to prompt everyone else to report every dime coming into their clinics.
The IRS estimates that $300 billion in potential revenue is lost to tax cheating. Yet, in its campaign to shrink government (and drown it in the bathtub) the current administration has reduced the number of IRS employees by 20,000 agents.
Let's help our president do some simple arithmetic: If the average agent made $50,000 a year, those 20,000 people cost us honest citizens $1 billion. If we paid them even an average of $100,000 a year they would cost us $2 billion.
Somehow, I have to believe that these 20,000 former IRS agents would have been able to recover a big slice of that missing $300 billion pocketed by those who fail to report their capital gains, take cash under the table, or participate in multimillion-dollar sham transactions -- to mention a few examples of evasion.
To deflect attention from the real problem, what remains of our IRS has been instructed to go after what some misguided leaders think are the major tax cheats. Agents have been directed to hunt down those people abusing the earned income credit who get some relief because their annual income is less than $13,000 a year.
The estimate is that one in five may be abusing the system. Let's assume that we find a million of these people who ripped us off for $1,000 each. That's only $1 billion of the missing $300 billion, and we are wasting huge amounts of time rounding them up with no hope of collecting.
It's a waste of effort and our money, but as military strategy, it serves to keep our army of agents pinned down in their bunkers with busywork. David Cay Johnston chronicles it all in his book, "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich -- and Cheat Everybody Else."
Here's just one of many examples Johnston cites: Of 1,600 citizens using illegal foreign tax havens audited by the IRS, only 49 were prosecuted and the maximum time in jail was 30 days. Crime pays and the current dysfunctional system forces the rest of us to pay for the cost of these people (and corporations) who enjoy the benefit of our military protection, court systems, education facilities, interstate highways, the space shuttle, the war in Iraq, etc.
If everyone who files a tax return takes a few extra minutes to share their thoughts with a congressman or congresswoman, we might get this travesty behind us.