Copyright 2000 The New York Times Company
The New
York Times
View Related Topics
April 16, 2000, Sunday, Late Edition - Final
SECTION: Section 6; Page 32; Column
1; Magazine Desk
LENGTH: 1071 words
HEADLINE: The Way We Live Now: 4-16-00: Word &
Image;
The Ides of April
BYLINE: By Max
Frankel
BODY:
Every year at this time, I
conjure an image of tens of millions of us rushing dutifully, but also proudly,
to send off our 1040's to feed and protect our prized democracy. The image
persists even though it has grown quaint, wrong in almost every respect.
Our taxes finance a government that writes too many laws, especially tax
laws, in undemocratic fashion. And as more and more Americans learn how their
taxes are unfairly raised and spent, they no longer pay them cheerfully or
rigorously. Complexity, gimmickry and dishonesty abound. My only hope is that
the Internet will soon destroy the whole mad tax structure and force a total
redesign.
I don't think the pain of payment is causing me to exaggerate.
What should be a solemn ritual of citizenship has been turned into a sordid game
of multidimensional hide-and-seek. And atop the maddening income tax inequities
lies a regressive payroll tax -- nominally "in trust" for Social Security. By
taxing only wages up to $76,200, it favors the rich yet is studiously overlooked
in the periodic clamor for tax reduction and reform.
So some of the
poorest, hardest-working Americans simply commit the crime of doing business in
undeclared cash or barter. And the wealthiest Americans engage platoons of
experts to devise serpentine tax evasions. They shelter earnings in foreign
hideaways, convoluted trusts, posthumous charities and many legal fictions, like
the depreciation of actually appreciating real estate.
All this leaves
the great majority of middle-income families with the greatest grounds for
grievance. Their incomes are impossible to hide, and their routes of escape are
few. Most settle for a "standard deduction" because they cannot qualify for
existing loopholes or hire lobbyists to write some for them. (Yes, tax lobbyists
no longer just mill in government lobbies; they sit down with state and federal
legislators to help cut the cloth to suit their masters.)
You would
think our media would regularly expose these conditions, particularly in income
tax season. But for most journalists old news is no news. Besides, their
business offices prefer to sell "news you can use" -- strategies for negotiating
not challenging the tax labyrinth. And our new media are no more bashful than
the old in settling for a stake in the system. The Internet features many more
sites offering tax advice and assistance and, yes, even "audit insurance," than
discussions about making our taxes comprehensible and fair.
Arrayed
behind the media in defense of the present system are the legions of
accountants, lawyers, brokers and investors who collect tolls for guiding the
public through the tax maze. They have made allies of those who think they
profit more than they lose through tax deductions, most notably homeowners,
lenders and builders who share government subsidies for mortgage interest and
real estate taxes.
Similarly ensnared in the system are the
philanthropies and nonprofit institutions that use tax deductions to lure
contributors. It does not seem to bother these do-good schools, hospitals,
churches and ballet companies that a rich person's $1 gift is rewarded with a
government rebate of at least 40 cents whereas a poor person's $1 yields not one
cent of discount.
Why is not every charitable gift rewarded with an
identical subsidy? Because disguising subsidies as tax deductions means they
never show up on Congress's list of expenditures. Inevitably, politicians and
their supporters have now also found ways to use obscure provisions of the
income tax code to hide huge campaign contributions. It's a dandy way to
compensate for their probable loss of more visible "soft" money from
favor-seekers.
Frustration with the entrenched income tax system has led
some reformers to urge a shift to a European-style "value added" tax -- which
would add a small levy to the cost of goods and services every time they change
hands or otherwise increase in value. Ultimately paid by consumers, this is
essentially a hidden sales tax. Such a national sales tax was unlikely to
attract much favor so long as states and localities relied on their own separate
sales taxes as a major source of revenue. But lo and behold: the merchants and
customers on the Internet are rapidly undermining local
sales taxes by destroying the geographical basis of America's
commerce.
Consumers have always been able to dodge local sales taxes by
shopping in catalogs and ordering by mail or phone from merchants in other
states. Only companies that operate physically in the customer's state are
obliged to collect that state's taxes. But the
Internet promises to make remote and "virtual"
sales commonplace: a book I buy from www.bn.com still incurs a
local tax because Barnes & Noble maintains stores in New York. But a book
from remote www.amazon.com reaches me tax-free.
Rest assured that this 8
to 10 percent advantage for Web merchants (on top of their savings on real
estate and sales clerks) will so enrage traditional businesses that they will
soon succeed in repealing most sales taxes. One clear harbinger is the way New
York's politicians have been offering "tax free" weeks on clothing just to keep
me from buying untaxed suits in New Jersey. They'll wake up soon enough to the
even greater Web bargains offered from Idaho, Shanghai and Tasmania. Indeed, a
commission created to advise Congress on Internet taxes has already fallen
victim to the tensions between fixed and virtual enterprises and adjourned in
confusion.
As local sales taxes are discarded, a national value-added
tax will come to appear more and more attractive. But it would still leave
states and localities without sufficient revenue sources. With luck and vision,
Americans would then demand a wonderfully simple and uniform earnings tax that
treats all forms of income alike, without gimmicks, deductions, credits or
postponements, and permits every state and locality to claim a small percentage
of that levy for its own budgets.
With computer records to vouchsafe all
calculations, your 1040 report could fit on a postcard and be settled with a
credit card. The Treasury would then send a designated fraction to your state
capital and city hall. And it could pay out truly equal sums to match every
dollar that anyone gives to authorized charities. No good causes would be lost
and much sanity would be regained.
Wake up! The deadline's tomorrow
night.
http://www.nytimes.com
GRAPHIC: Photo
LOAD-DATE:
April 16, 2000 
