Never reluctant to demand more from the federal government, Americans have nonetheless grown less willing to pay for what they demand and more willing to avoid paying what they owe. And government has become timid in encouraging taxpayers to pay up.
Much as wild animals held in captivity lose their ability to survive in the wild, we Americans have become so dependent on government services that we can’t survive without them. The pervasive influence of government touches almost every aspect of our lives. We are government service junkies.
Forfeiting more and more of our independence in exchange for government benevolence wouldn’t create such a problem if we were willing to part with more and more of our money to pay for that which we crave. But therein lies the problem.
Americans want to pay less and less to get more and more. Our tax system is so complex and convoluted that understanding it is beyond the realm of possibility for even our most sophisticated citizens. Americans believe that underlying all this complexity there exists opportunities for the astute to make lots of money, enjoy lots of government services and pay very little in taxes. And the IRS is relatively powerless to do anything about it.
A 2001 government survey found that 24% of taxpayers think it’s OK to cheat on their taxes — up from 13% in 1999. Deborah Schenk, a law professor at New York University, was recently quoted in The Christian Science Monitor as saying, “I think that people have come to see paying income tax as driving 55 mph: Only a fool would do it. If this attitude spreads, the whole system will collapse.”
Why is the tax assessing and collecting system in such crisis? Response to the viscous, and largely unfounded, attack on the IRS during the mid-90’s is a big part of the problem. Trumped-up charges and allegations of widespread IRS abuses caused Congress to slap the agency’s hand and, worst of all, cut their enforcement budget.
The number of IRS employees has declined 16% between 1992 and 2001. As a result of fewer auditors, the chances of being audited have dropped dramatically. According to the Christian Science Monitor, the IRS audited one of every 78 tax returns five years ago. Last year, that number dropped to about one of every 170 returns. Years ago, the IRS audited about 5% of all tax returns filed and that seemed adequate to encourage widespread compliance. Auditing one-half percent of all tax returns is clearly inadequate to get the job done.
Our voluntary system of income tax assessment and payment is largely a misnomer. We voluntarily calculate and pay our taxes as long as we fear the consequences of not doing so. When the fear is lifted, the system collapses.
The old clich