| December 13, 2006 Yesterday,
the Internal Revenue Service issued a mea culpa statement. Estimates of
the cost of the foul-up range from about $100 million to about $300
million. The error? Refunds issued to taxpayers who weren't due
them. The cause? A brand new $21 million solution that was apparently put
in place before it was ready -- and of course, the old system was already
unplugged.
There's plenty of blame to go around, and plenty of
reasons for the failure. IRS Commissioner Mark Everson blamed both the IRS
and the contractor for underestimating the complexity and difficulty of
the system -- and warnings of problems went unheeded.
Okay, the IRS messed up -- again. And again,
taxpayers are out millions of dollars. And yes, everyone loves to hate the
IRS bullies.
But before we get too carried away sneering at the
IRS, let's step back and look at the real problem. Our current tax
law is a convoluted mess of rules and regulations that bear no reasonable
relationship to reality. Constitutional prohibition of ex post facto laws
and the Constitutional guarantee of "innocent until proven
guilty" are suspended. The laws are sometimes designed around shady,
backroom deals; they are sometimes the product of pork barrel politics;
and they are often the result of the federal government's efforts to
tinker in social and economic engineering.
This most recent example of IRS mess up is just one
more case in support of a totally revamped tax collection system -- either
a flat tax or a national sales tax. And before the opponents of such
systems start howling about regressive taxes, let me point out that many
states have had state sales taxes in place for decades with seemingly no
ill effects to the taxpayers.
There are most likely two reasons that opponents rail
against the leading proposed alternatives to our current system. First, no
one minds someone else losing their deductions, but everyone wants
to preserve their own deductions. Second, either of the
alternatives would create difficulties for those who want to dabble in
economic and social engineering. In reality, no new system could be
implemented without some modifications to accommodate both of these
obstacles.
Yes, the IRS is not perfect -- but neither is the tax
code, and successions of Congress and Presidents are responsible for crafting and
enacting the nightmare. And don't forget the beloved bureaucrat who takes
a few pages of law and creates an entire library of bureaucrat-ease for
tax professionals and taxpayers to follow. Blaming the IRS alone is the
same as blaming the police for the laws that seem unfair -- they don't
write 'em, they just enforce 'em.
So what can you do? Keep contacting your
congressional representatives. Don't hope for any miracles, but don't give
up either.
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