Evening star., 1944-02-15

millions of persons, the adminiStra-
tive task of the bureau has become
almost the largest nonmllltary
operation of the Government.
It will not be persuasive to blame
the present congestion or the red
tape on the Bureau of Internal Rev
nue. or on the Secretary of the Treas
ury or on the President. The tax
laws and regulations are the product
of nearly 80 years of torture special
ly devised under Republican as well
as Democratic administrations after
trying to understand what the legiS-
lators wrote each time when they
finished a tax bill.
The simplifying should start at
the source-the legislation itself
The theory of the political mind
while writing tax bill is that if by
sone remote chance, some one might
possibly make larger profit or in
come the chance must be guarded
against. This is called plugging
loopholes." AS a matter of fact, it
often results in a dragnet that pen
alizes the innocent but the Bureau
of Internal Revenue appears to have
no discretion in the matter of sepa-
rating the obvious evasions from the
avoidance of taxes though time and
again the courts have seemed to in
dicate that it is lawful to avoid taxes.
The difficulty is partly in the
failure of Congress to provide an
adequate staff or to provide means
for checking the efficiency of the
bureau so as to ascertain whether
delays in handling returns are due
to complicated regulations or insult
ficient personnel or any other rea-
sons.
The British system seems to be
different. They seem to place re-
lance on their personnel and en-
. trust to them the task of making
equitable settlements on the spot
With fine civil service and men of
integrity who are instructed to do
an equitable job of tax collection,
the public seems to have a chance
to find out each year what has to
be paid. The same trust ought to
be bestowed on the Internal Rev.
enue Bureau personnel. The staff
OF auditors should be given power to
examine returns and deal with
technicalities on the spot-even to
the point of making lump-sum set
Elements. The cost in the end is
smaller and the revenue to the Gov
ernment probably would be larger in
the long run.
But there can be no simplified tax
returns till the laws are simplified.
Instead of allowing certain deduc
tions to apply to everybody, deduc-
tions are applied to individuals in
business which do not differ from
expenses incurred by individuals in
personal affairs. Probably the best
way out of the deduction mess is to
make fiat tax graduated up to the
first SIS 900 and allow no deductions
up to that point but let the rates be
lower on that account for that
bracket. This would eliminate much
OF the difficulty and at the same
time would treat everybody alike. AS
for sums above IS 900, a series of de-
ductions also reduced in number
would make the filing OF returns
simpler for administrative purposes
The Congress is largely to ame
for some of the complexities. thus
a bad debt has for years been
charged off 100 per cent when as
certalned to be really a bad debt
Now after January l, 1943, a bad
debt can be given only a 121a pei
cent deduction and can be applied
AS an offset only against a capita
gain. This is but one of many COM
plications invented by the legislators
or else forced into the bills by the
Treasury Department till each tax
law adds more and more perplexi-
ties to the previous one.
The wonder really is that the
taxes are ever collected in as big
sums as are obtained. It would be
public service if some congressional
committee took it upon itself to
IND out how many income tax re-
turns are not audited or settled, and
how many hundreds of millions of
dollars-perhaps billions-are in dis
pute and subject to litigation. How
much more inexpensive it would be
TO empower the bureau to have the
discretion to settle such cases on an
equitable basis instead of conf1ning
II to rigid provisions written so am
olguously that it takes the courts
years to interpret the intent of
Congress. Simplification begins in
the Treasury but it also must be
accepted on Capitol Hill in the writ
Ing of tax laws.
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