THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, August 8, 1996 TAG: 9608080009
SECTION: FRONT PAGE: A18 EDITION: FINAL
TYPE: Editorial
LENGTH: 50 lines
Buried in Bob Dole's proposal for tax cuts was some tough talk about the tax system. Unlike Dole, we believe a balanced budget must be achieved before tax cuts. But Dole's right that tax reform is long overdue.
At issue is not how much revenue the system raises but how the system works. Dole correctly criticized it for requiring average taxpayers to decipher 31 pages of mysterious verbiage to fill out a so-called E-Z form.
The system is so complex that it requires a vast infrastructure of accountants, preparers, attorneys and bureaucrats. Dole proposed two immediate repairs.
He would permit 40 million Americans whose taxes are withheld and who have little investment income to dispense with filling returns at all. He'd also shift the burden of proof in the case of audits to the IRS. Presently, taxpayers are presumed guilty until they can prove otherwise.
Those are reasonable reforms but amount to mere tinkering. Sweeping reform is needed. The Kemp commission that Dole sponsored called for a flat tax. Rep. Bill Archer, the House Ways and Means chairman, favors elimination of the income tax and the substitution of a consumption tax. Sens. Sam Nunn, D-Ga., and Pete Domenici, R-N.M., have offered a progressive tax that eliminates many loopholes.
Closing loopholes is the most-needed reform but the hardest to achieve. It's not the fact that a tax system has brackets that makes it complicated. Computing 15 percent or 20 percent of income is simple. It's all the festoons that cause the complications - the credits, exemptions, deductions.
Those are the work not of the IRS, though it too often behaves with bureaucratic arrogance. The tax breaks and exceptions are the result of politicians tinkering with the tax code to change society or to win friends and influence contributors.
So long as the pols can garner campaign donations with a loophole for the diary farmers here, a tax break for the pharmaceutical industry there, the tax code will grow out of control. It will also reward those with clout and penalize those without, including the average taxpayer who must foot the bill for the handouts.
Dole calls for reform, but his own plan shows he's not immune. His plan calls for some across-the-board cuts but would also benefit seniors, families with children, schools and financial institutions. Is he reforming the tax code or running for office?
Perhaps the only best hope for tax reform is to pass campaign-finance reform that removes the incentive for complicating the tax system to curry favor with contributors. We hope both candidates Dole and Clinton will promise not only to simplify the tax code but to reform campaign finance as well. by CNB