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From: cramer@kontron.UUCP (Clayton Cramer)
Newsgroups: net.taxes,net.invest
Subject: Re: IRS has budget of $160 Million???
Message-ID: <886@kontron.UUCP>
Date: Mon, 7-Jul-86 14:43:12 EDT
Article-I.D.: kontron.886
Posted: Mon Jul  7 14:43:12 1986
Date-Received: Tue, 8-Jul-86 05:35:25 EDT
References: <2eacf085.2a75@apollo.uucp>
Organization: Kontron Electronics, Mt. View, CA
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Xref: watmath net.taxes:1219 net.invest:1562

>     It's taking me a while to decipher your comment, but what I THINK
>     you are saying is that tax reform will be make tax collection so much 
>     cheaper that it will eliminate the deficit!  Is this the sort of
>     logic that people use when they vote for Ronald Reagan?  Why don't

1. Tax reform can make tax collection considerably cheaper -- maybe not
enough to eliminate the deficit, but certainly to make some progress.
First of all, the current tax system is so complicated that it is not
practical to check every tax return -- the most they can do is check the
arithmetic.  Reduce the number of special tax credits and deductions,
and it's practical to audit more tax returns because it takes less time
to check the supporting paperwork BECAUSE THERE'S LESS PAPERWORK.

2. If marginal tax rates decline, the incentive to engage in questionable
tax avoidance schemes (legal and illegal) declines.  Why take a chance on
getting audited if you only save $500?  If you save $1400, it makes the
risk of being caught and paying penalties more acceptable. 

3. Similarly true for people not reporting income -- reducing the 
marginal tax rate reduces the advantage of not reporting income.  Also,
spreading the brackets farther apart (or even taxing all income at the
same rate) takes away reason to take questionable deductions so that 
you can get below a particular tax rate.  (I know: I spent an hour once
adding up the state utility tax on my electricity bills to get seven
dollars more deduction to drop below a taxable income level to save
more than $7 in taxes.)

>     we just adopt a "free-market" tax collection system, and count on
>     the honesty of the american people?  Think of how cheap it would
>     be to collect everybody's money if it were completely voluntary!
> 
>     Tom Gross
>     Apollo Computer, Inc.   
>     Chelmsford, MA

It would save a lot of money all right -- we would find out how much
government people really want -- and I assure you it would be a lot
less.  (Of course, special interest groups would suffer horribly without
access to the public purse.)

Clayton E. Cramer