The Wall Street Journal and other sources today covered an IRS study that profiled noncompliance among taxpayers. The tax gap, measuring the difference between collections and the tax potentially imposed on taxable income, is estimated to be over $300 billion – enough to make quite a dent in projected budget deficits. Some of this is from people who don’t report income or who overstate deductions, and some is from people who report but don’t pay their taxes.
Honest taxpayers (and I count myself among them) should favor enhanced efforts to collect unpaid assessments and appropriate efforts to detect tax cheating. Tax scoffs who avoid paying their share make the rest of us look like chumps, and they undermine support for the system. Though some conservatives welcome anything that undermines support for an income tax system, such a position is contrary to the rule of law. We are admonished in Scripture to render unto Caesar the things that are Caesar’s, and in this country we get to vote on what Caesar gets to take from us. So take your opinions to the ballot box and support candidates who support your approach to tax reform, but pay your taxes.
This study reminded me of a Reuters news story published a few weeks ago, which discussed an unconventional approach to tax collection. In the city of Hyderabad, India, citizens with delinquent taxes were subjected to the spectacle of drummers who played outside their homes until the taxes were settled. (And you thought you had a problem with noisy neighbors!) The story reports that the new method has been successful in clearing 18 percent of the city’s delinquent tax backlog. It probably also employed a few musicians in the city. (They could probably do this more efficiently with a boom box, no?)
This method suggests an interesting cultural feature of that community where shaming the tax scoff is apparently effective. I’m not sure this would work very well in our country. In part, our tastes in music are too diverse, and some of our neighbors might simply think we were having a party and be miffed that they weren’t invited. So, I trust that our government pals who read this blog won’t follow their lead as they think about ways to address the tax gap. You might start worrying, however, if questions begin to appear on tax forms like: “What kind of music do you hate?”