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Few taxpayers are informers—but most of them resent the fact that the other fellow so often seems to get away with something. They do not grumble so much about the size of their own tax as about loopholes or advantages open to others: the foreign tax shelters, the oil-depletion allowance, the movie star or businessman who settles his tax bill for less than he owes, the man who can afford high-priced accountants to get around taxes even if he does not evade them. The Internal Revenue Service believes that the whole tax structure needs a complete overhaul, and the Kennedy Administration has promised to present a tax-reform bill to Congress—one that promises to set off a mighty brouhaha. Meanwhile, the IRS, like the taxpayer himself, is bound to the existing tax rules—and loopholes.
Forms & Reforms. Nonetheless, Big Brother seems confident that the days of the finagler and the fudger are numbered.
Under Commissioner Caplin, a former University of Virginia law professor who taught both Bobby and Ted Kennedy, the Government is toughening up its stand on tax loopholes and tax offenders. Personally, Caplin believes that the Government could garner at least as much money—and make the majority of taxpayers happier—by reducing tax rates to 10% in the lowest bracket and to 65% in the highest bracket while getting rid of most exemptions, and lowering oil-depletion allowances. To make present tax rules more intelligible, the IRS has cut form 1040—the long form used by more than a quarter of the nation's taxpayers—from four pages to two, laid it out in more logical order and simplified it in 19 places. Last summer Caplin took personal charge of a committee rewriting tax forms, tried out the phraseology of newly written forms on his wife Ruth. An English professor was called in to help redraft the forms in simple English—a task that has been at least partly successful.
Caplin believes that much more than the tax form needs change. He has introduced something called a "quality audit," which he hopes will raise a lot more money. Revenue agents used to go over large numbers of returns, generally stopped auditing when they found one violation or error. But the IRS believes that some taxpayers, particularly businessmen, throw in an easy-to-spot violation as bait to get the audit over with while hiding the really important evasion.
In the quality audit, such returns get a thorough going-over by agents under no pressure to run up numbers.
Psychological Advantage. Beyond that, the IRS has in the works a system calculated to scare the daylights out of every taxpayer in the land. It is called ADP—for automatic data processing—and its heart will be an electronic computer system headquartered at the National Computer Center at Martinsburg, W. Va.