- May 15, 2007
Mind the Tax Gap
A presidential election looms and the deficit remains large, so as predictably as spring follows winter, members of Congress are looking for ways to close the tax gap. Watch out, IRS!
The Internal Revenue Service estimated the 2001 gap, the difference between what the tax agency figures American citizens and companies owe and what gets collected, at $345 billion.
Subtracting the $55 billion the IRS estimated it ultimately would recover leaves a net gap of $290 billion, enough to ding the deficit, estimated at $244 trillion by the White House.
Whenever legislators start getting worked up about the tax gap, they call for increased enforcement and collection. But when the IRS responds, things can get ugly. So the tax agency would be well advised to learn from history and not repeat its painful past.
In 1994, what was then the General Accounting Office, along with Congress, pressed then-IRS commissioner Margaret Milner Richardson to close the growing gap. She announced that compliance had become an IRS priority.
The IRS used statistical measures to gauge field office productivity and to set goals for tax enforcement. Regional commissioners and district directors were held personally accountable for improving collections to close the gap, which had grown from $76 billion in 1981 to $127 billion by 1992. Use of statistics spurred hot competition among regions and districts to move up in the nationwide rankings by improving collections and enforcement numbers such as property seizures and tax liens.
But both an agency policy and the 1988 Taxpayer Bill of Rights prohibited the use of enforcement results to evaluate collections employees or to create goals. Congress and the IRS itself long have been understandably cautious about setting goals and quotas for tax collectors.
In September 1997, Sen. William Roth, R-Del., hauled IRS officials before the Senate Finance Committee for three days of testimony featuring anguished citizens' tales of despair, ruin and even suicide induced by overenthusiastic tax collectors.
After the hearings, the IRS' acting commissioner at the time, Michael Dolan, was forced to apologize for abuses, shut down the compliance effort, end virtually all use of collection statistics and then fall on his sword. Dolan, a career IRS executive, resigned to make way for the senior team of new commissioner Charles Rossotti. Twelve IRS managers, many of whom had won accolades earlier for using statistics to spur collections, received official reprimands.
Soldiers aren't crazy about the Army's recent efforts to outfit them with new clothes and gear. The new Army combat uniform, developed since operations in Iraq began in 2003, replaces the woodland camouflage battle dress uniform as well as the desert combat uniform.
The Land Warrior System is a set of equipment designed to turn soldiers into sensors-nodes in the all-encompassing information network envisioned as the Future Combat Systems program. The new uniform is half nylon, half cotton, has a wrinkle-free coating, and all patches attach and pockets close with Velcro. It also has a new "universal" camouflage pattern designed for concealment in urban, woodland and desert environments.
In early April, Eric Coulson, an Army officer commanding an engineer company in Iraq, sent Military.com a critique of the new uniform. Coulson's terse assessment: "Considering all the testing the uniform went through, it is surprising such a mediocre product finally emerged."
The Velcro patches are removed and lost too easily, he writes, and the cargo pocket closures don't hold up to anything large or heavy. The fabric is less resilient than the old 100 percent cotton. "In more than 10 years of active and reserve service, I never once had a uniform 'malfunction,' " Coulson writes. "Twice in my tour in Iraq I have had the crotch in my pants rip out."
And to top it off, the camouflage pattern isn't very attractive and "shows every last bit of dirt the soldier's been exposed to."
The Program Executive Office Soldier, which designs, develops and fields everything Army troops wear and carry, responded that the Velcro has been improved, the crotch redesigned to double its strength, a fire-resistant uniform will begin being delivered in July and work continues on a stain-release finish for the duds. Meanwhile, after 15 years in development, the Land Warrior System is on the rocks. It includes a helmet-mounted flip-down eye piece that displays an area map with friendly forces marked in blue.
Also in and on the helmet, earphones and a microphone for a radio emitting encrypted signals for communications among units. A wireless network transmitter on the body armor does the broadcasting up to a kilometer away. Soldiers also carry a battery, GPS transponder and 400 MHz computer, and a controller on their chest to operate it all.
Troopers' M-4 rifles carry digital sights, enabling soldiers to "see" anywhere the guns are aimed. The package has been trimmed from $85,000 per soldier to $30,000 and from 40 pounds to 16, but field tests aren't producing raves, according to a report in the May 2007 issue of Popular Mechanics. Writer Noah Shachtman tried out the gear along with a unit training at Fort Lewis, Wash. "As Alpha Company kicks in doors, rounds up terror suspects and peals off automatic fire in deafening six-shot bursts, not one of the soldiers bothers to check his radio or look into the eyepiece to find his buddies on electronic maps," he writes. Shachtman found the gun sight slow to focus and the map lagging real time by a minute.
The Army's new budget eliminated funding for the system.