# Libertarian Editorials (June 1980) **URL:** **Published:** June 1, 1980 --- “A worker who earned $10,000 in 1970 will earn $20,000 in 1980 if his wages and salary went up over the decade at about the same rate as everyone else’s.” Inflation is one of the tax man’s staunchest allies. For as prices of all sorts, including wages and salaries (the price of human labor) have gone up and up and up, more and more Americans have entered higher and higher income tax brackets. Though their incomes have not been going up as fast as the prices of food, housing and transportation, our “progressive” income tax system has nevertheless been steadily enlarging its cut. A worker who earned $10,000 in 1970 will earn $20,000 in 1980 if his wages and salary went up over the decade at about the same rate as everyone else’s. But since all other prices have gone up faster, the worker whose standard of living ate up every cent of his or her salary in 1970 will have to reduce his standard of living in 1980. (Another option might be the use of credit to live beyond his means, except that President Carter has recently chosen to order sharp cutbacks in the availability of consumer credit— an order which would be understandable if it came from a tyrant who delighted in torture, but which is utterly incomprehensible in the mealy mouth of an elected official who pretends, feebly, to be “fighting inflation.” Is Carter bent on restricting his people’s access to any device which might ease the suffering they were being made to endure by the inflation he had previously loosed upon them?) And on top of all this, the government is demanding a larger percentage of his earnings in the form of income tax. After all, he’s earning twice as much as he was ten years ago, isn’t he? The only beneficiary of inflation is government. Without having to take the political risk of raising the level of taxation, it manages to rake in ever-increasing amounts of revenue. This is one of the principal reasons why so many Americans are suddenly “cheating” on their taxes. The IRS is naturally hesitant to admit that such a problem exists on any large scale. The IRS depends upon voluntary compliance for its existence. And if it revealed how bad the problem has already become—how many Americans are now “cheating” and getting away with it—the system could fail altogether. But every few years the IRS does an in-depth review of 50,000 tax returns to determine the level of this voluntary compliance. In 1967, small proprietors had a compliance rate of about 80 percent. By 1973 it was down to 60 percent. And today, Jerome Kurtz, Commissioner of the IRS, admits that the level is as low as 47 percent for independent contractors. Kurtz claims that the compliance rate for employees is still incredibly high —98 percent—because their wages and salaries are reported for them, and are automatically withheld from their paychecks. Yet there is some concern on the IRS’s part that a growing number of those employees are beginning to claim too many deductions on their 1040 forms—more, perhaps, than they are “rightfully entitled” to. Others, millions of them, are entering the “underground economy” and dealing exclusively in cash, goods and services. No checks, no credit cards, no records. What goes unrecorded can also go unreported. And most Americans who are “cheating” in these ways are getting away with it. Mortimer Caplin, a former head of the IRS during the 1960s, laments what he calls “a serious deterioration in enforcement,” and claims that “the word is spreading that the IRS hardly looks at a lot of returns.” Robert McIn-tyre, head of Ralph Nader’s Tax Reform Group, blatantly states that “anyone who wants to cheat can.” This year only a little more than 2 percent of all returns will be audited. The rate was 5 percent as recently as the early ’60s. Furthermore, the IRS simply can’t keep pace with all the new tax-shelter schemes. Some 200,000 individual returns representing about 18,000 different tax-shelter ideas are now reportedly backed up for scrutiny at IRS offices. And even when the agency finally gets around to auditing those returns—or going after one of the five million Americans who don’t even file one— chances are very good it won’t win its case. A General Accounting Office study found that the IRS is catching only one out of eight non-filers, that many of those caught eventually end up with refunds rather than owing any tax, and that many other cases are dropped because the suspected nonfiler isn’t at his or her last address known by the IRS, even though the individual could easily be traced through relatives or even by looking at a phone book. Then there’s the newest trend among IRS investigators—going after the individual or small proprietor instead of the wealthy professional criminal. In many cases, the agents don’t want to mess with real crooks dealing in illegal income; individuals and mom-and-pop enterprises are much easier prey. Also, it takes nine months from the time the IRS calls a court hearing before the proceeding actually begins. It’s easy to disappear in nine months. Typically, real criminals don’t show— they’ve neatly exited their former addresses or even the country. This has been the scenario in more than 80 percent of all the court hearings the IRS has ordered in the last two years. Barbers, beauticians, secretaries, and the couple who own the health food store have a better record of showing up in court. They’re more compliant. But of course, this bully’s strategy of picking on the easy, defenseless victim is winning the IRS no new friends. One former Assistant Secretary of the Treasury, David Macdonald, believes it’s actually adding to the spread of tax avoidance and tax evasion by convincing people that the IRS is an illegitimate agency, not worthy of their respect. After all, what kind of organization would try to squeeze more money out of inflation-strapped working people while leaving affluent truck hijackers and car thieves alone? The resultant disrespect for the tax collector is making itself felt outside the IRS as well, in a new disdain for the bureaucrats who collect and spend state and municipal income taxes. In California during April and May, Howard Jarvis’s latest expression of his disrespect, Proposition 9, which would cut the California state income tax in half, was the most controversial item—including the candidates for the Republican and Democratic presidential nominations—coming up on the June 3 ballot. The controversy, however, was not really over whether Proposition 9 should pass—almost everyone who pays taxes would love to see them cut— but rather over exactly which concentrations of un-sightly government fat should be eliminated once it had. California politicians, needless to say, were agonizing publicly (with the emphasis on the publicly) over whether the cuts would have to be made in the police departments or the fire departments, or maybe the parks and recreation departments or the departments that fix the streets and keep them clean, or maybe we could close some public libraries. One wonders whether the government officials who are perpetrating this fraud are actually out to punish the impertinent taxpayers who have threatened to impoverish them by cutting back exactly those government services which they do not want cut back. Or are they merely out to spread misinformation and thereby win an election— by convincing the voters that there is no fat in government, that everything is already down to the bare bones, with the possible exception of our budgets for the parks and the museums and the police and fire departments and the people who maintain the streets and, of course, the libraries, always the libraries. But what about the thirty thousand and forty thousand dollar per year bureaucrats—phalanxes of them at a time—who sit shuffling papers so that California’s dozens of tax-supported community colleges will be able to go on offering classes in pottery for welfare mothers? What about the hundreds of thousands of taxpayer dollars which go down the rathole every year in every large city as “matching funds” for some federally conceived and federally peddled welfare boondoggle?—or jobs boondoggle or anti-crime boondoggle or transit boondoggle: pick your boondoggle; where cost and effectiveness are concerned, they’re pretty much interchangeable. What about the millions upon millions of taxpayer dollars which are spent every year to harass marijuana smokers, prostitutes, gamblers, and publishers of “pornographic” books? The only answer such questions receive from the bureaucrats and politicians of California is a stony silence—a silence with a good deal of eye-opening recent history behind it. This history, including an assessment of the effects of Proposition 13 and an analysis of how the “no on 9” scare stories came to be, is the burden of two other contributors to this issue of _LR_, Bruce R. Bartlett and Marshall E. Schwartz. Suffice it to say here that the spirit of _Jarvis II_ is the same as the spirit of the rising national tide of tax avoidance and tax evasion; and such a spirit is precisely what we need to usher in a new chapter in the ongoing tax revolt. –LJN \& JR ## Uncle Snoop In April the census Bureau began the most expensive and complicated count in its 200 year history. Plagued by errors, lawsuits and demands, and worried about public distrust of Big Brotherism, Washington appealed to Madison Avenue, The Boy Scouts of America, television and sports celebrities, hundreds of local ethnic leaders and 682,000 paid enumerators to cajole each and every one of the nation’s 220 million citizens to respond. The 1970 census missed about 7 percent of the population, mostly blacks and other minorities, especially Mexican illegal aliens. Since state, local, and minority leaders rely on numbers to achieve political clout and federal funds, it was in the interest of every group scrambling for dollars to make certain that not a single old wino or struggling alien was ignored by the tally. If the ad campaign fails in its 100 percent goal, we are warned (and with fear of the government at an all-time high it surely will), then Washington will not be able to “fairly” redistribute our wealth, give the correct information to private businesses for use in their direct mail campaigns, or, god forbid, know exactly how many members of its citizenry belong to a particular race or nationality. In an obvious attempt to justify the invasion of privacy inherent in the current census, and thus reassure a public disinclined to believe the government, Vincent P. Barabba, director of the census, says, “The bureau does invade your privacy—everyone does, but only questions relevant to government services are asked. That’s the balance between the right to privacy and the need to know.” For libertarians, of course, the government’s “need to know” is no need at all, but an outrageous and totally unnecessary incur-sion into our lives. And the 50 billion dollars of federal aid that is meant to bribe us into compliance (not to mention the one billion dollars that the census itself costs), would be far better left in the pockets of the populace. While the bureaucrats quarrel over whether or not illegal aliens should be counted, or whether the census might not be done by some more efficient method, there are several much more basic questions that should be answered. For instance, should there be a census at all? If so, why should it be more than a purely voluntary head count? And what is the probability that any information we volunteer will be used against us? It is this last question which has the most immediate interest. While the Bureau assures us that its records are absolutely confidential, there is enough evidence of the unreliability of the government in general, and of the Census Bureau in particular, to worry the Catholic Church, the ACLU, and the average citizen. What protection is afforded by laws which may easily be changed by a quick Congressional vote? The Bureau has admitted that it cross-checks its data (for the sake of accuracy, of course) with that of the IRS, the Social Security Administration, and the various agencies which keep our birth records. In fact, it tried to require Social Security numbers on the census forms this year, but was prevented by protests. The Bureau insists that all these checks are one-way, and no other agency is allowed access to its data. Evidently, some government agencies haven’t been informed: before the forms were even sent out, the suggestion that census information might be used to determine the number of draft resisters in the country was made by the Office of Management and Budget deputy director John White before the Senate Subcommittee on appropriations. Mr. White has since failed to clarify his statement, even though pressured to do so by anti-draft leaders, but it is just this sort of indirect use of census data that has been sanctioned in the past, and can lead to violations of rights, just as the release of individual information can. During World War II, the Census Bureau was asked to release the names and addresses of Japanese-Americans, which, to its credit, it refused to do; this is a fact which the Bureau frequently and proudly points out, failing to add that it was finally pressured into disclosing the locations where there were high concentrations of Japanese residents. Said Japanese were then rounded up, robbed of their land and personal property, and incarcerated in concentration camps. One instance of individual information being relinquished was during World War I, when the ages of draft resisters were released to aid in their prosecution. But, the point must be made that generalized census information may be released without violating the law that supposedly guarantees its confidentiality. And such generalized information may be used quite effectively against nationalities or age groups such as the Iranian students who are in danger of being deported by an irate Senator Hayakawa, the Mexican illegals who are considered criminals because they dare to try and work in this country, or the 18 to 20 year olds who fail to register for the new draft. As has been noted, the Bureau is aware of this public distrust, and is already worried about the 1990 census, which, the _New York Times_ reports, might take one of four possible forms: 1) a “protectionist” census, in which public distrust allowed merely a head count, 2) a “limited inquiry” census, essentially the present type, in which only certain types of questions were allowed, 3) a “free inquiry” census, in which people allowed any sort of question, believing that it would bring social benefits, or 4) a “1984” census, in which material was gathered for the express purpose of repress-ing and controlling people. It should be noted that the main differences between the current system and the “free inquiry” system are that there would be a “merging of data banks” and a “more or less continuous monitoring” of personal data on citizens, and that the difference between type 3 and “1984” is only in the way that the data is used. Already there is talk in Washington of a large, permanent organization and new technology which lends itself very well to repressive uses—electronic devices that record identities by photo-graphing thumbprints, and home televisions which are connected like Orwell’s tele-screens to a centralized statistical agency. A special census panel on future developments states, “By the year 2000, there will be no technological difficulties in obtaining rapidly any information that people are willing to release.” But there’s the rub. How much are we willing to release? We will never know how many households have chosen to resist the 1980 census, because the nature of the protest keeps even its numbers a secret. But only 85 percent of the forms sent out had been returned by late April. And the thousands of homes which were missed entirely and were content to let matters stand that way might, through bureaucratic bungling (of which this count has had an amazing amount), be overlooked entirely by the magnifying glass of Uncle Sam. Donald Ernsberger, of the Society for Individual Liberty, which sponsored anti-census demonstrations across the country, says that in areas in which SIL protested heavily, the return of forms was reduced an average of 20 percent. In Bucks County, Pennsylvania, the Bureau puts the blame for the 60 percent return rate squarely on SIL. And of the 85 percent of the forms which have been dutifully filled out, it is not even to be hoped that all the answers are accurate or truthful. Participants in the underground economy are not likely to reveal on a census form what they would not reveal on a 1040. There have also been reports of prank answers, like listing the dial-a-prayer number as one’s own telephone number. It tends to renew one’s faith in America the Rebellious. Resistance is also receiving support from some unusual, but gratifying quarters. Senator Strom Thurmond has recently introduced legislation to abolish the involuntary census, and Senator George McGovern has said, “There may be a legitimate purpose to be served by questions in the census, but I can think of none that surpass the right of each individual citizen to be secure against government intrusion into his private affairs. Certainly, the decision whether to answer — should be left to the individual.” What is really ironic is that the only “useful” function of the involuntary census may be to monitor the private lives of Americans, since it is not expected to reveal any surprising statistics. Spot sampling techniques have become so sophisticated that all the data necessary to “run” the economy and “solve” the nation’s problems can be, and are, obtained through voluntary and anonymous methods. As for the original, constitutional reason for the census, which was fair Congressional apportionment, we might consider taking the advice of Benjamin Franklin, as reported by Art Hoppe in the March 3 issue of _Inquiry_ magazine, “and progress serially — that is, ‘two,’ ‘three,’ ‘four,’ ‘five,’ etcetera — until \[we\] have enumerated all the residents of that state.” –VV