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Mona Charen

Tax time

HAPPY TAX TIME. Ten days ago, as I opened my thick tax file, I had the panicky sensation that I had lost a huge check written to the Internal Revenue Service. What followed was a frantic series of calls to my bank, the IRS and my husband, in that order. What if I hadn't paid the government? The image of owing thousands of dollars plus interest and fines made my head swim.

At length, I did clear the matter up. I wasn't suffering from early-onset Alzheimer's disease. I was merely experiencing the common anxiety and dread that many Americans have come to expect in the early days of April.

It is a cliche that our tax code is now so complex that even accountants commonly hire others to fill out their returns. (And a Money magazine survey found that fewer than one in four tax preparers could come within $1,000 of the correct tax when asked to calculate a hypothetical family's return.) It's not surprising, when you consider that there are 17,000 pages of IRS laws and regulations.

We know that Americans spend more in federal, state and local taxes (40 percent of income) than they do on food, clothes and housing combined (30 percent of income). But did you know that it costs the economy more than $150 billion per year, according to Heritage Foundation estimates, just to comply with the tax code?

There are a number of tax-reform proposals out there claiming to do away with the IRS altogether. But that's pie in the sky. We are a large, complex society, and we must collect taxes to run the government. The question we should be asking ourselves is this: Do we want to spend $150 billion per year just to purchase complexity?

Since 1986, there have been 6,000 changes in the tax law. The number of forms has increased by 100 since 1984, for a total of 569. The IRS sends out 8 billion pages of forms and instructions each year, consuming roughly 293,760 trees. Yet the IRS could not account for 64 percent of its own budget in 1993! Imagine if the IRS were to audit itself.

If we had a flat tax, the cost of compliance would be reduced almost to zero. That's $150 billion to keep in our own pockets or spend on worthy endeavors like education, defense or medical research. But it is money that would no longer go into the coffers of lawyers and accountants.

There's another group that would suffer if we moved to a flat tax -- politicians on the tax-writing committees of Congress. The average total campaign contributions to members of Congress in 1994 were $550,000. But for members of the tax-writing Ways and Means Committee, the average contributions approached $700,000.

A member of the Franklin Roosevelt administration once told reporter David Brinkley that the greatest thing FDR ever did was to institute tax withholding. Accomplished as a wartime measure, it became permanent and prevented Americans from seeing and feeling the effects of taxation. If Americans paid their taxes the way they pay their phone, electric and credit card bills, they would have more cause to consider whether they were getting value for money. Certainly, they might rethink whether complex depreciation schedules, itemized deductions, credits and other complexities were worth the trouble.

They might even take time to reflect upon the first-ever government-wide audit conducted last year by the General Accounting Office. It found that most government agencies do not keep accurate enough records to pass an audit, and of those that do, billions of dollars annually cannot be accounted for.

The Department of Defense cannot find two utility boats valued at $174,000 each, a floating crane ($468,000), 15 aircraft engines including two F-18 engines valued at $4 million each, and a surface-to-air missile launcher. The Federal Aviation Administration cannot find $198 million in assets, and the Department of Health and Human Services estimates that it paid $23 billion in fraudulent Medicare reimbursements last year. Oh, yes, and the Treasury Department noted $12 billion in "unreconciled transactions."

Translate that however you please, but it certainly doesn't mean that your government is being careful with your hard-earned dollars.