TOUGH TIMES: An old tax collector tells why they cheat
For 12 years I collected taxes for the federal government. I was a field officer, knocking on doors in every kind of neighborhood, from gated subdivision to dilapidated trailer park. I collected millions of dollars, some of it voluntarily repaid to the Treasury, some after a bit of friendly persuasion, and some only after I took something. A car. A boat. A house.
There was no profile of your typical delinquent taxpayer in the thousands of cases I worked. White, black, rich, poor, young, old, sick, healthy . . . the only things they had in common were that they owed money and I was the person dispatched to collect it.
For most, their predicament was a particular misery; it made them feel ashamed. Sometimes they expressed their chagrin with threats, dodges, bizarre rationalizations and childish excuses, but underneath was the corrosive mix of embarrassment and fear. The names of the penalties themselves reinforced the first component ("failure-to-file," "failure-to-pay"). My very presence created the second.
In our country, owing taxes in and of itself is not criminal. If it were, we would be building a lot more federal prisons. Willfully avoiding them is a crime.
In every case, I was required to ask: "Why didn't you pay?" This was, in IRS parlance, addressing root-cause. The most common answer, "I didn't have the money," was the least acceptable. The service's assumption was that everyone had the money; the taxpayer simply had chosen to do something else with it.
If the answer was a bit vaguer, as in "I didn't know I had to file/pay" or "It was a stupid oversight. I didn't realize I had to pay tax on that," a red flag went up. These red flags were called badges of fraud.
Another badge we were trained to look for was the educational background and lifestyle of the taxpayer. Did he live high-on-the-hog? Was he highly educated? Did he fail to report income year after year, despite his obvious wealth, level of education and professional accomplishment? The IRS loves to prosecute these kinds of high-profile cases. It sends a message to the ordinary folk who owe the vast majority of income tax.
I am not collecting taxes anymore, but if I were I suspect that more than a few taxpayers - long-haul truckers, struggling mom-and-pops, itinerant construction workers, hair dressers, carpenters - would point out, with righteous indignation, the offensiveness of my demands in light of my boss' (the secretary of the Treasury) tax problems and the problems of others nominated for the president's cabinet, at the apex of our meritocracy.
How could I defend what to my mind is indefensible? The old revenue officer in me finds the excuse of Treasury Secretary Timothy Geithner particularly laughable. You didn't realize your income from a foreign entity was taxable? You, a denizen of the financial world, head of the Federal Reserve Board in New York? If his case were mine, I would have immediately referred it to the Criminal Investigation Division.
Successful prosecution of prominent cheats like Geithner no doubt encourages compliance among ordinary taxpayers. But studies show that fear of jail isn't what motivates most of us to pay our taxes. It's a sense of civic duty and the belief that everyone should pay a fair share.
The anger I'd be hearing now in the field is not over Geithner's deficient sense of civic duty - I think people can allow for that. It's about an impression they have that some people can flout the law without suffering any consequences, adding insult to injury by offering ludicrous excuses.
The root-cause in Geithner's case - as with Tom Daschle, resigned nominee for Health and Human Services secretary ("My failure to recognize that the use of a car was income and not a gift from a good friend was a mistake") and Nancy Killefer ("my personal tax issue of D.C. unemployment tax could be used to create ... distraction and delay"), who had hoped to be chief performance officer - is not ignorance or failure to exercise due diligence. It is arrogance, a channeling of the enduring spirit of Leona Helmsley, who had the temerity to voice the truth nearly all the taxpayers I encountered knew intuitively: There are two sets of rules. One set for the rulers and another for the rest of us.
The message that a new day has dawned upon the political landscape has been muddled by the appointment of a taxpayer who clearly knew he owed and clearly decided the rules under which the rest of us are held accountable do not apply to him.
