Opinion: Senate must act to restore faith in our tax system after IRS scandal

After completing law school a long time ago, I went back to the
school for three years at night to learn about tax law and receive an LLM in
tax.  There were two things I learned
from this experience that have stuck. 

First, do not do your own taxes. The law is too
complicated. 

{mosads}Second, the essence of the American tax collection system is
that it is to a large degree voluntary. Its success is therefore dependent upon
the people who are paying knowing that the people who are collecting -— the
Internal Revenue Service (IRS) — are independent, apolitical, fair and objective.

This second point is one of the most critical foundation
stones of how our system of revenue collection, and therefore our system of
funding our federal government, works. 

Without it, people will lose confidence that they are being
honestly treated by the tax collectors.  

This will inevitably lead to a culture where instead of
being willing to pay taxes, no matter how onerous they may be, the population
at large will systematically try to avoid paying taxes.  

In a system that depends on voluntary compliance for most of
its collection activity, this shift will be disastrous. Revenues will fall, and
a massive, new autocratic bureaucracy will have to be created to guarantee the
federal government gets the revenues it needs to function.

Today, of course, the threat of the breakdown of the entire
system of revenue collection is very real. More and more cases are coming to
light of the IRS acting in an extremely biased way against certain taxpayers
and groups that hold conservative views. The act of targeting people,
presumably because some in the IRS did not like their politics, is the kind of
previously-unimaginable event that does massive damage to the confidence all
taxpayers must have in tax collectors.

What should be done to fix this problem before it undermines
our nation’s well-being? We run the risk of becoming like some other countries
where the population makes tax avoidance a part of the basic fabric of the
economy. If such a culture arises, our federal government would be dramatically
handicapped in its ability to function.

First, anyone who participated in this violation of trust
should have his or her actions reviewed not as a matter of personnel policy but
as a potential violation of the law.  The
IRS itself should simply shut down for a week or so and have all its members
participate in an intense education program on the issues of honesty and
integrity. This program should be repeated regularly until there is no question
that this is the way the service is to function and that any transgression from
it will not be tolerated.

More important, Congress must lead in investigating this
action. 

Obviously, the House is well down the road on this
path.  But that is not the best way. The
leadership should actually come from the Democratic-led Senate.  

The damage that has been done here is so fundamental to the
entire structure of our national government that it is critical that its
investigation, review and determination of how to correct the problem be done by
the party that technically controls the IRS as part of the administration.  

Also, in the Senate it would be clear that the investigation
is to a large extent bipartisan.  This is
important as the central issue is the need to restore the American people’s
belief that the IRS is not only independent but fair.

America has had a great advantage in having had for years a
tax collection system led by the IRS that was viewed as an honest broker of the
tax laws.  This has allowed our
government to focus on governing not on collecting taxes.   

Of course, many people have not found dealing with the IRS
to be pleasant. But for most people, it has always been viewed as an agency
where, so long as you followed the law and tried to pay what you owed, you were
treated with respect and fairness.   

It is critical that we return to that approach … and soon.

Judd Gregg is a former governor and three-term senator from
New Hampshire who served as chairman and ranking member of the Senate Budget
Committee, and the new CEO of SIFMA, a financial industry lobbying group. He
also is an international adviser to Goldman Sachs.