N.E. Editorial Rdp.

The Internal Revenue Service is worried: Too many Americans are underreporting their income, either deliberately or by making mistakes on their tax returns.

The net result, the IRS reports, is that there is a "tax gap" between what's owed and what's actually paid that amounts to as much as 16 percent of federal taxes going uncollected.

The last survey of the problem is a full decade old, and estimates from 2001 say $345 billion was going uncollected then. Today, the amount could be between $410 billion and $500 billion, and the IRS is planning another study within a year or so.

Naturally, the agency wants more money for "compliance," a word that means hiring more agents and auditors to crack down on scofflaws who may be inadvertently underreporting income or deliberately keeping it under the table or in offshore accounts.

But IRS requests for another $240 million for "tax enforcement initiatives" that could raise five times that amount in revenue encounter resistance in Congress, where efforts to trim federal spending, even if it yields a gain to government, remain popular.

The IRS says that the real problem isn't in the returns filed by normal wage earners, who typically get paid by their employers and have most of their income listed on W-2 forms.

Instead, it is the self-employed and those who get paid in cash who are the most likely to conceal income, paying only 54 percent of the taxes they owe overall, the IRS says. But while fraud is a crime that should be pursued, the other part of the problem - perhaps the largest part - is the incredible complexity of the U.S. tax code.

Very few ordinary Americans do their own taxes anymore, instead hiring professionals for the burdensome duty. And with thousands of pages of rules and laws, the code itself - expanded yearly by politicians offering exemptions and subsidies for favored groups - is nearly incomprehensible.

The obvious conclusion is that compliance - and revenues - would be boosted significantly if the code were simplified and made more comprehensible. A tax code in plain English may seem impossible, but we won't know it can't be done unless we try.

The Waterbury (Conn.) Republican American, July 8, 2011

Maybe Sen. Joseph Lieberman, I-Conn. felt people weren't paying attention to him as he enters his last year and a half of Senate service. Maybe Sen. Tom Coburn, R-Okla., was looking for a new project, having apparently won his quest to diminish or eliminate ethanol subsidies and tariff protections. Whatever their motives, they've launched a Laurel and Hardy act of sorts, merging their liberal and conservative sensibilities in an attempt to jump-start Medicare reform.

Medicare, like Social Security, is toxic ground for would-be reformers. So it has been for the Lieberman-Coburn team, who have felt the lash of Democratic and Republican power brokers in Congress. "Democrats reacted with criticism of the proposal," The Associated Press reported June 29. "Republicans betrayed no sign of support either."

The centerpiece of their scheme is an increase in the eligibility age for Medicare recipients from 65 to 67. They also would increase monthly premiums paid by seniors and would even dare to dabble in means-testing of Medicare services -- charging "better-off seniors ... more money for Medicare Part A, which covers hospital care." Finally, they would manipulate deductibles in a manner they believe would improve the program's financial health.

There's really nothing wrong with increasing costs borne by wealthy seniors. Defenders of the status quo point out all seniors, rich, middle-income and poor, spent their working years paying for a specific level of service; they view the prospect of pulling back some of these benefits, or charging more for them because current workers can't bear the program's burgeoning costs, as tantamount to intergenerational theft. But that's like demanding a civilization-destroying asteroid be redirected from a major city to the Australian outback. It can't be done, and even if it could, the asteroid would still wreak global destruction -- as Medicare is doing in its milieu in the federal budget.

To a great degree, Sens. Coburn and Lieberman seem to be trying to spread the sacrifice. In addition to wealthy seniors, employers and current workers would bear much of the pain. For example, increasing the eligibility age to 67 would keep in the workforce many aging Americans who otherwise would retire. It's true Medicare's fiscal condition would benefit from their absence from the line of entitlement-seeking seniors. Because these workers are generally less healthy and more prone to serious injury and illness than younger people, they'll cost more to insure. And all workers will have to pick up the tab.

But of greater concern are the unintended consequences attending a policy that would induce millions of Americans to continue working into their late 60s rather than retiring at 65. What would this mean in terms of workplace productivity and opportunity for younger workers? Nobody has given it much thought.

Entitlement reform really won't take off in earnest until the political class and the American public recognize nobody is "entitled" to the benefits all of us thought we'd been paying for all these years, any more than victims of Ponzi schemes are "entitled" to the earnings promised by the scammers. For Medicare, Social Security and other entitlement programs are Ponzi schemes in their own right -- and it's not as if Americans weren't warned decades ago.