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PROBLEM RAILS AT SOLUTIONS

April 06, 2006

Congressman Donald Manzullo went out of his way yesterday to illustrate why people find Congress contemptible.

IRS Commissioner Everson and Taxpayer Advocate Nina Olsen appeared before Mr. Manzullo's small business committee yesterday to talk about proposals to improve small business reporting. The recent "National Research Project" audits showed that the biggest non-compliance problems are with sole proprietors. One proposal would require withholding on payments to chronically non-compliant small-business taxpayers.

That idea was just too much for Mr. Manzullo:

An often animated committee Chair Donald A. Manzullo, R-Ill., spared no adjectives, accusing a “disgraceful” IRS of “poor scholarship” on a “lousy” study, telling Olson and Everson that the proposals “stink” and are “stupid.”

“The IRS should hang their heads in shame,” he said.

I don't know about the IRS, but Mr. Manzullo sure has no shame. He is the principal author of arguably the worst tax legislation in recent years, the execrable Section 199 deduction. Like his colleagues, he writes a tax law that is byzantine, illogical and impossible to enforce and administer, and then he beats on the luckless people whose job it is to administer his laws.

When he really got rolling, he deftly invented facts to make his point:

He told Everson the odds of an audit were much higher for small businesses than for others and that the tax collectors should spend their time chasing corporate bad actors such as Enron Corp.

"How much did those clowns gyp the American people out of? How many corporations out there are the Enrons?" Manzullo asked.

Actually, the largest corporations get audited at a rate of 44% per year. Schedule C individuals get audited at well under 10% of that rate. And never mind that Enron lost money and actually didn't owe taxes.

I make a living helping small businesses comply with the tax law. All Mr. Manzullo seems to care about is giving my clients' competitors a leg up by making it easier for them to cheat.

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