THE GREEDY HAND

Taxation is the function of government that everyone loves to hate. And here the Wall Street Journal’s editorialist on tax matters adds to the hallowed and estimable tradition of grousing about it. Shlaes (Germany: The Empire Within, 1991) doesn’t assail the Internal Revenue Service. She realizes instead that the IRS only does its assigned job. Rather, it’s the legislators and lobbyists who create the tax monster that scares us all. The author despairs that the power to tax is bandied about in the name of sporadic public policy. Her text demonstrates the tangled result by revisiting the histories of representative tax law changes. Wage withholding, instituted during WWII, was just an insidious trap, she says. She rightly describes Social Security as a Ponzi scheme. Shlaes also thinks the estate tax stinks. The well-publicized marriage penalty is no laughing matter, either, she contends. Fueled by outrage, her exegesis of some parts of the Internal Revenue Code tends to become a tad muddled. (For example, though legally separated taxpayers may, under certain circumstances, file as separate taxpayers, there is simply no tax law concept of “married, but unmarried for tax purposes.”) She decries change for rules she approves of (like the treatment of sales of residences). Then she calls for more change. Not confining herself to federal tax law, she complains about local school taxes and activist courts. And indeed, Shlaes offers a clutch of cures: Simplify and reduce taxes, forget about progressive taxation, and privatize Social Security. Such targeted fixes may have a nice ring, but they surely would bring unintended and problematic results if actually enacted. Cleverly crafted, exasperated invective on a popular theme, well timed for tax season and the cruelest month. (Author tour)