This Week:

Quote of the Week

Nygaard Notes Takes a Week Off

Action on Colombia and Iraq

“A Vast Range of Abuses”

Greetings,

Nygaard Notes is a day early this week, due to some computer weirdness that I hope will be solved shortly.

In Nygaard Notes #71 I wrote about the increasing involvement of the IRS in the hysterical “war on drugs,” which the LA Times characterized as “a major diversion from its traditional emphasis on conventional tax fraud.” I said I would write an article on this subject “in one of the next two issues of the Notes.” That was three weeks ago, but I do finally get around to it this week. And not a moment too soon, as the memory of April 15th, when taxes are on everybody’s mind, is fading fast. I think this timely story illustrates a number of things that go far beyond the workings of the IRS.

Local people may want to check out the next couple of issues of Siren! newspaper, as they will be publishing a two-part introductory series on Social Security by Yours Truly. Pick it up free at your local coffee shop, office building, or wherever.

Nygaard Notes keeps growing, and who knows where it will stop! As always, I welcome the new readers, and hope you will feel free to send along your comments. See you in two weeks,

Nygaard

"Quote" of the Week:

The following quote is from OMBWatch [www.ombwatch.org] talking about the current mania for “paying down the national debt:”

“The choice is not between spending on domestic priorities or preserving Social Security. It is a choice between spending on domestic priorities or paying down the debt. We haven’t begun to debate that choice, because it has been disguised behind a false controversy about saving Social Security.”

Nygaard Notes Takes a Week Off

I’m having problems with my computer and may be replacing it this week. Also, I am so far behind in my clerical work that it’s not even funny. And I am in the middle of a couple of research projects that I don’t seem to be able to find the time to finish. For all of these reasons, there will be no Nygaard Notes next week, June 16th. Nygaard Notes #75 will appear on June 23rd. I’ll miss you all. I will be checking the Nygaard Notes message board on the website, and will still be responding to your letters and postings.

Action on Colombia and Iraq

Here are some encouraging words about action you can take on two of the more urgent foreign policy disasters that are being proposed and/or carried out by the United States Government.

Iraq: The ambitious among you would be well-advised to consider traveling to Washington on June 24-28 to participate in SUMMER LOBBY DAYS to press for an end to the inhuman sanctions that are killing thousands of people in Iraq every month. Sponsored by the EDUCATION for PEACE in IRAQ Center (EPIC), this five- day project includes training on the issues and on how to lobby your elected representatives. Plus you get to commune with fellow activists from around the country, which is always worthwhile. For more information, visit EPIC’s website at www.saveageneration.org.

Greet The President: Closer to home (for Minnesota readers) is a little how-de-do to President Clinton, who will be in downtown Minneapolis THIS WEEKEND doing what he does best: raise money. Local activists - including yours truly - will be there to greet him and tell him “No Military Aid to Colombia, Hands off Iraq, and Stop Attacks on Welfare, Affordable Housing and Living Wage Jobs.” One o’clock PM on Saturday June 10th at the Fine Line Café, 318 First Avenue North in Minneapolis. For info, call or e-mail the Anti-War Committee: 612/872-0944 or tccispes@hotmail.com.

“A Vast Range of Abuses”

On April 25th the Star Tribune (Newspaper of the Twin Cities!) presented us with a wonderful case study that illustrates the interaction between media and power. In Nygaard Notes Number 35 (June 25, 1999) I published a piece called “Reading the Newspaper: A Four-Step Process,” in which I outlined the four steps as follows: 1. Learn the context elsewhere 2. Remember what you have previously read 3. Think about what you are reading, and what you are not reading 4. Synthesize The case study starts with an item published in the Star Trib in the section called “National Digest” (a daily collection of very short news items) on April 25th entitled “Probe Fails to Bear Out IRS Abuses.” Since it’s so short, I publish it in full here: “Investigators for the General Accounting Office (GAO) were unable to substantiate allegations of misconduct and abuse of taxpayers by the Internal Revenue Service that surfaced at Senate hearings two years ago, the agency reported. The GAO said it turned up no evidence of vendettas against taxpayers who appeared at the hearings or of actions taken for personal gain. The report was completed in May [1999, 11 months earlier], and a version with some names blacked out was released under the Freedom of Information Act.”

Step 1: The Context

When it comes to news reporting on the IRS, there are three things that anyone should know about the context in which this issue is covered.

First of all, the United States still has a somewhat progressive income tax system, meaning that in theory rich people pay more taxes than poor people. (Despite their mastery of tax dodges and fraud, rich people actually do pay proportionately more in income taxes than the rest of us regular folk.) This has been true since we began to have our current federal income tax in 1913.

Secondly, the United States has, overall, the lowest taxes of any of the industrialized countries, and taxes on our wealthiest citizens are dramatically lower now than they were 25 years ago.

Third, one of the top items on the agenda of business and the right wing in this country (yes, they are two different groups) is the complete abolition of the income tax, to be replaced by some sort of regressive tax, such as a national sales tax or a “flat tax.” (“Regressive” means that people with less money pay proportionately more in taxes than those with more money.)

A sales tax is regressive because the lower your income is the higher the proportion of your spending goes to buy the stuff that you need to live. Since more of your money goes to buy things (rather than to investments and savings) you pay taxes on more of your money than rich people do. A national sales tax is supported by such prominent conservatives as former presidential candidate Alan Keyes and Senators Richard Lugar and Bill Archer.

A “flat tax” would be regressive because everybody would pay the exact same percentage of tax on their income. This would have two effects: it would dramatically reduce the higher taxes that we currently levy on higher incomes, and it would increase the tax rate for working class and poor people. This plan is supported by the conservative Heritage Foundation and the libertarian Cato Institute, as well as their kindred spirit, Minnesota’s own Senator Rod Grams.

Step 2: Memory

Memory 1: When I read about the GAO report this past April, I remembered back to when I was reading the horror stories told in the U.S. Senate a couple of years ago. On a couple of different occasions (September 1998 and April 1999) the Republican leadership in the Senate held widely-publicized hearings in which disgruntled taxpayers testified about the way the IRS had allegedly abused them. The most spectacular testimony from the hearings were stories by people who owed tens of thousands, in some cases millions, of dollars in taxes. My favorite was Texas oilman W.A. Moncrief, who claimed that he owed the IRS nothing, but paid them $23 million(!) “just to make the I.R.S. go away.”

Memory 2: In an informative article published on December 15, 1999 entitled “Reducing Audits of the Wealthy, I.R.S. Turns Eye on Working Poor,” the New York Times reported a number of changes that the IRS has made or is making in its policies and procedures, changes that are having the effect of “reducing its efforts to find cheating by businesses and high-income individuals, and stepping up investigations into two forms of cheating that are more likely to involve the working poor than the affluent.”

The Times continues “These changes in IRS behavior are partly mandated by specific legislation, and partly the result of IRS attempts to ward off further attacks." As the Times puts it, “these changes all grow out of a series of new tax laws sponsored by the Republicans who control Congress. The most significant of these laws, the I.R.S. Reform and Restructuring Act of 1998, was passed after Senate Finance Committee hearings in which the I.R.S. was described as out of control and routinely abusive of taxpayers. Much of the most explosive testimony has since been discredited and a subsequent General Accounting Office report found no evidence of systematic mistreatment of taxpayers.”

Memory 3: A subsequent Times article reprinted in the Star Trib on April 16th made some important points along these lines. The Times said that “Since 1988, audit rates for the poor have increased by a third...while falling 90 percent for the wealthiest Americans.” This was true, the article states, “even though the General Accounting Office, the investigative arm of Congress, said in 1997 that [corporations and the self-employed] were more likely than the working poor to pay less in taxes than they owed.” The Congressional efforts to reduce the size of “big government” means that “[T]he permanent IRS staff is the same size now as in 1983, even though the total number of tax returns has increased by one- third and the number of complex returns by high-income individuals has grown even more.”

Step 3: Think

While it is difficult to believe that an innocent man actually paid $23 million to the IRS to “make them go away,” there are powerful people who are quite clear that they are on a mission to actually abolish the agency. And they have had some success.

The primary focus of the Reagan administration was to dramatically reduce tax rates for the wealthy. The focus now, as mentioned earlier, is to abolish the income tax altogether. Since that is not politically feasible right now, conservatives have been focusing on reducing the enforcement power of the agency, so that even the smaller percentage of taxes owed by the wealthy are less likely to be paid. As noted, legislation has been passed to carry this process forward.

While the December 1999 report in the New York Times on the consequences of this legislation was very good, in the crucial period during and after the famous Senate hearings leading up to the vote to weaken the IRS enforcement powers the Times played the desired role of whipping up the public sentiment necessary to ensure its passage. Times articles during the period bore headlines such as “Senate Committee Is Told of a Vast Range of Abuses by I.R.S.” and “3 Businessmen Testify of Armed Raids by I.R.S.” A database search of the national media for that period reveals that no attempt to confirm the (now discredited) testimony was made, by the Times or anyone else in the corporate press. Or, if such investigation was done, it was never published.

Step 4: Synthesize

Let’s review the time frame.

1. In September of 1997, and again in April of 1998, the papers are filled with sensational stories about the IRS storming into homes, restaurants, and businesses, harassing businessmen and Catholic priests, and generally behaving as an “uncaring, arrogant agency” that subjected taxpayers to “Kafkaesque experiences” in their zeal to collect taxes. USA Today leads off a story published on the second day of the 1997 hearings as follows: “A poll not long ago showed most Americans would rather get mugged than undergo a tax audit. That's sound reasoning, judging from the testimony of witnesses Wednesday at a Senate hearing into IRS practices. The wounds from a mugging can be less severe.”
2. Later in 1998 Congress passes the above-mentioned law which had the effect of reducing the ability of the IRS to collect taxes from wealthy individuals and corporations and redirecting its remaining powers to disproportionately target poor people and small businesses.
3. In May of 1999 the GAO completes an investigation that fails to confirm any of the “explosive” testimony.
4. In December of 1999 the corporate media report that, gee whiz, lots of rich people are getting away with major tax fraud, and the IRS seems unable to do anything about it.
5. In April 2000 the corporate media report that the GAO did a report 11 months ago that gave the lie to everything they reported on two years ago.

If we had an independent media in this country, perhaps they would have investigated some of these fantastic claims at the time rather than waiting two years for the GAO to complete their report. Even the threat of such reporting might give pause to the propagandists in Congress, but apparently they feel there is no need to worry. And rightly so. The people whom we expect to function as “journalists” in this country often act more like stenographers. As in this case, they do no more than record and publish whatever words and pictures their powerful sources place in front of them. This is called “objective” reporting.