Even if the Flat Tax Proposal Were Adopted, the IRS Would Be Needed, DePaul Professors Say

This week's three-day Senate hearing into alleged abuses by the Internal Revenue Service has renewed debate on the role of the IRS under current law and whether the agency would be necessary at all if a flat tax proposal were adopted.

Some argue that a flat tax system would be fairer and simpler than the current tax system, and that it might allow for the elimination of the IRS altogether. Not so, according to David J. Roberts and Mark J. Sullivan, associate professors of accountancy at DePaul University who have studied the flat tax and other tax reform proposals.

"The flat tax bill appears simple because the bill ignores all the complex issues and details necessary to administer a tax system in a large, sophisticated economy," Roberts said. "If it were adopted, Congress, the IRS or some other agency will have to develop rules, which, in turn, will create new arguments about how the law is to be applied." On the other hand, Roberts said that if the rules aren't detailed, there will be "whole new gray areas and opportunities for taxpayer abuses created."

Moreover, much as the flat tax would shift the burden of paying taxes away from the wealthiest individuals and onto other groups of taxpayers, and it is also likely to shift the focus of the government's audit efforts to those other taxpayers, the professors said. "That is probably not the kind of change that most Americans are hoping for," Sullivan said.

(Note to Reporters: Roberts and Sullivan are available for interviews. Roberts can be reached at (312) 362-8388; Sullivan can be reached at (312) 362-8306.)