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It's time to think about that federal tax bite

WASHINGTON - Here's an upcoming news story: The feds will reveal that they have pounced on a big tax cheat. Why now? Because April 15 is the deadline for filing individual tax returns. And the feds think a good way to heighten voluntary compliance among filers is to offer timely examples of the bad things that happen to people when they don't comply. Most Americans are on a pay-as-you-go basis and remain unaffected.

Surveys show that people are grateful to the Internal Revenue Service for the $100-billion or so the agency refunds to taxpayers around this time of year in over-withheld funds. Some people view their Treasury checks as a bonus of sorts - even though the IRS is merely handing back their own money, usually without interest.

The prevailing wisdom here is that taxes are too low and need to be raised to narrow the deficit. But you can bet your withheld "bonus" that the feds would regard such a plan as an inducement for a tax revolt.

The federal budget numbers released each year surely amount to an important story. But it is also a bit of a yawner. Perhaps the story would elicit more interest if people focused on how much the feds tax the average American family and how these dollars are spent.

The Tax Foundation reports that a typical moderate-income family - two workers with two children and combined weekly wages of $865 - will pay nearly $250 a week in federal levies during 1990. That covers both the family's direct federal taxes as well as such indirect taxes as Social Security and excise taxes on items ranging from gas to beer.

Since the military claims 24 cents out of every tax dollar, that typical family will pay $59.03 weekly to keep Uncle Sam in missiles, combat boots and the like. Now there's a "peace dividend" I can relate to.

Buried deep in the administration's 1991 budget book are tens of thousands of seemingly less significant items that will wind up costing you only a few pennies a day.

For instance, on page A-242, the Bush budgeteers report that they want to raise annual administrative outlays for the IRS from $75,955,000 to $120,234,000. At the same time, the feds want to lower IRS spending for processing returns and taxpayer assistance from $1,844,938,000 to $1,449,741,000. You don't need an accounting degree to figure out the impact that such a spending shift would have on the bureaucracy.

Possibly, after learning what the IRS wants to spend on itself, you might be tempted to append a neat marginal note on your voluntary return. Perhaps a memo to President Bush recalling how he had lambasted his Democratic opponent in 1988 for daring to suggest that hiring more IRS agents would snare more tax cheats.

My advice is don't do it: The feds could determine that you have filed a "frivolous return."

Some years ago, a Montana taxpayer named Donna Todd wrote a brief comment under her return that said: "Signed involuntarily under penalty of statutory punishment." The IRS fined her $500. The Ninth Circuit Court of Appeals rejected the argument that the penalty violated her First Amendment rights of free speech. It upheld the fine - plus interest.

Todd's problems with the IRS pale compared to those of Leona Helmsley, the New York hotel queen convicted of criminal tax fraud. But when it comes to taxes, every little bit hurts.

Cox News Service