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The Alternative Minimum Tax (AMT) "was created in 1969 to target 21 -- yes, 21 -- millionaires who had managed to avoid paying any taxes at all." (Wall Street Journal, April 14, 2007). "This year more than three million taxpayers will be hit by the Alternative Minimum Tax on the(ir) 2006 income. But next year (2007) that number could rise to 23 million..." Note: it didn't, only because Congress passed a so-called "patch" to prevent it.

The federal income tax, currently as high as 35% of taxable income, is increased by as much as 11% in state and local income taxes, plus another 6.20% and 1.45% in social security and Medicare taxes, which makes the total tax burden for some taxpayers almost 54%, not including excise, sales and property taxes, along with a host of other taxes, assessments and fees to numerous to mention. Medieval serfs were required to give only one-third of their production to the lord of the manor, and they were considered slaves.

Households in the lowest 20% of income received about $8.21 in federal, state and local government spending for every dollar of taxes paid (in 2004), while those in the top 20% received only 41 cents in benefits. (Tax Foundation Working Paper No. 1, March 2007).

Our tax laws have become so complex and contradictory that no one, not even the most brilliant tax professionals, including IRS experts, fully understand them.

It's worth noting, I think, that when I started practicing public accounting in the early 1960s, the filing deadline was March 15, not April 15, and only one 90-day extension was permitted. Today, the due date for filing is April 15, and it is possible to obtain a six-month extension - to October 15 - primarily because of the increased difficulty of obtaining the necessary information and the complexity of preparing and filing tax returns.

Many societies view taxation as a contest between tax collectors and citizens, with payment or avoiding payment of taxes as the prize. But we are different we are told, because Americans voluntarily, that is, willingly, file tax returns and pay their taxes.

Baloney! If that's true, why do we hear so much about taxes not being paid by people who work or do business in the "underground economy"? Would you file a tax return if you were not afraid of the consequences of not filing?

Putting aside the government's hype and PR initiatives, the reason our income tax system is so successful is FEAR. Fear of being audited, fear of being assessed, fear of tactics employed to collect unpaid taxes, fear of intrusion into our personal affairs, fear of not being able to defend ourselves against the unlimited power of government in general and the IRS in particular.

I believe the IRS has carefully cultivated this image over a period of many years. Who can say that they don't have a sudden, albeit perhaps brief, fearful reaction when they find a letter or notice from the IRS in their mail? I know I do, and I'm a retired CPA. I don't want to hear from them, ever! When I do get some sort of communication from my friendly tax agency (federal or state), I just know it's going to cost me time, money and aggravation. Perhaps you've noticed over the years that around tax time it's common to see a spate of media stories about prosecutions for tax fraud. In my opinion, that's no accident.

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