Tax Code Writing Outsourced to Tax Shelter Designers

You can’t make this stuff up.

The link in the story from Washington Monthly, “‘It’s the Fox Designing the Henhouse’,” points to a New York Times article, “I.R.S. Letting Tax Lawyers Write Rules.”

David Cay Johnston reports today that the IRS is outsourcing its writing of tax rules to the very lawyers and accountants who create tax shelters and exploit loopholes for the superrich:

John D. Graham, the official appointed by President Bush to streamline the federal rule-making process and give private interests a greater voice, said even he was surprised by the I.R.S. plan.

“Whoever’s pen the first draft comes out of has a big advantage,” said Dr. Graham, who ran the Office of Regulatory and Information Affairs for the White House before becoming dean last week of the graduate school at RAND, the nonprofit research organization.

….A single word, sometimes one letter, can change the meaning of a rule: “must” or “may”; “and” versus “or”; “could” or “would.”

….In recent years there has been a quickening pace of moves to outsource the actual work of regulation, hiring contractors to write the rules. Now the I.R.S. is proposing that outside experts do it at no charge, opening up the possibility that some firms providing the draft would be working on behalf of an individual, business or association seeking to plant a favorable nuance in a rule.

What an outrageous thing to say. I’m sure all these guys are doing this work for free merely out of a sense of pro bono altruism and a desire to make sure our tax rules are clear and consistent. I really don’t know where Johnston gets off implying that they might be trying to plant “favorable nuances” that they can later take advantage of.

Anyway, the IRS says this is just a pilot project limited to “technical and noncontroversial issues.” So I’m sure there’s nothing to worry about. And certainly no reason for the Democratic Congress to restore cuts in IRS staffing so that they can once again write their own rules and audit the rich with the same zeal they audit the working poor. Why, that would be tantamount to class warfare, wouldn’t it?

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