Tax Evaders Cheat Deprived Schools

This column was written by John C. Fager.

Currently, two-thirds of American schoolchildren are not being prepared to go to and graduate from college. One major cause is the lack of qualified teachers; all 50 states recently failed to meet the requirement of the No Child Left Behind (NCLB) law that every core class has a "highly qualified" teacher. Lack of funding is the main cause, but it is also worth noting that the financial gap between wealthy and poor schools is widening. It may be that not every student should graduate from college, but the opportunity should not depend on his or her parents' income and ZIP code.

Massive new funding is the place to start; it is needed to address the inequities in our separate and unequal public school systems. We have one system that is well-funded and generally serves the upper middle class and the rich who don't send their children to private schools, and there's the other system that often inadequately serves the rest of the families and their children.

It is time for Washington to put up some serious money that matches its new dominant role in setting education policy. Washington can no longer resist by saying schools are a local and state responsibility because when Bush and Congress enacted NCLB, they made the U.S. Department of Education the de facto National Board of Education.

With this federal assumption of power, the federal government should no longer be supplying only 8.2 percent (around $45 billion) of the $555 billion the country spends on K-12 education. It should be providing a full third, and the money should go to schools that serve families with incomes in the bottom two-thirds of our society, whose children are being left behind.

So in a time of huge deficits, where can this new funding be found? The money could be raised without increasing taxes if Bush and Congress ended their "cut and cheat" tax policies. Citizens know that there have been trillion-dollar tax cuts for the super-rich, but many are not aware that we have a huge and growing problem with cheating on taxes and other noncompliance — the so-called tax gap that conservatively amounts to $345 billion in lost revenue a year.

The Republicans are vulnerable on the tax cheating issue because the problem is huge and has grown worse on their watch — if you can call it that — and their policies seem to be encouraging the criminal evasion of the tax laws. What else would you call it when the tax laws have grown more complex and, at the same time, the ranks of IRS auditors have been slashed. Dr. Mark Mazor, director of research analysis and statistics at the IRS, testified at a Senate Finance Committee hearing on July 26 about "very low audit rates by historical standards." And just three days earlier, The New York Times reported that the IRS will cut almost half of the lawyers who audit large estates of the super-rich. It's as though there's a crime wave in a city and the mayor and city council have responded by firing police.

And last February even the Republican chair of the Finance Committee, Sen. Chuck Grassley, showed his frustration. "It's easy for politicians to stand on the soap box and criticize the tax gap," he said. "But I find it's pretty lonely when I need people to join me and get their hands dirty and try to solve these problems." Sen. Max Baucus said about the next ten years, "The Administration is proposing a $3.5 billion solution to a $3.5 trillion problem." He concluded, "It's time for a comprehensive plan to go after scofflaws and tax cheats."

It should be noted in fairness that Congress has done more than hold hearings and "coddle scofflaws and tax cheats." Congress did order the IRS to mount an extensive auditing campaign against the working poor who were legitimately claiming refunds under the Earned Income Tax Credit (EITC). Congress provided the IRS with $875 million to go after people with a median adjusted gross income of $13,000.

The IRS's national taxpayer advocate, Nina Olson, studied this enforcement action. "The IRS is doing little to address the largest component of the tax gap — the cash economy," she said. "Meanwhile, the IRS is expending significant resources on a criminal investigation program that probably freezes over 300,000 refunds each year, classifies taxpayers as 'criminals' without providing them an opportunity to produce exculpatory evidence ... and causes financial hardship for tens of thousands of taxpayers whose claims are legitimate."

So the money is there to massively increase the federal contribution to education if Congress and President Bush would get off the backs of the working poor and go after the real "scofflaws and tax cheats." The money could be used to train, hire and retain a "highly qualified teacher" in every classroom, reduce class size, build and modernize schools to solve widespread overcrowding and wire them for the information age, provide quality early childhood education for every child, fund special education, etc. That would be the beginning of truly leaving no child behind.

By John C. Fager
Reprinted with permission from The Nation