Bernard Axelrad Scholarship Fund

The anguished cries from many different quarters when the Treasury Department unveiled its tax overhaul proposal is probably the best testimonial that it would make a 'good' tax law. From the broad spectrum of complaints it would appear that the ox was being gored in many places.

It was a highly laudable act of courage and responsibility for this administration to bring forth such a commendable proposal. Not only does it plug loopholes and simplify tax preparation, but it is quite revolutionary in its elimination of many special interests deductions.

While the tax reform proposal has an unlikely provenance, emanating as it does from Treasury Secretary Donald Regan, the darling of Wall Street, it would result in making our tax laws more equitable and understandable. This is no small accomplishment; the IRS has stated that Americans failed to pay taxes on $250 billion of income in 1983, partly because the tax code is unfair and also because it is too complicated to follow or enforce.

How distressing it is to hear the self-serving hue and cry from so many different quarters.

Such lofty institutions as colleges and charities have complained that the tax proposal would reduce the deductibility of contributions to them and result in curtailed offerings.

Unions have grumbled at including some benefits such as health-care that are currently tax-exempt.

These lamentations and the displeasure of ordinary people who stand to lose some cherished deduction is understandable. But, the tax proposal would double the amount of the personal exemption from $1000 to $2000, and substantially decrease the tax bracket from the present rates for all taxpayers. The Treasury Department estimates that 4-out-of-5 taxpayers would pay either the same amount or less in taxes than they do presently. Only 1-in-10 would face a tax increase of more than 1% of income, and these are the ones who take exceptionally large deductions and exclusions.

Doesn't that tell you something?

The fact of the matter is this: such esoteric deductions as accelerated depreciation and investment tax credits, a host of exclusive business and tax shelter allowances, and the special favorable treatment of capital gains would be swept away! This would permit lower taxes for the majority of taxpayers who do not lay claim to such special benefits, and that's as it should be.

I have never appreciated why a $25,000 profit on the sale of inherited stock should be taxed at less than half the rate at which a factory worker pays tax on $25,000 earned for a year of arduous labor.

I've heard all the arguments for it, but believe me, they are specious and invalid. The only reason for such inequity is simply that the Internal Revenue Code allows it, and it was put there by effective lobbying of its adherents.

Although special interests would have us believe otherwise, tax shelters and deductions and exclusions are not sacred cows. No one has a vested right to them. They are granted by the tax code and stem solely from legislative fiat.

Why aren't more of us questioning the rationale behind the entrenched system of deductions that now exists?

Once deductions have found their way into the tax code, they are almost impossible to dislodge, even after they outlive their usefulness. Those who benefit from them do not give in readily.

The current treasury proposal is our best chance, ever, to change our convoluted, inefficient and unfair tax system.

Our present tax system is such that more than half of 250 major profitable corporations paid no federal income taxes at all in at least one of the last 3 years. What's fair about that!

It's a tax system where purchasing fancy Lear jets and Porsches gives investment tax credits and substantial write-off benefits to business without increasing productivity and efficiency.

It's a tax system where your neighbor may pay half the tax you do on the same income simply because he latched on to some questionable tax shelter. It's a tax system where the average worker subject to withholding ends up subsidizing the more affluent.

It's a tax system so diversive of talent and energy that the nation's brightest students graduating from business and law schools devote their careers to manipulating our tax laws to achieve favorable results on behalf of wealthy clients. With minimum effort they could find more estimable, and equally lucrative, fields to hone their egregious talents.

Every tax loophole reduces the amount of revenue available to the treasury. The national debt now stands at $1.6 trillion ($1,600,000,000,000), on which the government pays interest at the rate of $12 billion a month.

We, the people, are paying the price of all the deductions, exclusions and tax benefits that infest our present system. The rest of us must make up with our tax dollars the government's tax largesse dispensed to others.

Unfortunately, most Americans appear either apathetic or confused by the proposed tax revisions and simplifications. If people only realized how beneficial it really is for them, they would come forth in vigorous support. We have a once-in-more-than-a lifetime opportunity to change the philosophical basis of our tax structure. Not only would the proposed tax revisions make for a simpler, fairer and more comprehensible tax structure, they would revolutionize the existing tax system. Instead of adding more and more tax deductions and exclusions, the thrust would be to curtail and eliminate the remaining deductions and inequities.

It would go a long way toward removing the Internal Revenue Code as a vehicle for promoting various social, economic and political objectives, and return it where it belongs: a means of raising revenue.

While all of us may lose some of our pet deductions, remember that 80% us will gain from the new tax proposals.

The key to the passage of any such tax bill is President Reagan. Only his charismatic leadership and unique ability to communicate with the American people can lead us to the promised land. He can seize the opportunity to soar above the politics of the moment, free himself of hidebound dogmatic shackles, and stamp his personal imprimatur on tax revision. All this must be done before the entrenched forces of the status quo regroup and assault the battlements in earnest.

Just as Richard Nixon is most praised for his actions in opening up relations with mainland China, so can Ronald Reagan join the Pantheon of Presidential Greats with this accomplishment.

So, it is to be hoped that my readers, as well as the populace at large, will get behind the treasury proposal. The chances are that 95% of the people who read this column would pay lower taxes under the proposed changes.

I haven't even tried to factor in the savings in cost of preparing tax returns and the wear and tear on our psyches in trying to figure out how many of the myriad deductions apply to us under the present system.

Let's happily contemplate the professional fees we'd save and all the headache tablets we wouldn't ingest.