Dukakis Boasts National Revenue Collection Plan

While all the Democratic presidential candidates have made the need for an improved economy and reducing the budget deficit key points in their campaign, Gov. Michael S. Dukakis is taking an alternative tack.

Unlike the five other declared candidates, Dukakis argues that the best way to reduce the deficit would be to institute a tougher tax collection plan. The Bay State governor is proposing a multi-faceted approach which includes temporary amnesty for taxpayers and harsher penalties for tax delinquents.

But several economists and some of Dukakis's challengers have charged that this plan, which is modelled on the Massachusetts tax enforcement program, would not be a panacea for the deficit problems.

The Revenue Enforcement and Protection (REAP) program, a brainstorm of Dukakis's former Commissioner of Revenue Ira A. Jackson '70, was developed in 1983 to alleviate the $300 million deficit the state was facing.

And now the governor is proposing a plan a similar plan to help combat the nation's $163 billion deficit.

"REAP was a very radical proposal, a comprehensive far-reaching plan that was likely to alienate everyone," said Jackson, former associate dean of the Kennedy School. "Political prognosticators said the plan had a zero political possibilities, but it passed."

REAP

REAP was designed to collect taxes from evaders and delinquent residents and raise future tax compliance rates. The program offered residents a three-month amnesty to pay the state taxes without being penalized, increased the sentences imposed on long-term tax evasion, implemented the services of private collection agancies, set a fixed interest rate on overdue taxes and improved customer services.

Since its inception in 1983, the program has collected $1.3 billion through improving enforcement alone, netted $1.7 billion merely by increasing voluntary compliance, expanded the number of audits made each year and improved tax forms and service to the public.

But while tax collection in Massachusetts has improved, Dukakis has said the delinquency among tax payers nation-wide is alarming. The governor said the federal government is currently owed $110 billion in unpaid taxes and the figure will rise to more than $300 billion in three years.

Not Fair

In a speech at the Law School last month, Dukakis said, "Tax compliance in this country is down to 81 percent. That's not legal, it's dumb fiscal policy and it's just not fair."

Dukakis predicts that implementing the REAP program nation-wide will yield more than $7 billion a year and $35 billion in the next five years.

The Dorgan Task Force, a 10-member committee convened by North Dakota Congressman Byran L. Dorgan last spring to examine the merits of revenue enforcement plans, endorsed many of the policies Dukakis suggested in a report released in May.

But the report disagreed with the governor's proposal to establish limited amnesty for tax delinquents. And some economists have found other faults with Dukakis's plan.

James M. Verdier, a lecturer in public policy at the Kennedy School, said the plan was a "terrific success story" in Massachusetts, but added he was not certain it could be enforced nationally. He pointed to the fact that the federal IRS is currently better structured tax collection program than the one in Massachusetts in 1983, saying it is questionable "whether you can turn the enforcement screws any tighter."

Though Verdier agreed that Dukakis's national plan will increase revenue, he said the actual implementation will require several years to train new employees and raise a larger budget to pay for staffers and improved IRS facilities.

Democratic hopeful Richard Gephardt of Missouri also supports an improved IRS, but he said he doubts Dukakis's "pie in the sky enforcement scheme" as an answer to the deficit.

"[For Dukakis] to suggest it is an adequate solution to the budget deficit is his way of avoiding to be specific on the issues," Gephardt said at Harvard last week. "Seven billion dollars a year in revenue is not an answer to a $163 billion deficit."