December 30, 2001

Tax dodgers cheat honest payers by anticipating tax amnesty

The N.J. Assembly Appropriations Committee has proposed New Jersey's third tax amnesty in less then 15 years.  Tax amnesty allows those capable of paying their taxes, interest and penalties to pay only the tax, without interest and penalties.  In 1986, New Jersey offered its "one and only" tax amnesty.  In 1996, New Jersey offered its "last" tax amnesty.  Each was coupled with a promise of greater enforcement of those who cheat each of us.

Quite simply, a third tax amnesty is a bad idea.  As a certified public accountant and a tax professional, I have come into contact with taxpayers who have been planning since the last amnesty in 1996 on the amnesty now proposed.  They are figuring out how to beat the system while the majority of us continue to support New Jersey's government through our tax dollars.

Also, amnesty is not necessary.  New Jersey's Division of Taxation is already using installment agreements for those who need time to pay and closing agreements to maximize tax collections for those who are unable to pay.  I view such closing agreements as means-tested amnesty.  Collect what you can from people and then let them live their lives.  I believe these programs should continue and, possibly, be expanded.

The true test of political leaders is whether they can resist establishing bad policy in order to quickly bring in some dollars.  The long-term effect of a third tax amnesty will be to reduce the public's confidence in the tax system, which will lead to reduced tax collections going forward.  The state already has the tools to increase tax collections without increasing tax rates or providing amnesty.  For example, the state abandoned successful programs targeted at businesses to collect use tax.  They have also proved that they can collect from cash businesses (e.g. liquor stores) through the use of various techniques.  And they have not yet become aggressive with repeat violators of our employment tax laws -- those who refuse to withhold taxes from employees.

Paying tax is the price of living in a civilized society with the freedoms we enjoy.  I am willing to pay my fair share.  I am willing to subsidize those unable to pay.  However, I am not willing to subsidize those waiting for the next amnesty, those able to pay who choose not to pay.

I urge everyone to contact their legislators (find their names at www.njleg.state.nj.us/html/members.htm) and urge them to oppose any bill on tax amnesty.

E. Martin Davidoff

Dayton