In a well known old fable a scorpion asks a frog to take him across a river. At first, the frog is afraid that he will be stung if he gives him a ride on his back. But, the scorpion assures him that he would not sting him since they both would die if he stung the frog as they crossed the river. So the frog agrees.
Half way across the river the scorpion stings the frog.
"You fool!" cried the frog, "Now we will both die! Why did you do that?"
The scorpion shrugged, smiled, and said, "I could not help myself. I am a scorpion. It is my nature."
Then they both sank into the river and died.
Two years ago (almost to the day) I wrote a post on the NFIB's decision not to push for true tax reform while there seemed to be some promise due to the election of 2004. Rather than fight what they saw as an uphill battle, they, along with other major small business advocacy groups, decided to go along with the President's commission and focus their efforts on a much less ambitious agenda of "simplification" and tax reductions. It was thought that such a move would win bipartisan support in Congress.
Now there is news from last week that the Democrats in Congress view small business owners, especially sole proprietorships, as their best target to help reduce the federal deficit. They are focused on the "tax gap," which is the difference between what is estimated should be paid in taxes and what is actually collected.
From the New York Times:
"The tax gap is the logical place to go," said Representative Rahm Emanuel, Democrat of Illinois and chairman of the House Democratic Caucus. "It's also the fair thing to do. When you have a number as high as $300 billion in unreported and uncollected income taxes, that puts a burden on everybody."....The I.R.S. estimated that it lost $109 billion on unreported business income, almost all of that from sole proprietors, like painters, plumbers, dry cleaners, florists, limousine drivers and restaurant owners.
The problem is not with florists and painters -- it is with the system. But sadly, when we had an opening to fundamentally change the tax system in this country, we chose not to pursue bold action.
We shouldn't be surprised by Congress's call for the IRS to increase tax enforcement. After all -- it is their nature.
