Addressing Imperfections in the Tax System: Procedural or Substantive Reform?

Books about tax administration tend to fall into one of two broad categories: those that paint the Internal Revenue Service (“IRS”) as an agency peopled by corrupt, out-of-control bureaucrats who take pleasure in seeing innocent taxpayers suffer, and those that tell readers how to structure their affairs to minimize the risk of incurring an IRS employee’s wrath during a tax audit. Perfectly Legal, the full title of which communicates David Cay Johnston’s intent to focus on the tax system, does neither of those things. Instead, it is a book much like The Great American Tax Dodge, which explained the many varieties of tax fraud; the difficulties the IRS faces in pursuing high income individuals; the influence the affluent have on lawmaking; and Congress’s success in tying the hands of the IRS. In its strongest chapters, Perfectly Legal examines the inner workings of the IRS and describes the agency in a very different way from that represented in the popular press. While other authors may decry the threat of overzealous IRS agents, Johnston laments the inability of IRS employees to pursue known acts of noncompliance because of resource limitations and political pressures. While other authors may complain about the complexity of the Internal Revenue Code, leaving readers with the impression that the IRS is responsible for its enactment, Johnston lays blame for this complexity squarely where it belongs – with Congress and executive branch policymakers.