Lessening the tax burden

WHY pay taxes? Look at the financial pages! Advertisements assure Americans that taxes can be moderated or eliminated. Here's one from Scudder Managed Municipal Bonds in the Wall Street Journal touting ''High Tax-Free Income 9.28 %.'' Or in the New York Times, from Donald Sheldon & Co. Inc.: ''New Yorkers: Keep Every Penny: Tax Exempt Income With Free Checking.'' They remind us it's that time of year when the dread tryst occurs between Form 1040 and the breadwinner's checkbook.

The income tax has become extraordinarily complicated. There are tax exemptions, some valid, some questionable. In 1981 the Internal Revenue Service audited 217,000 returns for suspicious so-called ''shelter deductions''; this year it is expected to audit 350,000 or more. Many tax shelters are controversial. Some people think they are out of control. The matter will certainly be a major issue in Congress next year and it may well come up in the election. President Reagan has asked the Treasury to have changes ready for next year.

Expenditures the government exempts from taxes are technically called ''tax expenditures''; they embrace interest on home mortgages, social security, depreciation, employer contributions to welfare plans, and so on. There were 50 in 1967; there are 104 in 1982. They add up furiously; they should reach $330 billion this year.

Europeans are surprised at the way Americans calculate and submit their own income tax forms; the travail of the present tax-computing week in the US causes astonishment abroad. Here there is universal understanding of the phrase ''I'm working on my income tax''; also of the relief that comes when arithmetical compilation is finally put into an envelope and dropped in a mail slot. One big difference is that Western European countries have widely adopted a value-added tax (VAT). This is a form of sales tax. It has two striking attractions for politicians: It raises enormous sums and it is invisible. Says Rep. Barber Conable (R) of New York, ''The VAT raises significant amounts of money and hides it in the price structure - a politician's dream.''

Here's how it works: Suppose you are selling bicycles. The tax would be collected from the manufacturer, from the wholesale distributor, and from the retail appliance dealer. Each time something was added to the value of the bicycle an additional tax would be added. The tax collects itself because each group polices the group below in the exchange transaction. It is simple to apply.

Politicians hate to boost income taxes; they are tempted to use sales taxes instead. The public itself is more sympathetic to VAT. Americans will generate in 1984 an economy of around $3.5 trillion, of which consumption will account for $1.6 trillion to $2.6 trillion. If necessities are excused - food, health care, and related essential items - a 10 percent VAT could raise around $200 billion in one year. That's just about the deficit the federal government now faces.

Qualifications and disclaimers must be made at the start. First of all, any transition to a new tax system must come gradually. Then again, a sales tax rests most heavily on the poor. In the interest of ''progressivity,'' the tax chain needs flexibility; there should be exemptions for food and other necessities, some adjustment to make VAT press more heavily on the middle and upper classes. Even a modest 5 percent VAT tax would help reduce the present appalling federal deficit.

Nobody wants higher taxes. But with the successful use of VAT in Western Europe it seems certain to be debated again in Washington. Economist Norman J. Ornstein at the American Enterprise Institute thinks we will have to give VAT a second look. Pressure is building for massive tax change of one sort or another.

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