"an I.R.S. research officer in Washington named John Szilagyi had seen enough random audits to know that some taxpayers were incorrectly claiming dependents for the sake of an exemption. Sometimes it was a genuine mistake (a divorced wife and husband making duplicate claims on their children), and sometimes the claims were comically fraudulent (Szilagyi recalls at least one dependent's name listed as Fluffy, who was quite obviously a pet rather than a child).
Szilagyi decided that the most efficient way to clean up this mess was to simply require taxpayers to list their children's Social Security numbers. 'Initially, there was a lot of resistance to the idea,' says Szilagyi, now 66 and retired to Florida. 'The answer I got was that it was too much like '1984.'' The idea never made its way out of the agency.
A few years later, however, with Congress clamoring for more tax revenue, Szilagyi's idea was dug up, rushed forward and put into law for tax year 1986. When the returns started coming in the following April, Szilagyi recalls, he and his bosses were shocked: seven million dependents had suddenly vanished from the tax rolls, some incalculable combination of real pets and phantom children. Szilagyi's clever twist generated nearly $3 billion in revenues in a single year."
Sunday, April 02, 2006
Bureaucrat to Honor
STEPHEN J. DUBNER and STEVEN D. LEVITT in today's NYTimes Magazine describe a bureaucrat to honor in Filling in the Tax Gap: