August 1998
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IRS whistleblower Shelley Davis: Reforms won't repair tax agency
The most secretive U.S. government agency is not the CIA or the FBI, but the Internal Revenue Service -- "because we let them get away with it," author and former IRS historian Shelley Davis told delegates at the LP Convention in an Independence Day speech.
"Nearly every American, when asked, could name a current or former director of the CIA or FBI," she said. "Now try to name an IRS commissioner. Go to the library and you'll find shelves of books on the CIA and FBI -- but only one or two volumes on the IRS."
However, Davis has done her best to crack the wall of secrecy surrounding the federal government's most feared agency.
Following her eye-opening seven-year stint at the IRS, Davis wrote Unbridled Power: Inside the Secret Culture of the IRS, a blistering expose that revealed, among other things, the existence of an IRS "enemies list," cases of documents being shredded, and how the IRS wasted $4 billion on a computer system that didn't work.
After her book was published, Davis said journalists continually ask her: Aren't you afraid [of the IRS]?
"I know members of Congress are afraid, but I'm sorry, I refuse to be afraid of my own government," she said to a thunderous wave of applause.
However, her book -- and the recent furor in Congress and the media about IRS abuses -- won't be enough to lead to meaningful changes at the tax agency, she predicted.
"The [511-page] tax reform bill will be passed and signed and we'll go back to sleep," she said.
The reason that real reform is nowhere in sight, she said, boils down to two words: Withholding and refunds.
"Eighty percent of American taxpayers are employees subject to withholding and 80% of them get refunds," she said. "In short, they think, wrongly, that they have a vested interest in the status quo. People love the refund check, the present the government gives them every spring. With a flat tax or a national sales tax, you'd be taking away their trip to Disney World, their new couch, the down-payment on a new car. We need to convince people this is insane [and] stupid."
Furthermore, any reforms that are imposed on the IRS will be merely cosmetic, she argued.
"Not one single, solitary head has rolled out of the IRS -- despite Congressional hearings, reams of bad press, a blue-ribbon commission, and countless horror stories," she noted. "That sends a message that there's no need to change."
A few weeks before the LP convention, she said, she ran into the current IRS commissioner at a hearing in Washington and asked him why no one had been fired, despite the numerous ethical and legal violations that had been uncovered.
"It's not that simple," she said he mumbled.
Her response: "It is that simple."
