The Secret Agent, pt 2

The NY Times catches up to Free Will and publishes an op-ed from Harvey Shulman about the IRS rule that infuriated Joe Stack: Our Low-Tech Tax Code

The rationale for passing Section 1706 was that it would recoup tax revenue that the government was losing from self-employed technology workers who were allegedly cheating when they filed. It was also claimed that few of these workers would qualify as self-employed under the common-law test, so the safe haven should be eliminated for them.

Over the past 20 years, there have been several studies dismissing the factual and legal grounds asserted for the rule, and more than 60 senators — from Daniel Patrick Moynihan to Jesse Helms to Ted Kennedy — have sought its repeal.

A Treasury Department study in 1991 also thoroughly undermined the justifications for the law. It found that tax compliance for technology professionals was actually among the highest of all self-employed workers and that Section 1706 probably raised no additional tax revenue and perhaps even resulted in losses, because self-employed workers did not enjoy as many tax-free benefits as employees.

Section 1706 is an example of how Congress enacted a discriminatory law that hurt thousands of technology consultants, their staffing firms and customers. And despite strong bipartisan efforts and unbiased studies supporting that law’s repeal, it remains on the books.