Bread & circuses.

THE day before Reps. Dick Armey (R., Tex.) and Billy Tauzin (R., La.) were due to debate each other on tax reform before the Bakersfield Business Conference, their host received a letter from a local IRS official declaring the forum inappropriate. The letter's recipient commented succinctly, "It's scary."

A few weeks earlier, seven current and former IRS employees had provided dramatic evidence of their own informed fearfulness when they testified before William Roth's Senate Finance Committee from behind screens with their voices distorted -- like witnesses against the mob.

Her own familiarity with the current system led former IRS Commissioner Shirley Jackson to conclude, "We have reached the point where further patchwork will only compound the problem. It is time to repeal the Internal Revenue Code and start over." Her predecessor, Fred Goldberg, calls the current tax system "grotesquely burdensome and monstrous."

In reaction to the Bakersfield incident Dick Armey said, "This has strengthened my resolve to scrap the current tax code and replace it with a flat tax." And so he and Tauzin have continued to travel the country debating the comparative merits of a flat tax and a national sales tax. A NATIONAL REVIEW editorial last issue took the same tack: it recommended capitalizing on the public outrage over IRS abuses by moving quickly to establish a tax-reform commission.

But conservatives risk undermining the whole project of tax reform by failing to prepare the ground. If they advance tax-reform proposals prematurely, they will lose the opportunity to use the IRS as a stark symbol of the failure of big government.

Americans are generally aware that the IRS is the best demonstration going of the dangers of unchecked bureaucratic power. But there is little evidence of a national consensus that tax reform is the remedy for its abuses. Republicans themselves don't enjoy a consensus on how this reform could best be accomplished. It was Steve Forbes's GOP rivals last year who were the fiercest opponents of his flat-tax proposal. And as with the balanced budget, this is an issue the Democrats could steal by endorsing the goal of "tax simplification."

In three days of testimony before the Roth Committee a handful of aggrieved taxpayers were finally able to tell lawmakers about their nightmarish ordeals at the hands of arrogant IRS agents and managers. Their stories were compelling and widely publicized; within a week the committee had received similar complaints from two thousand others. There is clearly no shortage of aggrieved taxpayers. Many more of them should be heard from, in order to counter the suggestion that abuses are anomalies, easily corrected by more diligent oversight.

Two years ago, Grace-Marie Arnett served as executive director of the Kemp Commission -- officially, the National Commission on Economic Growth and Tax Reform -- which examined the current system and developed principles for tax reform. Miss Arnett's experiences on that commission and as senior policy advisor to Steve Forbes in 1996 convinced her that tax reformers haven't yet made politically feasible the kind of reform that is needed. As far as the public record is concerned, only four taxpayers have told short stories about the IRS. Miss Arnett recommends, "Let's make it a thousand-page novel."

Miss Arnett points out that every solution has problems of its own. Hence, "unless people are angry and informed enough they are unable to make the hard choices reform demands." Only when there is agreement on broad principles like fairness, neutrality, simplicity, and visibility should specific proposals be outlined. During 1995 and 1996 she learned that "'We must eliminate the IRS' is a sure applause line; 'We need a flat tax' is not."

THE experience of Rep. Bill Paxon (R., N.Y.) with promoting tax reform tells him too that the ground must be prepared before complex reforms can take root. In the mid Eighties, as a state legislator, Paxon was the lonely sponsor of a bill to eliminate New York's tax system and piggyback on the federal system instead. He recalls that the merits of his reform needed a lengthy explanation, which was easily overcome by a 30-second soundbite.

Rep. Paxon is concerned that Republicans "not get too caught up in what our solution might be before we have built a case that there is a problem." He would like to see the hearings on IRS abuses duplicated next year in the hope that widespread attention would launch "a great national debate on what a new system should look like." To underscore his commitment to tax reform, Paxon is sponsoring a bill that would sunset the tax code on December 31, 2000.

Some Senate Republicans have expressed interest in holding field hearings on IRS abuses and the complexity of the code, and House members are being encouraged to host town-hall meetings during the winter recess.

Paxon sees detailed evidence of the abusiveness of the IRS and the incomprehensibility of the code as important not just because of the potential for tax reform, but also to make the IRS the symbol of big government. "The IRS is the best issue for Republicans to highlight the problem with the size and intrusiveness of government," he says. In the past three years Republicans have mostly abandoned their traditional objections to big government and have concentrated on eliminating the deficit. But if Republicans heed Paxon's advice and recommit themselves to smaller government, they could put themselves in a position to weaken seriously the IRS and other agencies that threaten our property rights and personal freedoms.