COLUMN ONE : April Rite May Get Very Taxing : President plans to use levies as carrots and sticks to manipulate behavior and promote fairness. But with that, accountants say, will come new layers of complexity and confusion.

So you just paid your taxes. You’re like millions of other Americans, wondering why this annual Rite of April has to be so agonizing.

You don’t like it one bit. It costs you money. It makes you cynical.

Well, guess what: It’s likely to get worse, especially for high-income taxpayers, entrepreneurs, investors and many retirees, the experts say.

President Clinton’s plans for the Byzantine, 1,200-plus section U.S. tax code stand to make the much-maligned system even more complicated and create a flurry of business for accountants and lawyers who specialize in trimming tax burdens for the wealthy.

More than at any time since the mid-1980s, government officials want a tax system that goes far beyond collecting income for the cash-starved Treasury. The White House would again make tax considerations a more important factor in people’s business and investment decisions.

Clinton would use taxes to promote certain kinds of behavior (investment), penalize other kinds (smoking and drinking), favor some forms of income (stock gains) and businesses (small) while shifting burdens (hiking rates for the rich).

No wonder that taxes could get even more bewildering.

“You carve out a niche for people who earn under a certain amount and for people who earn over a certain amount, for people who invest in this and for people who invest in that,” says Roy E. Cordato, a tax specialist in Washington.

“Every time you do that, it requires a new form. Every time you do it, you add another piece of complexity to the process.”

Many argue there is nothing wrong in politicians exploiting the tax code as a way to manipulate behavior or promote fairness and other goals. Indeed, it would be surprising if a President didn’t seize every possible tool to further his objectives.

From Franklin D. Roosevelt, who introduced the Social Security tax, to George Bush, who campaigned in vain to cut the levy on capital gains, every modern President has had a personal agenda on taxes.

Still, White House critics accuse Clinton of using tax proposals to make political points at the expense of easy targets, such as millionaire business executives, and for pushing backdoor strategies to increase the tax burden on the middle class.

Take the proposed energy tax, based on something known as British thermal unit of energy, a gauge understood by few Americans.

Details aren’t final, but energy producers are likely to face higher taxes, which then would be passed along to customers in the form of higher prices. Thus consumer prices would go up, but the public wouldn’t actually see the tax that pushed them up.

“What’s a British thermal unit? Long underwear?” asks Robert S. McIntyre, director of Citizens for Tax Justice in Washington. “I think they picked the BTU tax because it’s the most unintelligible to people.”

Administration tax gnomes are tinkering with other levies that come in careful camouflage. Just this week, White House officials signaled renewed interest in a national value-added tax. Similar to a sales tax, it could be charged to business, which then would raise prices for consumers.

“You’re not going to know how much of the price increase is the tax and how much is inflation,” says Andre P. Fogarasi, a managing director of the Arthur Andersen accounting firm in Washington. “The government likes any tax they can put on that’s hidden.”

Actually, the government made a big attempt in the mid-1980s to clean up the tax code, with modest success. The 1986 reforms, pushed by Sen. Bill Bradley (D-N.J.) and endorsed by President Ronald Reagan and other Republicans, failed to simplify the daunting task of filing a tax return.

But they broke ground in making taxes a more neutral factor in the economy. Billions of dollars in tax loopholes for real estate and other investments were tossed out, deductions for the affluent were restricted and the number of income tax brackets was slashed from 14 to five.

The theory was that everyone would be better off if consumers, investors and executives put their money where it made sense--not simply to play games with the Internal Revenue Service.

“People took money out of real estate shelters and put it back into productive investment,” recalls McIntyre. “It didn’t solve every problem in the tax code, but it solved a majority of the economic distortions.”

Clinton is holding the line on deductions, restricting some even further, such as the tax break for business meals and entertainment.

In key ways, however, he has rejected the philosophy that taxes should be only a clean-and-simple means of collecting income for the government. Rather, he sees taxes as a carrot and a stick to accomplish other ends and nudge people to behave in particular ways.

Consider Clinton’s proposal to reimpose an investment tax credit. The goal is economic: to spark a burst of productive business investment, which the government would underwrite at a cost of $29 billion in lost revenue. And officials see hard-hit regions, such as Southern California, benefiting strongly.

“The space industry and high technology that you have so much of in California will be particularly interested in investment tax credits and permanent extension of research and development tax credits,” Treasury Secretary Lloyd Bentsen told the Senate Budget Committee earlier this year, adding: “Those hit home.”

But in the arcane world of tax planning, the view is more jaded. Experts recall that a previous investment tax credit--tossed out in 1986--triggered a wondrous array of machinations.

Taxpayers dueled with the IRS over the eligibility of air-conditioning systems, carpeting and even elevators. (Stationary structures, such as permanent parts of a building, weren’t eligible for the credit.) On tax forms, walls became known as “movable partitions.”

These days, foreseeing a new round of legal cost and controversy, business lobbyists have told the White House they don’t even want a new investment tax credit.

“Nobody knows how to write the law, because of the highly sophisticated financing techniques today,” said Arthur Andersen’s Fogarasi. “And even if they write the law, and a company takes the tax credit, the IRS is going to come and debate with them.”

And that’s just one proposal. Individuals, particularly the more affluent, could be affected by tax changes in other ways.

Higher-income retirees, who currently pay taxes on 50% of their Social Security benefits, could face a hike to 85% under Clinton. The $135,000 cap on income subject to a 1.45% Medicare tax for wage earners may be lifted altogether.

The more affluent a person is, meanwhile, the greater the reward for maneuvering cleverly around the tax code.

High-income taxpayers (starting with single people earning $115,000 and couples earning $140,000) would face income tax hikes to 36% from the current 31% rate; those earning over $250,000 would pay 39.6%.

Yet the tax on capital gains, affecting investments such as real estate, stocks and bonds, may be a substantially lower 28%.

For an army of tax advisers, the yawning gap between tax rates for capital gains and the higher rates for the wealthy could open up a whole new frontier of devising ways to characterize income as capital gains.

The White House, of course, has other motivations than enriching tax accountants. Hiking taxes for the rich is consistent with Clinton’s campaign theme that the wealthy escaped paying their fair share in the 1980s--and now it’s pay-back time.

Big tax hikes for alcohol and tobacco, now under consideration, reflect social priorities as well as revenue needs. The justification: Smoking and drinking are unhealthy for individuals and costly to society; taxes can serve as a deterrent and also a source of money.

Similarly, the BTU energy tax, which could cost many middle-class families $200 a year, according to the Treasury Department, has justifications that go far beyond raising cash.

Higher energy prices promote conservation, energy independence and a clean environment, the reasoning goes. The proposed tax is even structured in a way to charge more for oil than other energy sources.

Then, of course, there’s the matter of politics. A Clinton proposal, which could make it costlier for corporations to pay executives more than $1 million a year, is a populist blow against 1980s’-style corporate greed. Better yet, it would hit a tiny constituency, one that presumably includes few Clinton voters.

A vastly larger constituency of lower-income voters did support Clinton, however, and the White House wants to offer them a benefit. It would take the form of expanding the earned income tax credit, a provision that eases tax burdens on low-wage working households.

As one step toward a larger overhaul of welfare, Clinton would reward work by expanding the credit, which currently goes to almost 14 million families that earn less than $22,370 a year.

Only one problem: It’s complicated. The credit has the dubious distinction of causing more errors than any other income tax provision, according to the General Accounting Office. A large if unknown number of qualified taxpayers don’t even take it.

Clinton proposes simplifying the credit, by tossing out a couple of the more confusing provisions involving children and health care. But some tax veterans, who applaud the goal of fairness, aren’t holding their breath that the changes will be easy to follow.

“The more they try to make the tax system fairer,” Philip J. Holthouse, a tax adviser in West Los Angeles, said, “the more complicated it gets.”