Be Kind to Bureaucrats

 

These days, the two nastiest things you can call somebody are not “thief” and “murderer”, but “politician” and “bureaucrat.”  “Bureaucracy” has become a synonym for delay, obfuscation, and obsession with procedural detail at the expense of substantial justice.  Virtually anyone who works for a governmental agency–except perhaps a police officer or a firefighter–is vulnerable to charges of being a bureaucrat.  A few astute observers have even noticed that private business and industry have bureacracies, some of them more intricate than anything ever invented by a government in the U.S. 

 

Most of us do not even realize where the idea of bureaucracy came from, what it was meant to accomplish, and, perhaps most important, what the alternatives to it may be.  It all started with the government of the German state of Prussia in the eighteenth century, which originated the idea of government agencies whose purpose was  to get the governmental job done, whatever it might be–rather than to make a particular person richer and more powerful. The Prussians developed the idea of setting standards for the governmental job, so that anyone (inside or outside the agency) could tell when it had been done properly.  They originated the revolutionary idea that such an agency was supposed to do the job the same way for anyone who requested it and was entitled to it, regardless of whether the individual government worker liked the requester, and regardless of whom the requester had voted for or otherwise supported.  The Prussians first invented the notion that a governmental agency must not only do its job, but be able to prove that they had done so—also known as documentation, accountability, or red tape.  And they invented the idea of civil service–hiring people based on objective testing for merit and aptitude, and guaranteeing them continued employment so long as they served honestly and competently, regardless of which politicians might be running the government. 

 

Most people who complain about “waste, fraud, and abuse” at the hands of “bureaucrats” are actually calling our attention to governmental employees who have failed at being bureaucrats,  They have given worse service to some patrons than to others, or failed to give any patron the service required by the applicable regulations, or lost track of a case because of poor documentation. 

 

Other complaints about “bureaucracy” come from a dislike of the ideas behind it.  Some people, for instance, think no employee can be trusted to give competent and honest service except under the constant threat of arbitrary firing.  Job security of any kind, they think, is bad for the employer, even when the employer is the taxpayer.  Others favor patronage because they believe that government workers should respond immediately to any change in political administration–or resign in favor of the new administration’s flunkies–even if this makes long-range planning of governmental programs impossible. 

 

And some of those who complain about bureaucracy are complaining because they believe they personally should be getting better service from a governmental agency than its ordinary patrons.  Most of us, at heart, really want two systems of governmental service–one for ourselves and our friends, and one for everybody else.  We object to bureaucracy precisely because it treats all of us alike.

 

But the real alternative to bureaucracy is government by corruption, patronage, cronyism, guesswork, or intimidation; government which owes nothing to those who pay for it–not even a receipt for taxes.   Of course bureaucracies can be corrupted, or filled by incompetents.  Generally that happens in societies where corruption or incompetence are endemic everywhere–not just in governmental service–and would show up in any system of governmental service. And generally, the cure for a flawed bureaucracy is not the abolition of bureaucracy, but the creation of a better bureaucracy. 

 

Jane Grey

Tax Simplification and Over-Simplification

 

Americans have no patience for complexities.  Americans hate taxes, not so much because they think they’re paying too much (though they do–and they aren’t, compared to citizens of industrialized nations), but because they hate the 1040 long form and the Schedule C and the other auxiliary forms, and were even sufficiently unhappy with the 1040 X (short form) to force IRS to come out with the postcard-sized 1040 EZ.

 

Lately, several of the people I correspond with on various computer bulletin boards have been asking things like “Why should we have to file returns at all? Why don’t they just take out the withholding all year, calculated so that everybody comes out exactly even?”  In point of fact, that is the whole idea behind the withholding system–to make everything come out exactly even.  The need for filing a return–and its accompanying complexities–arise out of two different problems.  One, which has always been us, is that we have decided we want to make certain kinds of expenses deductible, either for the sake of fairness (like medical expenses or casualty losses) or to encourage certain kinds of behavior we have decided are desirable (like buying homes, contributing to charity, and saving for retirement.)  Since not everybody has these expenses or engages in these activities, or spends equal amounts on doing so, people have to file returns to claim those deductions.  It’s easy to simplify the system, if we tax all income, including medical expenses, casualty losses, home mortgage  interest, etc., at the same rate.  But the average taxpayer might lose money in the process, at least in a bad year.

 

And the other side of the problem is that an increasing number of taxpayers are getting some or all of their income, not from a single employer who regularly withholds taxes and sends them on to Uncle, but from a multitude of private clients, as independent contractors or consultants.  That trend is likely to get a lot worse before it gets any better. It may never get better, if corporate employers have their way.  In another ten years, we may all be independent contractors. Trying to require every one of the contractor’s private clients–anyone who pays the kid next door to mow the lawn or babysit, anybody who gets his house painted or his car repaired–to deduct taxes and do the paperwork necessary to send them to Uncle on the contractor’s behalf–would merely shift the complexity from the employee to the employer, while turning virtually everybody into an employer.

 

If the complexophobes have their way, presumably the next federal income tax return form (the 1040 BS, for “Bumper Sticker”, which is what it will be printed on) will be entirely blank. The IRS will fill it in with the figures they consider appropriate. Letting the guy with the biggest gun have things his way is the simplest system there is, but rarely is that simplicity enough to compensate us for what he will then be free to take away.

 

Bureaucratic complexity, in short, is almost always the result of two opposing forces–the demand of some powerful entity for money or power over the individual, and the individual’s wish to have that power exerted fairly and/or at minimal cost to the individual.  The complexities of the tax code mostly have to do with reasons we think people should not have to pay taxes on income earned or expended in certain ways–charitable contributions, for instance, or child care.  A simple tax code would just take 20% (or whatever) of everything, including the change in the beggar’s cup. We have decided, as a society, that fairness is more important than simplicity.  Now, for some reason, we have lost sight of the reason why.  Let’s just let the guy with the biggest gun take what he wants, so long as we don’t have to do any simple arithmetic.

 

But, says the local chapter of the Timothy McVeigh Fan Club, who says the government has to be the guy with the biggest gun?  Who says government should get a gun–or our taxes–at all?  They don’t have to, of course.  But if we get rid of them, there are plenty of other people, with far bigger guns than we have, anyway, out there, equally eager to take our money and a lot less interested than the government in providing any kind of goods or services in return.  And they’ll be the first to say, as thugs have said for thousands of years, “Don’t make things complicated. Just give me everything I want.” No deductions, no exemptions.  Just 100% taxation.

 

(Remember the old story about the man who threw his buddy into the lake, after a disagreement over the rules of poker?  The buddy came up, gasping for air, and his pal hit him on the head with a board.   The buddy sank, came up, got hit again, sank, and so on for about five or six go-arounds before he finally drowned.  His pal told the police later “He shore was a fool to keep coming up.”)

 

(Remember the sexist dictionary that defines the difference between seduction and rape as depending on how much effort the woman is willing to expend to postpone the inevitable?)

 

Everybody’s proposing alternatives to the income tax.  Dick Armey is proposing a flat tax, by which he means a simple flat percentage of income, applied to all income from all taxpayers, with no deductions.  Bill Archer (R. Tx) is talking about eliminating income taxes altogether and catching us at the other end, with a consumption tax. 

 

Americans hate all taxes.  After all, the only reason we are the U.S. of A. is that we rebelled against taxation without representation.  We have since discovered we don’t much like taxation with representation either.  According to the Lutheran Brotherhood Insurance Company’s recent study, Americans actually hate sales and real estate taxes even more than federal income taxes–but we’re not too fond of any of them.

 

Rep. Archer’s consumption tax is a fancy name for a sales tax. (The taxes in honor of which the American Revolution was fought were consumption taxes and what we now call user fees.) It is also, by the way, the main revenue-raising method used by the government of the USSR–remember them?  The very model of a successful economy every American would love to imitate?

 

Personally, I think all those guys are barking up the wrong tree.  The simplest, fairest kind of tax we could possibly have isn’t a flat percentage tax–after all, most Americans these days can’t do percentages any more. It’s a flat amount tax.  The first $6,000 (or whatever) of every American’s gross income from any source. No deductions, no percentages.  Most of us still know how to subtract.  The same six grand from the ex-steelworker on the corner selling papers, and from his billionaire ex-boss in the suburbs.  What could be fairer?

 

Oh, yeah.  You want to know what happens to people who don’t make six grand a year, or make just barely that much.  And what about children who aren’t old enough to make any money?  Don’t bother me with that stuff.  Those are complexities.  Ignore them and they’ll go away–that’s the spirit that made this country great. 

 

Or let’s try another simple solution.  The Gingrichites seem to be taking the position that the way to end poverty is to end all government programs that make poverty endurable.  Why not take this position one step further, and pass a law that, after a stated date, anybody with an income too low to pay the flat amount tax will be taken out and shot?  Now we’ve not only simplified the tax system, we’ve turned it into a screening system to get rid of the deadwood.  That should be a great incentive to get poor people on their feet. Oh, yeah. What about amputees and other people who don’t have any feet?  Are you suggesting some sort of complex exemptions for people with disabilities?    You mean they have to fill out a form that says “I have [1, 2, 0] feet.”?  Yeccccch. No way.

 

 

Red Emma

WHO GETS THE REBATE?

Our Glorious Leader has decided to stimulate the economy by giving tax rebates to ordinary working taxpayers.  And seniors on Social Security.  And people getting the Earned Income Tax Credit.  And…sorry, I’m losing track.  But I’m pretty sure that none of the people on the list are independent contractors or entrepreneurs.  None of them, that is, are the people whose income mostly shows up on the Schedule C. 

 The Schedule C is the IRS form that people submit with their 1040 to report “profit or loss” from a business.  In the political realm, it is the form people love to ignore.  The only presidential candidate who is proposing anything that will affect Schedule C filers is Mike Huckabee, who wants to abolish the IRS and the income tax altogether.  By implication, that means the Schedule C gets abolished too.  This is as close as anybody has come to mentioning it in what passes for political discourse since 1960 or so. 

Why on earth should that matter?  People talk about the income tax system only to denounce it, or occasionally to protest excessive denunciation.  Why should we care about one particular obscure tax form?

Because Schedule C is what our economy increasingly runs on, that’s why.  Schedule C is how entrepreneurs, and small business owners, and independent professionals, and contractors, and odd-job men (and women) report their income (or lack of it.) 

 Lots of people who get most of their income from a job, reported on a W-2 form, also file a Schedule C for doing various odd jobs on the side.  And some people who report most of their income on a Schedule C also file W-2s for various part-time job income as well.  But the people whose income shows up entirely or mostly on a Schedule C are, arguably, the people our country and our economy are built on. We are the people who make most of the new jobs. (Last I heard, the Fortune 500 had not created a single net new job in the last thirty years.)  We are the people who work without a net, outside the corporate welfare state. We provide our own health care, our own retirement, our own office space and equipment, our own training and education, our own unemployment compensation.  When we succeed, we may get famous.  When we fail, if we’re lucky, we can get welfare.  When we just muddle along, we get from one day to the next.

In the meantime, the politicians look out for corporate employees and major business owners.  The Small Business Administration, which you might expect to be helpful to the sole proprietor, defines ”small business” as including any operation grossing less than $750,000.00.  Even in these days of galloping inflation, I find that unhelpful. 

Back when “tax simplification” was the mantra (about three elections back), all the “simplifiers” talked about was the 1040 Form.  They managed to get it down to the size of a postcard, at least for some filers.  I’m still waiting for the Form 1040 BS (standing, not for the obvious barnyard epithet, but for Bumper Sticker, the ultimate simplification), but sooner or later it has to happen.  That does absolutely nothing for the increasing number of people who have to file Schedule C.

And why is that number increasing?  Well, maybe some of it is the Baby Boomers and their progeny, who are just too individualistic and ornery to make it as employees.  But most of it is the result of one round after another of job cuts in one segment of the economy after another, while the erstwhile “safety net” that was supposed to catch workers as they fell out of those industries tatters and shreds.  If those of us who have been declared “redundant” (in the elegant British word) stubbornly insist not only on living but on having families to support, the only place most of us can go is into self-employment of one sort or another.

There are different kinds of “self-employment”, some of which are purely fictive.  Every now and then the federal government actually sues some large employer for representing that certain of its workers are “independent contractors” (and therefore responsible for paying their own income and Social Security taxes), when in fact they are employees and their employers have that obligation.  But most of the time, employees and “contractors” work side by side in the same companies, doing the same work, and nobody knows the difference except the payroll office. 

Some “self-employed” people are actually farmed out to employers by “temporary” agencies. Their “temporary” status may be fictive as well. Some “human resources” specialists use charmingly oxymoronic terms like “permanent temporary” and “full-time part-time” to describe workers who do precisely the same work as their fully employed colleagues, but have been arbitrarily defined as “temporary” or “part-time” so that they don’t have to be given the same pay and benefits.  Indeed, it is fairly common for a full-time employee to be fired and then allowed to come back to exactly the same job as a “temp” or a “part-timer” or a “contractor” so that the employer can skimp on the worker’s pay and withdraw benefits altogether.

That’s different from the real independent contractors, who at least get compensated for their low pay and total absence of benefits by not having a boss.  Or, depending on how you look at it, having lots of bosses, but not being dependent on any one of them for their entire livelihood.  That’s basically my situation.  I get hired and fired all the time, by one client or another. Sometimes I quit, too.  That has its attractions.

It almost makes up for the fact that, so far as I can tell, we ”independent” workers are not going to collect one cent in rebates in this upcoming economic stimulus.  It’s bad planning on the part of the government, though.  If Uncle Sam sends a rebate to an ordinary employee, it will eventually get spent, probably on personal consumption items.  But if that same rebate gets sent to an “independent contractor,” that money may very well get spent hiring another independent contractor to do some subcontract work, thereby going through two families rather than one–twice as much stimulus for the same buck.  Give it a thought, George.

Jane Grey