Monday, March 18, 2013

The Missing Amendment From the Bill of Rights

Suppose the Bill of Rights (in the US Constitution) had contemplated far-reaching things such as benefits policy and tax policy. Just suppose. Now, I know this is far-fetched. Back in the 1780s, there was no income tax (that was a 20th century brainstorm in the US) and generally, people didn't live long enough or save enough to retire. Those who could afford not to work were often so wealthy that savings were not an issue.

Anyway, just suppose. Writing in the spirit and attempting the style of our founding fathers, could this additional amendment have read, "Congress shall make no law intertwining tax policy and benefits policy?"

What do you think? Those founding fathers were pretty wise. That little document that they crafted about 225 years ago has stood the test of time. It's been amended only 27 times thus far and 12 of those occurred in the first years after the Constitution was ratified.

In my opinion, had the founding fathers known the mess that Congress would create, they would have loved my amendment. Using tax policy as an excuse for nearly everything these days is not good governance. But, look at the Internal Revenue Code (I know, you don't want to). Aside from the taxes, virtually everything else in there is an incentive to change the behaviors of groups of individuals and or corporations. In a nutshell, whenever Congress finds something they would like for employers to provide to employees, they give them a tax deduction for it. If they think it's being done too much for executives, they cap it.

And, when they go through this song and dance, the esteemed members of Congress are consistent -- they are always sure to make their legislation as unintelligible as possible. If there are tax [policy] issues embedded in the legislation, they are careful to include a clause saying that the poor souls at the Treasury Department shall figure this stuff out and write regulations.

That's where it gets even worse. Only the Treasury Department appears to have the ability to take a one sentence law and write hundreds of pages to tell us what it means. (For full disclosure, I'm not sure that in many of these cases that if I were charged with regulating these laws that I could make the guidance any shorter.)

Perhaps we should go back to a world of competitive practices. If it is necessary to offer someone health care benefits, for example, in order to employ them, then companies will do so. If it's not, then they won't. If the costs are affordable to companies, they may offer them. If the costs are too high, they may not (see, for example, the retail and restaurant industries and their reaction to PPACA (ObamaCare)). Then, if the markets lose business, they may lower their costs so that companies might in turn reconsider their decisions to not offer benefits.

What is it that they say these days? Just sayin'?

Today, the largest tax expenditure (think tax deductions) for the federal government is the cost of employee benefits. In fact, if you add the deductions for employer-provided health care benefits to the cost of employer-provided retirement benefits, the expenditure for the deduction of mortgage interest looks like a needle in a haystack.

Just think if we hadn't backed ourselves into this corner.

Just sayin'

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