Congressional Idiocentricity -- Tax Reporting Paperwork Landslide

Buried in the ObamaCare bill that had to be passed so we could learn what was in it, is a change to Section 6041 of the tax code which requires businesses to file 1099 forms with the IRS for almost any vendor they deal with and pay more than $600 in a tax year.  This means that payments for property or for services are covered by the mandate whether the company to whom the payments have been made is a corporation or not.  The paperwork and the nuisance are unbelievable.  Congress has lost its senses entirely.  This is the sort of systematic wrongheadedness combined with a complete disregard for reality that I have coined idiocentricity.  Well, Pelosi, you passed the ObamaCare bill and we just keep on learning what was in it.  No matter how idiocentric I believe Obama, Pelosi, Reid, Waxman, Franks, Dodd, and others of their ilk may be, they just keep surprising me over and over again.

Before a company submits the 1099 Form to its vendor and to the IRS, it must have its vendor fill out a Form W-9 with its address, contact information, and the company taxpayer identification number.  The total amount of work involved is huge.  As a business owner, I will be receiving many more requests to fill out W-9 Forms and I will have to fill out many 1099 Forms early in the new year when I am trying to catch up after my busiest time of the year in the Fall.  I will resent every moment spent in this way immensely.

Why did this idiot plan get foisted on us?

• The wording changes were slipped into the unread ObamaCare bill late in the process so they would not be discovered until after it was passed in accordance with Pelosi policy.
• Congress is desperate to eke out every last dime, no make that $0.04 given the Utah case of huge penalties and interest based on a claimed overdue payment of $0.04, to pay for its wild, drunken overspending.
• This is an underhanded way to help the Post Office with its deficits.
• It is a subsidy program for lumber and paper companies.
• It is a subsidy for tree farms.
• Transporting the billions and billions of forms will provide more income for truckers.
• Increased truck traffic will destroy the roads and bridges faster, leading to more construction and repair work.
• America will import more oil to operate more trucks, which will help the underdeveloped world by transferring American wealth to them.
• It is a plan to increase man's emissions of CO2 so Congress will have more of an argument for cap and trade taxes on the increased fuel imports and use and the CO2 will help corn grow better to produce more subsidized ethanol.
• Its a make-work project for accountants, a profession much-beloved by Congress.
• This will make businesses much more inefficient, thereby reducing the huge advantage in efficiency of the private sector compared to the public sector.  Reducing that difference will make it easier for the government to push for more socialism.
• Companies will try to concentrate their business on a smaller number of vendors to reduce paperwork.
• Small businesses will be both more burdened with the owner doing this paperwork and they will be preferentially shut out of business by larger companies trying to reduce their paperwork.

Of course, it may be that Congress in its haphazard sloppiness did not think of some of these obvious effects.  It is unwise to give them too much credit for any thought, however twisted.  But, it does seem clear that this Congress has an affinity for the line of thinking of that it is a good thing when a window is broken because the repair of the window generates business.  No one in Congress ever asks what tasks did not get done because the window had to be repaired, despite Bastiat having destroyed this line of thinking long ago.  No, that would require that those who think islands float and who do not care about the constitutionality of laws to be capable of thought and then to actually do it.  What an imposition that would put on these rulers who fancy themselves the elite and the aristocrats of American society.  How unfair and unjust of us mere peasants to expect them to think about the consequences of their laws as an essential part of their service to us.

Pelosi's Money-Saving Calculation for House Cafeteria Lighting

Nancy Pelosi called a press conference on 21 April 2010 to announce that the government had just spent $140,000 to put a new LED (light-emitting diode) lighting system into the House cafeteria in the Rayburn Building.  This new lighting system is supposed to pay for itself in a bit less than 10 years with energy use savings.  Great fanfare with all the politically correct words of energy-saving, sustainability, environment-friendly, Mother Earth, and green were used at the press conference.  It is hardly surprising to see the government spend $140,000 on something that gives it such a fine opportunity to look so green and earth-loving. 

Now, other things being equal, saving money on energy is a good thing.  However, we have to remember that the federal government is running huge deficits, which clearly are not sustainable.  We can look a little closer at this as well.  If the $140,000 lighting system pays for itself in 10 years, then the LED lights are saving about $14,000 per year.  It was noted that about 1 year ago, the light fixtures installed cost about $800 each and they cost just over $300 when the upgrade of the House cafeteria lighting system was performed.  So, in one year, the cost dropped to about 3/8 ths of what it was.  If in the next year it dropped as much, the cost per fixture would fall to about $112.50.  Perhaps the rate of the drop in price will not be as much, but it is reasonable to think it might fall to, say, $200/fixture.  If it did, the payback time would then be only about 6.67 years, or about 3.33 years less.  Since they said the payback was a bit less than 10 years, let us say the difference in payback is 3 years.

Thus, delaying the installation of the LED lighting system for one year would mean the government would pay out $14,000 more in electric bills.  Installing the $200 fixture LED system 1 year later, would save three times $14,000 in installation cost, however.  Subtracting the $14,000 not saved for 1 year in energy, means that delaying the installation for a year would have saved the taxpayer $28,000 more than installing the system will when it was installed!  Now, admittedly, I have assumed the cost of installation of each fixture is either minimal or included in the cost per fixture as given.  Perhaps this assumption is not justified and some other cost calculations need to be performed to determine the rational time at which the installation should be performed.  But, I have no confidence whatsoever that Congress performed any such rational calculations before they decided to spend $140,000 of taxpayer easy-come, easy-go money on this project.

Such rational calculations are much more likely to be performed in the private sector than they are in the public sector.  The lame media, many of the academics, and most politicians and bureaucrats are forever pointing at some failure in the private sector with harm coming to some relatively small numbers of people usually in some voluntary association with the persons or company causing the harm and claiming that if only the judgment of the government were brought into these associations and trades, events would turn out better.  This argument keeps foundering on one very important observation:  the assumption that the government will act rationally, more often than the private sector does, is demonstrably wrong.  It is very clear that the government acts less rationally and when it does, that the consequences fall upon many who have not made any voluntary choices based upon their own evaluations at all.  Government increases the number of irrational decisions and lays the sad consequences on many more people, many of them innocent of any irrational decision themselves.

The government has too little invested in other people's lives and fortunes and the money it spends comes too easily to it, for it to bother to make rational decisions even when it has adequate information at hand as we have seen from the House cafeteria lighting system decision.  In most cases in which the government wants a hand, it lacks the necessary and adequate information, which is either not available to it or takes more effort to find than it is willing and able to do.  After all, its SEC employees are too busy at Internet sex sites to have the time to gather the knowledge they need to do their job!  Frankly, even much more conscientious government employees will commonly fall short here as well.  Finally, what really matters is the press conference at which all the politically correct words can be spewed and the politicians can pretend to be paragons of virtue.  The reality is that they are commonly buffoons and wastrels.