Dear Editor:
In March 2020, Congress passed a $2.2 trillion economic relief bill whereby small businesses struggling with the economic impact of the pandemic could obtain funding guaranteed by the Small Business Administration under the Coronavirus Relief Aid and Economic Security Act. As worthy of good intentions as was the $800 billion covid relief component known as the Paycheck Protection Program, outcomes included the largest fraud in US history – the theft of $80 – 100 billion in taxpayer money.
PPP authorized banks and other financial institutions to make government-backed loans to businesses, loans to be forgiven if companies spent the money on business expenses. Lenders did little to verify applications, in part, because Congress required the SBA to issue explicit guidance that lenders would be held harmless for borrowers’ failure to comply with program criteria.
Our government spent $800 billion to provide 21 million loans to individual business owners many of whom inflated their payroll expenses to obtain loans larger than those for which they would otherwise have qualified.
Some had revived dormant corporations and purchased shell companies with no actual operations to apply for multiple loans to support significant payroll. Most offenders misappropriated loan proceeds for prohibited purposes – purchase of houses, cars, other luxury items, real estate, and securities.
Organized crime groups, identity thieves and even prison inmates have used stolen identities of individuals ineligible for unemployment insurance to claim jobless benefits. PPP loans ended when the money ran out. With billions of taxpayer dollars lost, those people who worked for businesses unable to apply because funding had been exhausted were the most exasperated. The 2020 covid relief programs had needlessly sacrificed security for speed.
Now, it’s 2022, and on the heels of the PPP debacle, Congress has readily approved $80 billion of new funding to double the budget of the Internal Revenue Service including the hiring of tens of thousands of new “enforcement” personnel to perform audit scrutiny.
This particular bloating of the federal government will inevitably lead to an increase in audits and investigations of American taxpayers. Even as this funding has been approved, specific spending plans have yet to be provided! With the IRS having a history of data security failures and violations of taxpayer confidentiality, and as this administration has already demonstrated a proclivity to sacrifice security for expediency, perhaps this money and energy would be better spent on efforts to recapture taxpayer dollars misappropriated to fraudsters.
Recall that in 2016, at least five Republican presidential candidates were seeking an overhaul of the 74,000-page federal tax code as they considered the tax code to be penalizing individual investment, work, and entrepreneurship.
Those candidates were proposing a simplified one-rate “Flat Tax” wherein all income would be taxed at the same percentage. Instead of the current progressive income tax system that uses tax brackets to determine what percentage a person pays, households get one exemption – an allowance based on family size – and then pay a low rate on any income above that amount, and not needing to report dividends, interest or other forms of business/capital income. Even earlier, publishing executive and politician Steve Forbes popularized the concept of a single tax rate when he referred to the tax code as “an anchor on the economy” citing loopholes that contribute to inequities.
For my money, I like former Arkansas Governor Mike Huckabee’s 2008 idea of a national sales tax. With the “Fair Tax”, consumption is taxed rather than investment, savings, and work. Revenue for government programs would come from what is spent rather than what is earned. In addition, the government would send the lowest income families a monthly “prebate” to cover taxes on necessary expenses; no tax would ever be paid on basic necessities. Federal income and corporate taxes would be abolished as well as the IRS being dismantled – a remedy for willful waste making woeful want.
Peter Wibell, Rutledge