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Apr 22, 2008

Undocumented Employee Benefit

Great Moments in Government: The Birth of a New Tax Policy

(As it might have been)

Fred: I have a great idea. I got it when I read a story about the FAA, those airplane guys.

Mack: About how to raise taxes?

Fred: Not "raise", just collect the tax that we want, I mean that we are owed.

Mack: I've got to hear this.

Read more ...

Fred: Well, the FAA has a sweet operation. They make those airlines document EVERYTHING. So, if anything goes wrong, they look it up in the documentation, and there is always some paper mistake, or some rule that wasn't followed. Then, no one talks about the FAA, it is always about the airline's mistakes.

Mack: Come back to earth. How does that help us?

Fred: We allow businesses to deduct "expenses" so they don't pay tax on those.

Mack: Right.

Fred: But, what about stolen office supplies, phone calls home, donuts served at office meetings, extra furniture in the offices that isn't directly related to an employee's work, desk chairs that are more expensive than needed, break rooms with free coffee, and ...

Mack: Are you OK Fred? You are breathing hard. All of those things are allowed under the "Employer Convenience" rule. The employer provides a few free things that encourage employees to be more comfortable and to work better. They are at the employer's convenience and for the employer's benefit.

Fred: Yes, but we could make them DOCUMENT it. In detail.

Mack: That is ridiculous. The documentation work would be picky and enormous. They would never go to the trouble to . . . AH!

Fred: You see. It would be way too expensive to document. We could say, either document everything, or we will just ALLOCATE some part of your expenses to these Undocumented Employee Benefits. The allocated amount is no longer an expense, so we would collect the extra tax.

Mack: This is a moment. You are going to be an Assistant Director. This is big, complicated, and wonderful.

Fred: Yes, and what could they complain about? They can't say that they don't know, or can't keep records. They are running a business, after all.

Mack: You have created a new category: Undocumented Employee Benefit. This is history. But, won't this be a big burden on business?

Fred: The airplanes are still flying, right?


Wall Street Journal: Tax on Talking

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