Small business woes flow from government bureaucracy


I heard a term years ago used to describe some highly educated people. It was “articulate incompetent.” I don't have an opinion on the matter regarding that, but it is a pretty good description of the man currently occupying the most powerful elected position in the world.

Many of the problems small businesses will face in the coming years are going to flow from the government’s elected officials’ lack of control over the bureaucracy. Nobody is minding the store.

People hate the Internal Revenue Service. That is like the people who blame guns for homicides. The gun is the tool of the murderer; the IRS is the tool of government. The person, not the gun, is responsible for the death of the victim.

Our elected politicians are responsible for the IRS. The IRS is a tool of policy the elected officials promulgated. Blame the people who direct the IRS, and that is Congress.

In a perfect world, the most capable and responsible politicians would win elections. We know that’s not the case. People become elected for reasons having nothing to do with their ability to make good economic decisions. Personality and financial resources are what get people elected.

The financial support comes from people who expect a return on their investment. What is good for a politician’s supporters may not be good for you. If a person puts enough money into the election, they will have an influence on the policies.

I have thought for years the description of the IRS as the “American Gestapo” was an exaggeration. I don't feel that way anymore.

The Gestapo was Adolph Hitler’s secret police. If you were on the list as an enemy of the Third Reich, your life, liberty and property were in great danger. With the IRS, it is only liberty and property that are at risk, for now.

About five years ago, I heard a chilling presentation by the Internal Revenue Service’s director of small business compliance. Kevin Brown introduced the concept of the tax gap to the National Small Business Association board. Treasury had convinced Congress it could nearly balance the federal budget with small business audits. Penalties and interest were to be considered a significant source of revenue.

That was chilling to hear. Things have gotten worse.

Lois Lerner’s performance in the House hearings on Tea Party applications for tax exemption was stunning on several levels. It may be that the IRS affected the outcome of the 2012 presidential election. While liberals’ applications for tax-free status were rubber stamped, conservatives’ applications were blocked. The IRS had moved from a dangerous government enforcement agency to an organization that, through intimidation, could affect the outcome of national elections.

The people in Congress who control the IRS can rein in their abuses. When the abuses are the work of political operatives finding sympathetic employees in government agencies that are willing or even anxious to harass legitimate organizations for the benefit of the occupant of the White House, we are in real trouble. Congress cannot control these clandestine operations.

JP Morgan Chase has agreed to a $13 billion settlement of penalties with the Justice Department for its involvement in the subprime loan fraud. As reprehensible as their activities were and as astounding as it is that the nation was plundered by these white-collar bank robbers who escaped jail, I found a disturbing element in the fine.

According to some observers, the attack on JP Morgan Chase was punishment for CEO Jamie Dimon’s criticism of the current administration. He had been the administration’s lead man on Wall Street but had turned against the administration.

That is a rumor, not fact. The problem is that if Wall Street executives believe it is true, the White House has added another level of insulation from critics.

None of this is new. It has happened all over the world for all time. This is here and now, and your well-being is threatened by people who do not believe you have a right to succeed. “It is not fair” is their mantra.

It may not be fair, but we don’t have millions of people trying to escape; we have millions of people trying to get in. That’s how you know if a country is a good place to live.

I recently read that entrepreneurship is living a few years of your life like most people won’t so you can spend the rest of your life like most people can’t.

We who have benefitted from the system owe our young people to keep it alive.

Paul Hense is the retired president of local accounting firm Hense & Associates and a past chairman of the Small Business Association of Michigan.

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