Wednesday, July 28, 2010

Integrity Today Means Fewer Rules Later

Internal.
Revenue.
Service.

Three words that, together, can immediately conjure up a host of negative emotions.

In a conversation with a secretary at my church, the topic of IRS guidelines for expenditures came up, and how churches have to jump through more and more hoops when documenting every little expense.

I sympathized with my friend, and I agree that churches and other non-profits who want clean books have been burdened by a lot of busy-work by the IRS. However, I wonder how much of the IRS's suffocating accounting requirements may really be our own fault?

Not mine and my friends', of course; but of taxpayers in general.

Being Accountable

Indeed, when it comes to a lot of the encroachments conservatives accuse the government of making into our private lives and freedoms, how much of this government “interference” is the result of Uncle Sam’s thirst for power, and how much of it comes from our own abdication of personal responsibility?

After all, when a parent tries to teach a child personal accountability, and the child repeatedly fails to convince the parent they’re worthy of trust, a good parent will – albeit temporarily – re-assume control over that area from the child and try to teach the lesson again later.

Of course, when the government and the IRS take control of something, they’re loathe to relinquish that control back to us, so my parental analogy only goes so far. But do you see where I’m going?

My friend at church expressed her frustration over what looked like a matter of micro-management from the church's financial office. On the surface, it could have been misconstrued as maybe a subtle power play.

But I’ve worked in the financial office of a large church before. My boss at the time ran a strict set of books. Sometimes my fellow subordinate and I chuckled at how much documentation our boss insisted on having for every little thing. But then she let us read a church accounting newsletter she subscribed to. Its editors described some of the financial shenanigans churches were trying to get away with, and I realized that while the IRS may suffer from a power fetish, it’s gotten a lot of affirmation for its authority from the very organizations that owe it fiduciary integrity.

Of all the tax entities in America, churches should be the ones that strive to be the most above-board in their accounting, but many churches instead try to see how much they can get away with. That doesn’t sound like holy living to me. A lot of church people forget that taxation itself is actually affirmed by Christ when he told His mockers to give to Caesar what belongs to Caesar. Churches that have abdicated their responsibility for abiding by this command have instead handed our privilege to be presumed above reproach to the IRS on a silver platter.

Handing Freedoms on Silver Platters to Uncle Sam

Indeed, how many other rights and freedoms have we handed to the government on a silver platter through our society’s abdication of personal responsibility? Just recently, conservatives howled at President Barak Obama’s new restrictions and additional layer of bureaucracy to ostensibly oversee Wall Street after its infamous mortgage meltdown. How much of this additional heavy-handedness could have been avoided if banks, mortgage companies, and home buyers hadn’t all been too greedy years ago?

After a spate of whistle-blowers, near-misses, maintenance problems, and other issues put a spotlight on the cozy relationship between the Federal Aviation Administration and big airlines, some politicians have started calling for stricter oversight of our sprawling aviation industry. Safety experts have generally heralded the news, while as expected, conservative business analysts decry further government meddling into our de-regulated skies. But what is the extent to which airlines have pressured the FAA to overlook, or at least squint at, their minimizing costs by minimizing maintenance and other factors? When passengers who have waited hours on tarmacs pressured Congress to come up with a “passengers bill of rights,” was Congress' acquiescence an overextension of government authority or simply an automatic response to a problem airlines weren’t willing to address themselves?

Today marks the 100th day of BP’s oil disaster in the Gulf of Mexico. Since it began, the Obama administration has been pushing for further regulation and moratoriums on offshore oil drilling activity, claiming that BP’s multiple failures regarding this crisis provide enough proof that oil companies can’t be trusted. Many citizens, politicians, and business interests dependant on the complex offshore oil industry have protested the administration’s actions and fought it in court. Several large energy corporations have pitched money into a $1 billion pot to research state-of-the-art spill response mechanisms to try and demonstrate that they don't need further government oversight. However, two incidents within the past several days in Michigan and New Orleans involving oil spills in waterways don't speak well of an industry which by most accounts has had a duplicitous relationship with the Minerals Management Service, supposedly their government overseer.

Exceptions to the Rule

Which, to a certain extent, creates a case study in what should - and shouldn't - incentivize government “meddling” in affairs like these.

Personally, in relation to the Gulf of Mexico spill, I oppose moratoriums that affect any oil company but BP, because as far as we know, the other players in this industry haven’t spurned prudence like BP has. Yes, there have been accidents and spills, and a certain margin for error must be accommodated for with offshore deep water drilling when we're talking about accessing a commodity which fuels our very way of life. But we've never had anything of this magnitude in US waters, and as time goes by, we're learning more and more about how cavalier and careless BP has been regarding the Deepwater Horizon in particular and their corporate culture in general.

But how can I defend accident-free oil operators when I can't deny that the IRS has the right to apply the same strict reporting standards to all non-profits, not just churches which have proven to have unreliable books? I'm assuming that my church has clean, balanced books, so why should it abide by the same reporting standards as non-profits with tainted books? How can I say that ExxonMobile and other operators should be excluded from restrictions devised in response to a mistake of BP's?

Part of this apparent double-standard comes from the fact that far more non-profits exist than major oil companies. Crooked accounting practices are far more easier to hide than an exploding deepwater rig. In addition, while tax cheats can ruin lives, they rarely take them; whereas oil drilling is dangerous. Yes, tax fraud can cause many people problems for years, just as oil spills can, and I'm not implying that the Minerals Management Service doesn't need to be overhauled with new standards and oversight that affect all players. But as we've seen in the Gulf over these past 100 days, if the same practices and attitudes as BP's were being perpetrated on oil platforms across the globe, we'd be having disasters like this far more frequently. From what we know today, the proof simply doesn't support extending drilling moratoriums past the major culprit in the Gulf disaster, BP.

That's not to say that as the focus intensifies on our energy industry, further problems with other companies won't come to light, and further restrictions won't be forthcoming. If the BP explosion caught other offshore players off-guard, and they've been scrambling to fix their processes and fortify their procedures, then maybe this incident in the Gulf has bought some time for other companies, and they owe BP a favor!

Honesty Isn't Expensive; Cheating Is

The basic issue, however, is being responsible from the get-go. Individuals and corporations shouldn't wait until they're caught before embracing principles and enacting procedures to make themselves and their organizations honest, safe, and even profitable. Apparently, BP thought it was saving money for shareholders by running roughshod over best-practices, but look at how much saving money is costing them now.

Maybe some people want to gamble and risk not getting caught.

Unfortunately, it's those kinds of people who end up making officials like the IRS force everybody to jump through hoops. Setting the rules yourself at the start is a lot easier than somebody else setting them for you later on.

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