- How much taxpayer wealth does the Federal government waste every year in just a handful of its programs?
- Real life examples of waste and fraud.
- A unique approach to eliminating waste and tax avoidance in Italy.
- Why the NBS is dangerous from a liberty perspective but necessary from a financial crisis perspective and political class inaction perspective.
We have discussed the following numbers previously, all of which can be documented from reliable, nonpartisan sources and analyses. However, it is important to understand the magnitude of the waste, inefficiencies, and criminal fraud that is rampant throughout the Federal government which occurs on an annual basis, regardless of which party controls the White House and Congress:
- Estimated amount of taxpayer wealth lost every year through waste and fraud via the Medicare system: $60 - $90 billion.
- Estimated amount of taxpayer wealth lost every year through waste and fraud via the Medicaid system: $40 - $60 billion.
- Estimated amount of taxpayer wealth lost every year through waste and fraud via the Social Security system: over $100 billion.
- Estimated amount of taxpayer wealth lost every year through waste and fraud via just one of the Federal government's unemployment programs: $19 billion.
- Estimated amount of taxpayer wealth lost every year through waste and fraud via just one of the Federal government's food stamp programs: $2-$3 billion.
- Estimated amount of taxes that are legally due but not paid every year by American tax evaders: $385 billion.
- Total amount of taxpayer wealth wasted every year from just the above programs: $606 - $657 billion.
- Total amount of taxpayer wealth wasted every year from just the above programs per U.S. household: $5300 - $5700
2. Real life examples of waste and fraud
An Associated Press article late last year reported on a Seattle area married couple that had been having a grand time defrauding the Federal government, and the American taxpayer, over the past few years. (details of this waste and other examples can be found at: http://loathemygovernment.blogspot.com/2011/12/obama-congressional-super-committee-and.html) The article reported that:
- The married couple lived in a 2,300 square foot, $1.2 million house in the Seattle area.
- The article cites the probability that the couple also owned an expensive Jaguar automobile since investigators found it constantly parked in their driveway.
- Over the past eight years the couple had taken vacation trips to Moscow, Paris, Israel, Turkey, Mexico, and the Dominican Republic.
- During this same time period, the couple had collected over $100,000 in Federal welfare payments.
- Finally, after eight years, the local U.S. Attorney General's office is going after the couple in an attempt to recover $135,000 in Federal housing assistance and additional fines and penalties.
- Apparently, the wife applied for the government assistance by claiming that she was a single mother with two kids and assets worth less than $5,000 even though she was still married, according to the information and proof cited in the article and was living in the $1.2 million home with her successful, chiropractic practicing husband.
- Fred Dweck, a surgeon in two Broward County, Florida worked at two hospitals and also ran his own health care business in Miami.
- Last year, Mr. Dweck pleaded guilty to Medicare fraud since for four years before he was arrested, he cheated Medicare out of at least $24 million or about $6 million a year, an amazing $500,000 a month, on average.
- He put in claims for prescription drugs, insulin injections, in-home visits by nurses, and many other treatments for 1,279 patients, none of whom actually needed any of these treatments that the good doctor was reimbursed for.
- He had five nurses conspire with him to create fake patient records and payment forms.
- One would have hoped that someone in the Medicare organization would have grown suspicious of this one doctor generating so much work over the years or the $500,000 a month he was billing. Unfortunately, it took many years to figure out this one scam, too many years.
3. A unique approach to eliminating waste and tax avoidance in Italy.
The February 13, 2012 issue of Business Week contained an interesting article concerning what the Italian government is doing to track down tax evaders, "Nice Car, May I See Your Tax Records?" The concept is quite simple: if you own a high end auto or own an expensive yacht, it may be time to check your tax returns to make sure that your reported income is consistent with your high end, expensive lifestyle, as measured by the car your drive or the yacht you sail.
The article reports on one sweep through a posh ski resort last December where officials stopped 251 high end, expensive cars and asked for the identification information of the driver. That information was examined by the Italian government tax authorities, who found that 42 of the 251 cars, about 17%, were owned by people who reported to the Italian government that had declared income of less than 30,000 Euros (about $39,000) for 2010 and 2009.
This was just one of at least five sweeps Italian authorities have done in the past six months, targeting high end car owners and yacht owners. It provides a targeting tool to narrow down the most likely and most blatant tax evaders in this country of many tax evaders. The article estimates that the Italian government misses out on about $157 billion a year in legally owed taxes.
This strategy of matching lifestyles with likely tax liabilities was summed up by a top authority in the Italian tax authority, Carmelo Piancaldini: "The ownership of a luxury car highlights a level of spending and a standard of living that are often not reconcilable with the income declared by the owner." In other words, there is probably a very high correlation between how you spend your money and how much you should have legally paid in taxes.
4. Why the NBS is dangerous from a liberty perspective but necessary from a financial crisis perspective and political class inaction perspective.
What I am about to propose, the National Bounty System (NBS), is not something I do willingly or easily. I am a great believer in individual freedom and minimal government interference in our lives and families. Usually, the more a government intercedes in one's life the lower the freedom one has to live their lives as they please. George Orwell's novel, 1984, was the blueprint for increasing government's power and surveillance over our lives, the turning of one citizen against another for the "common good."
Given the danger of what is proposed below, I would demand that the NBS have a definitive starting point and end point and all records of the program be destroyed once the objectives are attained. The only reason the NBS is needed is because the political class has proven that they do not have the desire, the ability, the knowledge, or drive to clean up the waste and fraud that is robbing Americans of hundred's of billions of dollars every year.
Both Republicans and Democrats have had their chances to clean up the waste. They have all failed miserably. That is why we, as a nation, need a strong but temporary dose of NBS to fix the problems and then get back to living in a free, fair, and efficient country.
The National Bounty System (NBS)
The National Bounty System would be a temporary Federal program whose sole purpose would be to ferret out criminal fraud in many of the government's largest programs and crack down on tax evaders. It would clean up the mess that our political class has been unable to do.
Rather than rely on only hundreds of government employees to ferret out crime and tax evasion, it would rely on tens of millions of Americans to identify the fraud within their midst and pay them a bounty for their efforts, if those efforts were instrumental in prosecuting the criminals and recovering the wealth that was stolen or the taxes that were not paid.
The program would have many of the following components:
- A independent process would be established to gather, sort, prioritize, and track tips on fraud and tax evaders by a task force established within the Justice Department, with representatives from the IRS, Medicare, Social Security, Congress, the FBI, HHS, and others.
- Citizens could report their tips via email or snail mail, with the earliest date of receipt being given the bounty opportunity to collect a reward if the tip results in the retrieval of ill gotten fraudulent gains or the collection of unpaid taxes.
- The amount of the bounty would be 10% of the money recovered.
- Following the lead of the Italians, the task force would correlate new car and boat/yacht registrations with income tax returns to identify those people that reported low income but had high value purchases.
- The same correlation analyses would be done by crossing high end home purchases with tax returns.
- The program would be tested in one or two states in order to work out the bugs in the processes before a nation wide rollout.
- In advance of actually cracking down on felons and tax evaders, a well publicized amnesty period would be extended to all who would be likely targets of the task force. The amnesty period would allow anyone to come forward and confess their wrong doings and avoid jail time.
- However, they would still have to repay what they stole and owed in full.
- Those caught after the amnesty period ended would not only face jail time, if appropriate, they would have to pay back what they stole and the appropriate fines, penalties, and interest.
- The amnesty period would not only be in the one or two trial states, it would be nationwide. The trick is to make sure that those who are guilty know that their neighbors, their customers, and their work associates might be tempted to turn them in for the bounty and make them think twice of doing the right thing, turning themselves in, before the task force reaches their states.
- From an accounting perspective, half of the recovered money from the program would be used to pay down our national debt and the other half would be returned to taxpayers in the following year when they filed their own taxes. Under no circumstances would the recovered wealth be put under the control of the political class and likely wasted again.
- A similar process would be established for Federal employees, as outlined in "Love My Country, Loathe My Government," to identify fraud and waste within the Federal bureaucracy. The Las Vegas GSA disaster that has unfolded over the past few weeks might not have occurred if Federal employees had been properly incented to point out waste within their own realms of responsibility, especially if there was a bounty reward possibility.
- Would a neighbor or office worker of the Seattle chiropractor discussed above have come forward sooner if they could have received 10% of the hundreds of thousands of dollars that couple embezzled from the government?
- Would a nurse or patient in the office of Dr. Dweck have come forward sooner if the opportunity to receive 10% of up to $24 million, assuming that all of the ill gotten gains were recovered, and possibly receive a hundreds of thousand dollars or more?
- Would someone now be tempted to turn in an obnoxious neighbor who continually brags how they are receiving government unemployment checks while getting paid under the table for work the neighbor is actually doing if they could get rewarded for doing so?
- Would a Federal worker be more likely to turn in coworkers who are illegally selling food stamp benefits if they could partake in the reward of a prosecution?
- Would a Medicare patient turn on a crooked doctor who was using their Medicare number to rip off the system if that patient got paid for their trouble?
There is more than enough wealth in this country to take care of the less fortunate citizens among us if only the hundreds of billions of dollars wasted every year did not go to crooked doctors, organized crime, tax evaders, etc. This is a drain on the economy and an insult to all of us that play by the rules and the laws. I see no other way to stop the madness except to take the temporary but dangerous step of putting a bounty system out into the market and let the rewards of such a system potentially deputize every American in the country.
Once we have cleaned up the mess, the NBS would be shut down before it also became a threat to our freedom. In the meantime, we need to dump all incumbents out of office in November and replace them with some real leaders who would have the leadership, analysis skills, and courage to actually address and resolve the situation of fraud and tax evasion. Heaven knows the current crop of incumbents have not done anything about these two conditions, requiring the necessary but dangerous implementation of the NBS.
We invite all readers of this blog to visit our new website, "The United States Of Purple," at:
http://www.unitedstatesofpurple.com/
The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.
The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/
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