With the election of Donald Trump and Republican majorities in the House and Senate, we have an unprecedented opportunity to roll back the worst economy-killing laws and regulations of the Obama and Bush eras.  Obamacare, Dodd-Frank, and the Keystone pipeline top the list, but there are dozens if not hundreds more that no one outside specific industry niches has even heard of, which cumulatively are equally if not more destructive.  Congress and the president need to take an axe to all of them. 

To cite one example: TEFRA 1706.  TEFRA is the Tax Equity and Fairness (there’s that word! run away!) Reform Act of 1986.  I call it the Democrats’ Revenge for Reagan’s Tax Cuts Act.  Buried inside that law is Section 1706, which deals with the regulation of independent computer consultants.  In a nutshell, it lays out over a dozen “tests” of the independence of computer consultants working for client companies, failing which tests, the IRS will re-classify them as employees, entitled to benefits, paid leave, health insurance, etc. – but not entitled to operate as independent businesses; develop specialized products and service that they own; deduct their travel expenses, training, rent, equipment etc.; and hire or sub-contract other consultants or employees.

TEFRA 1706 effectively put corporations on notice that independent computer consultants are radioactive, and those corporations received the message loud and clear.  Instead, anyone working in this field must be someone’s captive, whether the client’s or an agency’s, which agency takes between 10 and 40 percent of the hourly rate that the client pays (where is Karl Marx and his theory that the worker should own 100% of his work product when you need him?).

When I began my I.T. career 25 years ago, there still existed a cadre of independent “cowboy” consultants who had gotten their start in the 1970s and ’80s, prior to the passage of TEFRA, when the personal computer and internet were in their infancy and expertise was scarce.  They got together in monthly and quarterly meetings of user groups that were independent of vendors and employers.  But in my sector (database application development), at least, the collegiality and camaraderie of those days have died out.  Independent professional associations have gone extinct and been replaced by organizations chartered by multi-billion-dollar industry behemoths, and nearly all of the professionals who show up are sponsored by a corporate employer. 

This is not just some anecdotal misfortune for a few individuals.  By raising insurmountable barriers to entry into business, laws like this wipe out entire distinctly American sectors of the U.S. economy.  Untold thousands of bright, creative, risk-taking Americans have been prevented from building businesses and developing innovative products.  We have our titans of Silicon Valley, but the small business sector has been hollowed out, and IPOs are way down.

Employees as such have nearly zero opportunity to preserve any private rights in the systems they work on for their employers (ever see the intellectual property clause of a boilerplate employment contract?), whereas independent consultants have far greater leverage to negotiate what belongs to the client and what belongs to the consultant.  Intellectual property-owning entrepreneurs have the potential to create innovative products that might not otherwise see the light of day, as well as jobs for other professionals and potential entrepreneurs. 

Creativity; ownership of one’s work product; risk-taking; and a full spectrum of lighthearted, optimistic pop-culture wackiness have given America its distinct entrepreneurial business culture, unmatched inventiveness, and competitive edge.  Independent-minded American tech pros have seen all of those dimensions – the humanity, the fun, even the very soul – sucked out of their professional lives, replaced with their assigned cubicles in the federally regulated mega-corporation, its bureaucracy, and its power hierarchy.  Instead of being able to produce and create on the basis of their full spectrum, they are left to compete internationally on the lowest-common-denominator dimensions of  the hourly rate or salary, willingness to follow orders without question, and ability to work long hours without complaint – platitudes about “work-life balance” in the toilet.  Americans have no competitive edge in those dimensions, or in bureaucratic management. 

Stories of American STEM (science, technology, engineering, and mathematics) workers, of which there is no – I repeat: no – shortage, being replaced wholesale with young, cheap foreign holders of visas like H-1B, have received increasing public attention in recent years, and the Trump administration has indicated that it may act to reform the programs and clamp down on abuses.  This response may or may not provide relief to American workers; there is the possibility of it backfiring if American companies simply move entire operations to India.  Michelle Malkin and John Miano have made an indispensable contribution to this discussion with their book, Sold Out: How High-Tech Billionaires and Bipartisan Beltway Crapweasels Are Screwing America’s Best and Brightest Workers.  But competition with foreign workers, and calls for policies that have the taint of protectionism, might not have become the hot-button issues that they have in the first place if Americans were not being prevented from deploying the complete scope of their talents and capital, and instead being regulated down to generic commodity drones.

And for what?  Presumably this law was passed to prevent income tax fraud – or, put another way, “presumed guilty.”  It is likely that a significant motive for the law was that powerful vested interests like Big 5 (6?) consulting firms didn’t want competition from uppity cowboys and had the clout in Washington to have them shut down.  The whole thing reeks of the swamp Trump was elected to drain.

The fact is, any laws or regulations that do not follow – directly, not by spinning-yarn degrees – from government’s legitimate role and need to prevent and punish murder, assault, robbery, theft, fraud, rape, persecution, and conspiracy are illegitimate, destructive, and un-American.  They should be wiped off the books. 

That’s about 90 percent of them.  Congress and Mr. President, get to work so that we can, too.

Howard Hyde is editor of www.CitizenEcon.com, fellow of the American Freedom Alliance, and author of the books Pull the Plug on Obamacare (2013) and Escape From Berkeley: An EX liberal progressive socialist embraces America (and doesn’t apologize) (2016).

With the election of Donald Trump and Republican majorities in the House and Senate, we have an unprecedented opportunity to roll back the worst economy-killing laws and regulations of the Obama and Bush eras.  Obamacare, Dodd-Frank, and the Keystone pipeline top the list, but there are dozens if not hundreds more that no one outside specific industry niches has even heard of, which cumulatively are equally if not more destructive.  Congress and the president need to take an axe to all of them. 

To cite one example: TEFRA 1706.  TEFRA is the Tax Equity and Fairness (there’s that word! run away!) Reform Act of 1986.  I call it the Democrats’ Revenge for Reagan’s Tax Cuts Act.  Buried inside that law is Section 1706, which deals with the regulation of independent computer consultants.  In a nutshell, it lays out over a dozen “tests” of the independence of computer consultants working for client companies, failing which tests, the IRS will re-classify them as employees, entitled to benefits, paid leave, health insurance, etc. – but not entitled to operate as independent businesses; develop specialized products and service that they own; deduct their travel expenses, training, rent, equipment etc.; and hire or sub-contract other consultants or employees.

TEFRA 1706 effectively put corporations on notice that independent computer consultants are radioactive, and those corporations received the message loud and clear.  Instead, anyone working in this field must be someone’s captive, whether the client’s or an agency’s, which agency takes between 10 and 40 percent of the hourly rate that the client pays (where is Karl Marx and his theory that the worker should own 100% of his work product when you need him?).

When I began my I.T. career 25 years ago, there still existed a cadre of independent “cowboy” consultants who had gotten their start in the 1970s and ’80s, prior to the passage of TEFRA, when the personal computer and internet were in their infancy and expertise was scarce.  They got together in monthly and quarterly meetings of user groups that were independent of vendors and employers.  But in my sector (database application development), at least, the collegiality and camaraderie of those days have died out.  Independent professional associations have gone extinct and been replaced by organizations chartered by multi-billion-dollar industry behemoths, and nearly all of the professionals who show up are sponsored by a corporate employer. 

This is not just some anecdotal misfortune for a few individuals.  By raising insurmountable barriers to entry into business, laws like this wipe out entire distinctly American sectors of the U.S. economy.  Untold thousands of bright, creative, risk-taking Americans have been prevented from building businesses and developing innovative products.  We have our titans of Silicon Valley, but the small business sector has been hollowed out, and IPOs are way down.

Employees as such have nearly zero opportunity to preserve any private rights in the systems they work on for their employers (ever see the intellectual property clause of a boilerplate employment contract?), whereas independent consultants have far greater leverage to negotiate what belongs to the client and what belongs to the consultant.  Intellectual property-owning entrepreneurs have the potential to create innovative products that might not otherwise see the light of day, as well as jobs for other professionals and potential entrepreneurs. 

Creativity; ownership of one’s work product; risk-taking; and a full spectrum of lighthearted, optimistic pop-culture wackiness have given America its distinct entrepreneurial business culture, unmatched inventiveness, and competitive edge.  Independent-minded American tech pros have seen all of those dimensions – the humanity, the fun, even the very soul – sucked out of their professional lives, replaced with their assigned cubicles in the federally regulated mega-corporation, its bureaucracy, and its power hierarchy.  Instead of being able to produce and create on the basis of their full spectrum, they are left to compete internationally on the lowest-common-denominator dimensions of  the hourly rate or salary, willingness to follow orders without question, and ability to work long hours without complaint – platitudes about “work-life balance” in the toilet.  Americans have no competitive edge in those dimensions, or in bureaucratic management. 

Stories of American STEM (science, technology, engineering, and mathematics) workers, of which there is no – I repeat: no – shortage, being replaced wholesale with young, cheap foreign holders of visas like H-1B, have received increasing public attention in recent years, and the Trump administration has indicated that it may act to reform the programs and clamp down on abuses.  This response may or may not provide relief to American workers; there is the possibility of it backfiring if American companies simply move entire operations to India.  Michelle Malkin and John Miano have made an indispensable contribution to this discussion with their book, Sold Out: How High-Tech Billionaires and Bipartisan Beltway Crapweasels Are Screwing America’s Best and Brightest Workers.  But competition with foreign workers, and calls for policies that have the taint of protectionism, might not have become the hot-button issues that they have in the first place if Americans were not being prevented from deploying the complete scope of their talents and capital, and instead being regulated down to generic commodity drones.

And for what?  Presumably this law was passed to prevent income tax fraud – or, put another way, “presumed guilty.”  It is likely that a significant motive for the law was that powerful vested interests like Big 5 (6?) consulting firms didn’t want competition from uppity cowboys and had the clout in Washington to have them shut down.  The whole thing reeks of the swamp Trump was elected to drain.

The fact is, any laws or regulations that do not follow – directly, not by spinning-yarn degrees – from government’s legitimate role and need to prevent and punish murder, assault, robbery, theft, fraud, rape, persecution, and conspiracy are illegitimate, destructive, and un-American.  They should be wiped off the books. 

That’s about 90 percent of them.  Congress and Mr. President, get to work so that we can, too.

Howard Hyde is editor of www.CitizenEcon.com, fellow of the American Freedom Alliance, and author of the books Pull the Plug on Obamacare (2013) and Escape From Berkeley: An EX liberal progressive socialist embraces America (and doesn’t apologize) (2016).



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