Some problems with Reynolds' idea

Reader comment on: Revolving Door Tax

Submitted by Fast Eddie (United States), Mar 5, 2013 14:22

I agree with Reynolds' objective of slowing down the revolving door between federal employment and private sector employment where the fed trys to cash in on his time in govt when he/she jumps ship for the private sector. However, there are some problems that would need to be addressed, such as: Reynolds will apply his surtax on the "post government earnings" for these job hoppers. Fine, as long as he can define "earnings" with sufficient clarity and detail . For his/her time as a fed, the term "earnings" presumably means the gross amount of his/her paychecks. But does it also include fringe benefits, such as pensions? The federal CSRS (if the person was employed prior to 1986) and FERS system (for most feds since 1986) are relatively generous compared to many private sector plans, assuming the private sector job he/she jumps to even has a plan. Also, the federal health benefits plans are quite good, often far better and less expensive than available in the private sector. So, will Reynolds include these fringe benefits in calculating the difference in fed/non-fed "earnings?" Reynolds might also want to keep in mind that some of the private sector employers will no doubt devise some very creative ways to generate employee "earnings" that escape Reynolds' taxation, such as clever deferred payment plans that pay out in years beyond Reynolds' five year surtax window. And what about job hoppers who do not actually go to work directly for a private company but, instead, meet the letter of the law to be considered independant contractors? They could build a very successful business without paying themselves much in the way of what would reasonably meet the definition of "earnings," yet they could be facilitating the operations of a large corporation just as much as someone who was an actual employee of that company. Finally, what would Reynolds do about the huge group of federal executives who have high level positions at regulatory agencies, i.e., the alphabet soup of FTC, FAA, FCC, SEC, CSPC, and so on and on? These agencies are, theoretically, "creatures of Congress" despite the fact that their executives are appointed by the Executive Branch.

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