Trekkers Lodge, Lukla, Nepal
“The only difference between death and taxes is that death doesn’t get worse every time Congress meets.” Will Rogers
On September 13, 1986, the St. Peterburg Independent (our community’s now defunct evening newspaper) published my Op-Ed, “We Need More Lights Turned on in Lukla”. In March 1986, Joanie and I had been trekking in Nepal, to Tengboche, a Buddhist monastery some 12,600 feet high in the Himalayas, on the way to Mount Everest (part of our rugged “INK Venture” into India, Nepal and Kashmir). Shortly after we returned, I attended the New York University Law School 1986 Tax Conference.
Our experiences in Lukla, and on that trek, were key turning points in my ultimately becoming a Planeteer. But, attending the NYU tax conference added an unexpected twist.
Now, almost four decades after writing the Op-Ed, it’s time to reflect, to flush out my conclusions.
The 1986 Op-Ed:
Op-Ed: “We Need More Lights Turned on in Lukla”
I recently spent some time in New York at the New York University Spring Tax Conference. I had been away from my law practice for a while. It was time to get caught up on what’s going on in the “real world.”
So I sat in one of the meeting rooms in the Marquis on Broadway at 45th, and listened to some of the best legal minds in our country analyzing and dissecting what perhaps has become the most difficult and incomprehensible body of rules and regulations that exist in regard to any subject – our federal tax laws.
In the evening after the conference, I walked down Seventh Avenue to 42nd Street, then back up Fifth Avenue to my hotel. New York is an incredible city; a complex of concrete and steel arranged in mostly useful form to serve the needs and interests of its humanity. No doubt New York houses some of our brightest, our most vital people.
Many are lawyers and accountants, like those of my conference – our professionals who mold and shape the rules and regulations, which pace the thrust of our society’s performance and its allocation of resources.
It is very complex, time and energy consuming process. The rules are so many. The rules change so often. The rules are subject to such a variety of understandings, due as often to the richness of our language as to our genius for playing verbal chess. In fact, some would say our entire governmental rule-making process has become a game a likened to Trivial Pursuit. The tax laws are but one of the many mazes we have created for ourselves.
As I walked past the fashion and camera stores on the Avenue, it was impossible not to be drawn to the small eat shops interspersed along the way. In more than one, the lonesome and shallow eyes a middle-aged man or woman reached out to me.
As I observed the contrast before me, my mind could not help but drift to the village of Lukla, elevation 9500 feet, in Nepal. We had been there but a brief few weeks before, snowed in after our trek in the Mount Everest region by the unpredictable spring weather of the high Himalayas.
As we sat in our lodge room, wrapped for warmth in our sleeping bags, our Sherpa host interpreted for us. Soon, a hand-operated drill was boring through our wall. Minutes later, a black-coated wire was nailed to the beamed ceiling above us. Then a light bulb, flickering and struggling to outshine our candle, glowed in the night.
Pressed against the doors and windows were the intense faces and wide eyes of the villagers of Lukla. Awe and curiosity surrounded the miracle which is now so commonplace to us in America.
A lonely electrical wire, strung over the mountain, had arrived in the valley.
And so, a lightbulb had been turned on at Lukla.
Until then Lukla had no electric lights. It’s days ended when the sun set behind the mountain.
The lightbulb is Lukla’s first utility. No water purification process. No sewage treatment plant. No schools. No hospitals.
No books or newspapers for sale at a corner drugstore. There were no books or newspapers; and there were no drugstores.
All that will change. A lightbulb has been turned on in Lukla.
And more are coming, up and down the valley. But it will all take time and a careful allocation of very scarce resources of a relatively poor country. Our Sherpa guide, from Kumjung, a village which is a two-day walk from Lukla, proudly told us Kumjung will have its lightbulb in two years. In the meantime, the Yeti scalp which is revered in its Buddhist monastery will be worshiped by candlelight.
Our part of our planet may move into the future with infinite speed. But that part of our planet advances with painful slowness.
The fate of Lukla is the fate of almost two-thirds of the population of our world. Advanced societies, which have the time to occupy themselves with the self-made complexities of the subject matter of my New York conference, comprise, perhaps, only 5% of humankind.
And that brings me to the point of my story. It is our concentration and allocation of so many of the best-trained people we have on the inordinate complexities we have created a wise allocation of her own very scarce resources – our minds?
– At a time when deserts, now occupying one third of the surface of our planet, are expanding at an uncontrollable rate, starving man and animal alike?
– At a time when rain forests are retreating each year by a land size that exceeds the landmass of England, to the detriment of the very oxygen we breathe?
– At a time when population is exploding beyond the capacity of this planet to be supported?
Is the use of our trained minds to sort out a deal with our constant and growing body of regulatory complexity in our best long-run interests?
This is not the time our brightest need spend their energies sorting out the games we have decided to play.
There are lights to turn on for the Sherpas of Lukla. For the Campecinos of Cuzco. For the Masai of Arusha. for the hollow-eyed men and women in New York. For the people who call Tampa Bay home. And for all the places in our shrinking planet that need to be enlightened, not by electricity, but by the minds we have.
So. let’s organize ourselves for what we are meant to do. We are proceeding to tax simplification. An after-tax simplification, let’s keep going, through the whole unnecessarily irrational complex system and needless layers of rules and regulations that have lost all sense of meaning and purpose, except for their own self-perpetuation.
We need more lights turned on in Lukla. We need our best minds to help us do it.
Tax reform did take place in 1986, but the idea that reform included simplification was a myth – in 1986 or in the years following.
I remember writing a 26-page memo to my clients in 2005 about the newly adopted IRC§ 409A – a 5-page statute providing for the taxation of deferred compensation. Why did it take a 26-page memo to overview a 5-page statute? 187 pages of IRS explanation and 200 pages of IRS “final” regulations were necessary to launch the 5-page law.
The Code of Federal Regulations.
The Code contains 50 titles of regulations. The tax regulations are in Title 26, which has subchapters A through H. The regulations for 409A are in Part 1 of Subchapter A.
In 1938, the Code of Regulations consisted of 18,000 pages of regulations. By 2014, the Code contained 175,000 pages.
In 2016, Congress adopted 2,966 pages of laws and the Federal Government’s executive [administrative] agencies added 97,110 pages of new regulations.
And then, of course, there are state and local regulations.
Lessons for the Learning.
George Will tells the story in his Conservative Sensibility of Utah Senator Mike Lee having two stacks of paper in his office. One stack contained 800 pages of laws passed by Congress in a recent session and the other, “about 80,000 pages, is all the regulations proposed and adopted in one year by executive [administrative] agencies.”
Will points out:
“The lesson that Lee wants visitors to his office to learn, and to be dismayed about, is that Congress is no longer the primary institution of American’s self-government.”
Lee’s lesson is critical for both liberals and conservatives:
The Constitution places the sole responsibility for the laws that regulate us on Congress, our elected representatives. What has happened over the years is that Congress has delegated critical legislative power to the Executive branch, which operates our administrative agencies:
• Our President, our Nation’s chief executive, appoints political heads to administrative agencies, subject to perfunctory approval of the Senate – except where the President, as Trump has become fond to do, appoints temporary agency heads not approved by the Senate.
• Our dependence on administrative agencies to make and enforce our laws has given Congress the opportunity to pass vague laws – “politically correct” laws that allow both conservatives and liberals an opportunity to boast about what they have done for the people, without in fact little if anything of substance. Thus, the laws are too frequently void of the details a conscientious executive – our President – and his administrative agencies need to guide their actions, which allows President and the administrative agency to fill in the details and provide the substance without ample consideration of the will of the American people.
• With little legislative guidance from Congress, the President and the President’s agency heads decide not only the depth of the administrative regulations, but how they will be enforced. (Although, with mixed results, the ACLU and a few other legislative activists do their best to challenge agencies when they go too far astray – but courts are forgiving when it comes to measuring the responsibilities of agencies.)
• Over the years, the Supreme Court has adopted the position that it is not unconstitutional for Congress to delegate its legislative powers to the Executive Branch’s administrative agencies. (In recent times, Congress has also delegated most of its constitutional-war powers to the President as well. An almost total copout of Constitutional responsibility.)
o A judicial review of administrative law regulations is usually perfunctory. For the most part, agencies have the power to interpret their own regulations.
o Thus, it’s rare for Courts to “say what the law is,” which is their fundamental Constitutional responsibility – recently, in a related context, ignored by the Supreme Court, which held 5 to 4 that the Court does not have the power or right to rule on election-district gerrymandering.
• And agency lawyers and other personnel come and go between the industries they are charged to regulate and their regulatory agencies.
o I remember a hearing a client had before the SEC. The SEC’s hearing officer [supposedly an independent attorney] and the SEC counsel, the SEC’s advocate, flew to Tampa together from [and back to] Washington for the hearing. Their conversations were those of obvious friends who have taken these trips together several times.
o Special counsel for my client was a former SEC counsel, having moved recently from representing the regulator to representing the regulated – a common occurrence in all industries regulated.
• The process strengthens the hands of lobbyists, as the regulators’ staff move back and forth between the regulating agencies and their regulated industries.
o The movement of counsel and other staff personnel from the regulator to the regulated gives the lobbyists advocating for their industry clients special power to shape administrative law regulations in their favor.
o A cursory examination of our current administration appointments as head of its regulatory agencies is shocking: most come directly from the industry’s they regulate, and when their work for our government is over, most will return to their regulated industries. For example, our current administration replaced academic members of EPA advisory boards with industry appointees favoring polluter backers. There is also evidence that at least one of the current administration appointees continued to interface with his former employer in violation of federal ethics rules.
o Thus, industry lobbies have open access to make their point and achieve their sought-after results with little interference, and certainly without the back and forth that is expected in Congressional legislative hearings by members of both parties.
o In his “This Land: How Cowboys, Capitalism, and Corruption are Ruining the American West,” as he provides evidence of the “evisceration of public lands,” by the Forestry Service, a stressed-out Christopher Ketcham writes, “The Forestry Service, I had thought, were the good guys.”
• As Will points out, Congressional delegation to the Executive Branch is not only contrary to our Constitution, but to the writings of Locke upon which our Declaration of Independence and Constitution are based. It also ignores Madison’s caution in his Federalist 47: “The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, few or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny.” The Court’s reasoning? Life has become too complicated to do it any other way.
It’s little wonder that Trump received rave support when he ordered his administrative agencies to cancel three regulations for every regulation they added. Or when he began to dismantle the Environmental Protection Agency and other agencies, which over the years, despite their shortcomings, have become the prime bastions of public protection.
Many political commentators call our administrative agencies our fourth branch of government, the branch which maximizes the power of the President, while minimizing the Constitutional balancing roles of Congress and the Supreme Court.
Will suggests what Congress should have done was to keep its legislative responsibility and strengthen its professional staffs to provide it with the necessary expertise to legislate. Such a process would minimize its current output of vague laws by Congress and substantive laws adopted in the form of administrative regulations by administrative agencies run by unelected political appointees with the power to tilt the thrust of vague laws in favor of their political beliefs, often contrary to the interests of the American people, and in many cases, solid evidence and good science to the contrary.
However, Will’s suggestion is not likely to become law. The fourth branch of government is too entrenched, too powerfully corrupted by what has become a Democracy of Dollars and not a Democracy of the People.
How we restore Constitutional balance – if we restore Constitutional balance – should be the prime thrust of the 2020 elections. Can we elect Congressmen with the guts to restore the Constitution and its balance of power?
Yes, we have too damn many regulations; but we can’t live without good regulation. We just need to go about regulating our lives in a fundamental, Constitutional way for the benefit of us all. That’s how we will turn more lights on in our Luklas.