MILLION DOLLAR CAP:
NO ONE SHOULD GET MORE THAN
ONE MILLION DOLLARS PER YEAR
FROM THE U.S. TAXPAYERS

SYNOPSIS:

    When we begin to look for places to cut the federal budget,
we usually pay attention to large cuts seen from above:
Cut 'entitlements', military spending, foreign aid, tax-deductions.
But we could also cut from below:
Which particular individuals receive too much money from the taxpayers?

    Following the money will discover several individuals
who are now receiving more than one million dollars per year.
Should we cap such salaries and other benefits and payments?

OUTLINE:

1.  EVERY TAXPAYER COUNTS,
     EVERY RECIPIENT COUNTS.

2.  WHO RECEIVES TOO MUCH MONEY FROM THE U.S. GOVERNMENT?

       A.  DEFENSE CONTRACTORS.

       B.  DOCTORS PAID BY VARIOUS HEALTH-CARE PROGRAMS.

       C.  HEALTH-INSURANCE EXECUTIVES.

       D.  CORPORATE FARMERS.

       E.  WHEN PRIVATE CORPORATIONS OR ORGANIZATIONS
             ARE TAKEN OVER OR 'BAILED OUT' BY THE U.S. TAXPAYERS.

       F.  FOREIGN GOVERNMENT LEADERS.

3.  WHO WILL PROTEST LOSING MOST OF THEIR INCOME?

4.  THIS MILLION-DOLLAR CAP
            COULD APPLY TO THOUSANDS OF SITUATIONS. 



MILLION DOLLAR CAP:
NO ONE SHOULD GET MORE THAN
ONE MILLION DOLLARS PER YEAR
FROM THE U.S. TAXPAYERS
by James Leonard Park

1.  EVERY TAXPAYER COUNTS,
     EVERY RECIPIENT COUNTS.

    When discussing cutting the federal budget of the United States,
one of the most common responses to any proposal
is that it will make little difference:
Your suggestion is too small to consider.

    Similar thinking leads to tax-evasion:
My small amount of taxes due will not affect the federal deficit,
therefore I need not be very particular about paying everything I owe.
And news stories sometimes expose people high in government
who have not been paying all of their taxes.
They obviously think that paying their own taxes does not matter,
especially if they are not likely to be caught avoiding taxes.

    But every dollar in and every dollar out does count.
The U.S. Treasury pays the expenses of running the USA.
But the money paid out for aircraft carriers and highways
is not simply made-up numbers on paper or computer memory.
Real money must come into the U.S. Treasury
to cover every dollar the United States spends.

    When there is not enough in the U.S. Treasury to pay all the bills,
the U.S. government must borrow money by issuing bonds
to balance the money coming in and the money going out.
Even some members of Congress do not fully grasp this:
Do they think that the Treasury can just keep printing checks
without regard to the money coming into the Treasury?

2.  WHO RECEIVES TOO MUCH MONEY
            FROM THE U.S. GOVERNMENT?

    The President of the United States is paid $400,000 per year,
plus fringe benefits too numerous to name.
He (and later she) performs services for the USA
that are well worth what we pay him or her. 

    When wondering who receives too much of the taxpayers' money,
we can begin with people who receive several million dollars per year
for goods or services provided to the USA.
We do not easily know who these people are.
They keep low profiles in order not to attract attention to themselves.
But if we follow the money, we should be able to identify
who is receiving too much—either legally as by defense contracts
or illegally by means of various kinds of corruption and fraud.

    Lest we get into the mode of 'bashing the rich',
it is well for us to note that we Americans
voluntarily pay millions of dollars every year
to people who play professional sports, sing songs, or make movies.
As long as they pay all taxes due on these large incomes,
we should not object to them being very rich.

    But when it comes to people who are paid by the taxpayers,
should we limit the amounts they receive each year?
This essay proposes that we establish a universal policy
of not paying any person more than one million dollars per year
for providing goods and services to the United States of America. 



       A.  DEFENSE CONTRACTORS.

    If we establish this cap on federal payments to any individual person,
the low-hanging fruit will be the people who are getting checks
totaling in excess of one million dollars per year.

    In the United States, private corporations create the weapons of war.
The federal government pays them to build tanks, ships, & airplanes.
At present, there is no limit on the amount of money any individual can earn
as the result of one of these defense contracts.
But all federal contracting could be changed to specify
that no individual in any company making anything for the U.S. government
shall 'earn' more than one million dollars per year.

    If these corporations with government contracts
are correctly reporting all salaries to the Internal Revenue Service,
the laws could put a million-dollar limit on one person's income.

    Of course, lawyers will be needed on both side of such accounting
to make sure that corporate boards do not just shift the compensation
to keep paying their executives more than a million dollars per year.
The revised federal law limiting the amount to be paid to any individual
will have to foresee how companies will attempt to get around this limit. 

    For example, total compensation will have to be defined
as everything included in the cost to the company for that employee.
Sometimes the stock-options and other fringe benefits
are greater than the stated salary.

    At present, the written defense contracts do not state
how much money will be paid to each employee
who will be involved in building an aircraft-carrier for the United States.
But honest and complete income-tax returns for all employees
should disclose what they were paid.

    Probably several top executives of the defense contractor
receive more than one million dollars per year from the U.S. taxpayers.
This is all completely legal.
Of the proverbial triad—waste, fraud, & abuse—
executive compensation in the defense industries
would not usually be classified as fraud.
But we might conclude that such salaries waste taxpayers' money
and constitute an abuse of the system.

    Defense contracts could be changed for all future expenditures
so that no one person would be paid
more than one million dollars per year for his or her personal efforts.

    If any individual works 2,000 hours in a year,
one million dollars comes to $500 per hour!
Surely, that is enough to pay even the most brilliant mind
working on behalf of the people of the USA.

    Of course, any employment includes various costs.
The person in charge of making an aircraft-carrier
will have thousands of other people working on that project
and many legitimate business expenses associated with the effort.

    Careful bookkeeping is required to determine
exactly how much of the money paid for the aircraft-carrier
is salary and other benefits for each worker.
But this is exactly the way our income-tax system works:
The accounting department explains where each and every dollar goes.
Some money goes for steel to build the ship.
Some goes to pay local property taxes for the ship-yard.
(And each company that supplies something to the ship-builder
should also limit the cash received for the services of any individual
to no more than one million dollars per year.)
Other costs of ship-building includes money for salespeople and lobbyists
who got the contract in the first place.
Since lobbyists earn their incomes indirectly from the U.S. taxpayers,
should their incomes also be less than one million dollars per year?

    All future defense contracts could require careful, honest accounting
showing that no person was paid more than one million dollars per year
from taxes collected from Americans.

    Some defense contractors would drop out of the business
of making the weapons of war.
Their executives could 'earn' multi-million-dollar incomes
from making cars instead, for example.

    But some public-spirited contractors would be proud
to continue making airplanes without charging the taxpayers
more than one million dollars a year for any employee.

    By executive order, President Obama ordered a minimum wage
for everyone working under a federal contract: $10.10 per hour. 
Later this minimum wage could be put into federal law.
Would it be possible to put a maximum wage into federal contracts?
Should contracts specify both a minimum wage (say $15 per hour)
and a maximum wage of $500 per hour for anyone under that contract?

       B.  DOCTORS PAID BY VARIOUS HEALTH-CARE PROGRAMS.

    I myself have been saved from death by doctors paid by taxes.
And all of my on-going medical expenses are paid by the public.
Thank you, taxpayers!

    Skilled doctors should be well paid for their efforts.
And doctors who are paid by private funds
should not have any upper limit on their incomes.

    But when doctors are paid by taxes collected from everyone,
then it does not seem unreasonable
to limit their incomes to one million of the taxpayers' dollars per year.
How much of the income of top medical specialists comes from taxes?
Highly-skilled doctors definitely do good work, which does save lives,
but if their income is mainly provided by the taxpayers,
should they receive more than the President of the United States?

    Perhaps the way to correct such abuse of the taxpayers
would be to identify just where public money goes.
Private doctors have a right (under our system)
to make as much money as they can out of the health-care system.
And they often do 'earn' thousands of dollars per hour for their services.
The law should not stand in the way of private payments.
But when doctors are getting very rich with money from the taxpayers,
perhaps there should be some way of limiting this cash-flow.

    A million-dollar income cap for money from the taxpayers
would also be one meaningful way to control health-care costs:
No one who receives most of his or her income from taxes
should receive more than one millions dollars in any one year.

    Of course, doctors also have lots of support staff and equipment.
Here again, the accounting department sorts out how
much should be paid for each part of the surgery, for example.
And the part paid directly to the surgeon
is the income from the taxpayers
that would be subject to the one-million-dollar limit.

    There are probably only a few millionaire surgeons
getting more than a million dollars from the taxpayers per year.
But some limitations should be put into place.
Otherwise, surgeons will charge too much for their services.

    And, as said before, doctors paid from private sources
would still be able to charge unlimited amounts for their services.
This might cause some doctors to leave the health-care systems
supported by tax-dollars and work exclusively for private systems,
where they can 'earn' unlimited amounts of money.

    Changing how health-care workers are paid from public funds
would require careful re-drafting of health-care legislation.
And doctors who are complying with the spirit of this limitation
will be able to explain the various ruses created by other doctors
in their efforts to evade the million-dollar limit. 

    But there will always be enough public-spirited doctors
who are willing to work for the good of their patients
without expecting more than a million dollars per year.

    There are already elaborate methods in place
for reporting fraud in the health-care system.
More efforts should be developed in this direction.
At present the bills are paid as submitted.
Only later might there be some investigation of the charges.

    One obvious way to detect fraud in health-care billing
is to discover when one doctor treats a huge number of patients.
Honest doctors can help us to understand
what a reasonable patient-load looks like.
Doctors who charge the U.S. government millions of dollars per year
are clearly cheating the taxpayers.
Following the largest flows of cash will uncover
doctors who are exploiting the taxpayers.



       C.  HEALTH-INSURANCE EXECUTIVES.

    Health-care reform in 2010 required all Americans
eventually to purchase private health-insurance.
(Patients under Medicare, Medicaid, & the Veterans Administration
were not required to purchase private health insurance.)
But this reform did not limit the amount of taxpayers' money
that goes to executives of the heath-insurance industry.

    However, that oversight could be changed by a revised law.
As long as it is primarily money collected from the taxpayers,
then no individual should receive more than one million dollars per year.

    Because health-insurance has been an unregulated industry,
some executives of the insurance companies
have been collecting hundreds of millions of dollars each year.

    If some companies avoid all moneys collected from taxpayers,
they will be allowed to pay their executives unlimited amounts.

    But, if the money going to the top executives
comes primarily from the American taxpayers,
then the million-dollar-limit should apply.
If this cap is written into future health-care legislation,
then some insurance executives who are used to unlimited income
will move their companies exclusively
to those payers who impose no such salary-caps.

    There will always be public-spirited health-insurance companies
willing to provide health coverage without paying their executives
(or anyone else receiving money thru that company)
more than one million dollars per year.

    Eventually private insurance companies
might be completely eliminated from tax-supported heath-care.
The Veterans Administration already operates this way:
Taxes pay directly for all health-care provided by the VA.
Private health-insurance companies are not involved at all.


       D.  CORPORATE FARMERS.

    Should taxpayers pay money to support farmers?
Any such examination of farm programs
might begin with the most obvious abuses.
Some multi-million-dollar farm corporations
are still receiving more than $1,000,000 per year from the U.S. Treasury.

    Originally begun during the Depression,
when most farms were small and independent,
farm subsidies were intended to help small family farms.
But now most money goes to huge corporate farming enterprises.

   Because crop-supports are given to acres instead of to farm families,
sometimes the owners of farm land are receiving
more than one million dollars of taxpayer money each year.
Such farm supports were originally intended to help poor farmers.
And where that still does work as planned, it should be continued.
But rich farmers have learned how to 'game the system'
and how to 'farm the taxpayers'.
Occasionally, Congress limits the payments to individual farmers,
but farmers and their lawyers are usually able to get around these limits.
For example, there are more farms in Kansas than there are farmers.
People who own farm land can sub-divide it into smaller fictional farms,
each of which is eligible for the maximum crop-support payment.

    When people are named as recipients of farm subsidies,
they sometimes cannot identify which piece of land they 'own'.
The huge tracts of farm-land have been sub-divided only on paper.
Only the land-surveyers would be able to point to the actual acres
that are receiving money from the U.S. taxpayers.

    Many mailing addresses that are receiving 'farm' payments
are actually located in large cities.
Would addresses in Manhattan and near Washington, D.C.
be places to begin looking
for this abuse of the system of 'crop-supports'?

    Are tobacco subsidies the most abusive way to farm the taxpayers?
Even people who are far from the actual fields where tobacco is grown
are paid large sums of money from the taxpayers
because of the ways these laws were written.
How many of these tobacco millions
are actually going to addresses in New York City?
Why are we sending taxpayers' money for tobacco subsidies
to addresses so many miles away from the tobacco fields?

    And the basic idea of supporting tobacco production
does not seem to be a good use for tax-money
paid by regular taxpayers everywhere in the USA.
Who can defend huge payments to people who own tobacco land?
If we want to help people to give up smoking,
why not end all subsidies to those who grow this harmful product?

    As a matter of public health, in addition to all of the taxpayers' money
going into programs intended to help smokers give up tobacco,
the USA could completely end payments related to tobacco fields.
We could either immediately end all tobacco subsidies, crop-insurance, etc.
Or we could phase out all payments over a period of five years.
This would encourage the same farm land to be switched
to crops that benefit the human race rather than kill 1,000 people per day.

    Payments for acres planted and to keep agriculture prices high
are now being replaced by subsidized crop-insurance.
Land-owners can buy private crop-insurance
with the taxpayers paying about 2/3 of the premiums.
How is this emerging system of farm supports likely to be abused?
If the crop fails, the insurance company will pay. 
The owners of marginal farm land can make money
by planting crops that are likely to fail
as long as the total insurance pay-out will be more than
what they put into their part of the premiums
and the costs of planting the crop that is likely to fail.
And if by chance the weather is ideal,
they might make more money by harvesting the fields.

    Perhaps all farm subsidies should be replaced by
income support for poor people,
or at least people living on income-producing farms.
All people living on the land could be assured of income
equal to 100% of the poverty level.
This is the level of income support now enjoyed
by people living on Supplementary Security Income (SSI).
People actually living on farm land would be able to survive
on this low level of income more easily than the urban poor
because they can grow some of their own food.

    Because many farmers also have non-farm jobs,
they might be well above the poverty level already.
Such farmers would no longer be subsidized by the taxpayers.
And farmers over age 65 already receive this income support
if they do not have enough income from other sources.

    This would be a radical revision of farm supports.
The focus would shift to actual people living on the land:
They could earn as much as they like from farming
—and/or any other means of making a living.
But if they are still below the poverty line,
the federal government would bring them up to that level.

    Thus, instead of sending millions to large corporate farms
and to people whose only role is to own farm land,
the maximum payments to farmers who are actually living in rural areas
would be about $10,000 per year—if they had no other income.
This is well below the million dollar cap.

    Eventually all farm subsidies will probably end.
Farmers are well able to make a living off the land.
They do not need support from the taxpayers.
Without changing the specifics of existing farm programs,
all programs could be phased out over a period of five years:
In the first year after farm-reform,
the recipients would receive 80% of what the programs provide.
In the second year after reform,
the recipients would receive 60% of their old payments.
In the third year after this new farm bill is enacted,
the payments would be further reduced to 40% of the previous level.
In the fourth year, the payments would be down to 20%.
And as of the fifth year, there would be no more taxpayer money
going to farm land, crop-supports, crop-insurance, deficiency payments, etc.

    The thousands of 'farmers' now receiving support from the taxpayers
would be on notice that they will be weaned over a period of five years.
Those who know they can make a living from farming the land
will stay on the land and receive their incomes from whatever they produce.
Those who know they have been farming the taxpayers will sell their land
to other farmers who have the capacity to make farming work for them.
The taxpayers will save millions of dollars.
And the remaining farmers will be forced to become more efficient.
Some farmers will continue to raise horses or cattle as a hobby
while they make their real income in other ways.

    And as a replacement for all farm programs,
people living on the land who are less than 65 years of age
could be supported at the same level of income as all Americans over 65.
For them, income support would replace farm supports.
And because they have a guaranteed annual income,
some could sell their land to people who want to produce something.

       E.  WHEN PRIVATE CORPORATIONS OR ORGANIZATIONS
             ARE TAKEN OVER OR 'BAILED OUT' BY THE TAXPAYERS.

    Whenever a private organization is saved from bankruptcy
by an infusion of money from the U.S. Treasury,
the U.S. government should reduce all salaries in that company
to normal government pay-levels.

    At least, no single individual should receive
more than one million dollars of taxpayers' money per year.
When private corporations in trouble ask for help from the taxpayers,
the leaders of those corporations should know in advance
that their own salaries will be drastically reduced
as a sacrifice the executives make for saving their jobs.

    For example, top executives of Freddie Mac and Fannie Mae
were still earning multi-million-dollar pay-packets
years after these agencies were taken over by the U.S. government.
Since these agencies will never become independent again,
when will the salaries be reduced to regular federal pay-grades?

    If and when such financial entities become independent again,
they would be free to resume paying
their traditional high salaries and benefits.
The unlimited salaries could be resumed
after the companies pay back the bail-out,
including interest for the time the taxpayers' money
was needed to keep the company from going broke.

    When taking over a private corporation,
the U.S. government will need teams of accountants and lawyers
who will examine the books of the failing company
to uncover all of the hidden means of compensation.
Total compensation means everything paid by the company
to keep that executive on the payroll.

     Most corporations have very complicated pay-packages,
which are in part intended to reduce taxes paid by the employee
and to avoid the one-million-dollar cap for tax-deductable salaries.
There will be battles between lawyers and accountants on both sides.

    The executives of the failing corporations
will try to keep all of their fringe benefits,
even if they agree to reduce their cash salaries
to less than one million dollars per year.

    For example, if the CEO has been accustomed
to receiving 100 million dollars per year,
then he will be required to give up
the 99 million dollars in excess compensation
if the U.S. taxpayers are going to be paying his salary.

    The stock-options, life-insurance, pension-funds, cars, & jets
were all ways of trying to give millions to the CEO without
anyone paying taxes on these forms of compensation.
The company might provide payment to family members
who do little or no work.
Rich bonuses might be deferred until years later or after retirement
to avoid being taxed now or counted as part of the cash salary.

    If this person is now a government employee,
he or she should not be paid any more than any other employee
of the U.S. government with similar skills and responsibilities.
Careful analysis will discover which pay-grade is most appropriate.

    If such provisions had been in place
when government hand-outs saved many Wall Street firms,
some executives would have preferred to let their companies go bankrupt
rather than lose so much of their former incomes.
They would have moved on to other Wall Street investment companies,
where they would continue to receive millions of dollars every year.

    Even if the compensation can be said to come from company profits,
if the taxpayers are supporting the company,
then all salaries should be drastically reduced
to the level of regular employees of the U.S. government.

    And if the corporations repay all of their loans (with interest),
they would be free to pay as much as they please to the CEO
and all other employees.



        F.  FOREIGN GOVERNMENT LEADERS.

    We might feel that it is in our national interest
to keep some foreign national leaders in their positions.
But if it becomes known that the U.S. taxpayers
are putting more than one million dollars per year into their pockets,
then that cash-flow should be stopped or at least reduced.

    One foolish practice of the past was to send actual U.S. currency
to fund foreign governments we wanted to keep in power.
Usually this resulted in billions of dollars simply disappearing
without any records of who got what.
When American troops or diplomats were also paid in those countries,
we did not pay them using $100 bills.
Perhaps the first part of re-building other nations
should be establishing a banking system everyone can trust.
Then everyone can be paid by checks or electronic payments,
with good record-keeping of where each U.S. dollar goes.

    When dictators are deposed, it is often discovered
that they have billions of dollars stashed away in Swiss bank accounts.
Some of this money came from stealing from their own countries.
But at least a part of this came from U.S. foreign aid,
which was supposed to help the people of that country.

    When we give foreign aid to other countries,
we must demand accounting as good as accounting
for the taxpayers' money being spent within the USA.
We should never send jet planes filled with $100 bills.
It is far too easy for every level of government
to take some of those $100 bills as they pass thru the office.

    When we pay in cash without requiring complete record-keeping,
some of the money collected from American taxpayers
ends up in the hands of people we do not want to support.



3.  WHO WILL PROTEST LOSING MOST OF THEIR INCOME?

    The people who have benefited from the waste, fraud, & abuse
will, of course, protest loudly when budget-revisions end those payments.
And frequently such special interests are paying lobbyist in Washington
several million dollars each year
to keep that money flowing from the U.S. Treasury.

    But putting the common interest of all the U.S. taxpayers
ahead of the special interests that have been draining the Treasury
should eventually win the day
because there are many more taxpayers than special interests.

    Also, the influence of professional lobbyists would be reduced
if their costs were no longer tax-deductable.
Why should all of the U.S. taxpayers subsidize organizations
to lobby Congress to keep the money flowing?
The members of the U.S. Senate and U.S. House of Representatives
should be able to put the public interest ahead of the special interests.
Campaign contributions will be reduced from the special interests,
but the votes of the people should reward elected representatives
who are able to reduce waste, fraud, & abuse.



4.  THIS MILLION-DOLLAR CAP
            COULD APPLY TO THOUSANDS OF SITUATIONS. 

    The mass media have often done a good job of exposing
foolish flows from the U.S. Treasury.
But there are probably thousands of other ways
in which money is leaking away in large amounts
that have not yet been exposed.

    Whenever laws and regulations are revised,
especially when the taxpayers' money is going to be spent,
new controls should be inserted to assure
that no person is going to receive
more than one million dollars a year
or more than $500 per hour. 

    After we have plugged the largest leaks from the U.S. Treasury,
careful investigators can begin to look for
smaller ways in which our taxes are being wasted.
We carefully examine each dollar we put into the U.S. Treasury.
Let us hope that the out-flows can be controlled just as carefully.


Created August 6, 2011; Revised 8-18-2011; 8-20-2011; 8-24-2011; 10-26-2011; 11-4-2011; 11-9-2011;
11-9-2012; 11-14-2012; 11-15-2012;
1-4-2014; 2-28-2014; 4-23-2014; 5-29-2014; 8-8-2014;
1-25-2015; 3-21-2015; 9-10-2016; 1-13-2018; 4-9-2019;

AUTHOR:

    James Park is an independent author.
His income has been well below taxable level since 1968.
(However, he still pays Social Security taxes,
which are due when earned income goes above $400 per year.)
And he receives income-support from the Social Security Administration
and health-care benefits from Medicare and Medicaid.
Many thanks to taxpayers at all levels of government.

    Will other out-flows from public funds
ever be as well-controlled and monitored?

    Non-financial facts about James Park
will be found on his personal website, which is linked below.

    One closely-related essay is:

The Social Security Tax:
Reforming the Most Unfair Federal Tax

If you know about ways in which taxpayers' money is being wasted,
you can report this on a Facebook Page called:
"Americans Against Waste, Fraud, & Abuse".

The essay above has now become a chapter in a book called:
Fixing America
 several additional ways to make a better future.


Go to other on-line essays by James Park,
organized into 10 subject-areas.

Go to the beginning of this website
James Leonard Park—Free Library