Self Employed Australia

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“Everyone needs an Advocate”

USA

Anti-Trump Democrats get political black eye from small business

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Thursday, May 28, 2020

The anti-Trump forces in the USA have just suffered a surprise defeat in a Californian bye-election that has likely implications for the November US Presidential election.

The Democrats suffered a massive backlash against them because of vicious anti-small business laws that have crushed the self-employed small business sector in California.

The law (AB5) started on 1 January this year and essentially outlawed self-employment in California. It’s caused havoc with huge job losses, large numbers leaving the state and economic collapse in independent contractor industry sectors. This bad job wave swept across California just before the Covid-19 disaster.

The Democrats who control the California legislature and created the anti-self-employed laws have responded with arrogance. Go get a union ‘employment’ job they say! Self-employment’s not a ‘real’ job the Democrats claim. Voters have thought differently.

The political power cards play out as follows.

In the US Federal Congress (parliament) the Trump Republicans control the Senate (upper house). But the anti-Trump Democrats control the (lower) House of Representatives with 235 seats to the Republicans’ 197 seats. This Democrat control of the House of Representatives frustrates and limits the Trump agenda. California is the key state giving Democrats their control.

Of the 435 seats in the House, 53 come from California. The Democrats have 46 of those seats. If the Trump Republicans were to win 20 seats from the Democrats and Trump remained President, Trump would control the US Congress. The Californian Democrats’ hatred of small business raises just that scenario: a Trump Presidential and Congressional win.

Just a week ago a Republican Trump loyalist won a bye-election for a Californian House seat, defeating the incumbent Democrat with a 19 per cent swing. A bye-election ‘flip’ of this sort has not happened in California since 1998, let alone one with a swing of this size.

The Trump Republican candidate campaigned hard against the Californian Democrats’ anti-small business law (AB5).

The national implications are clear. The Democrats’ Presidential candidate, Joe Biden, has endorsed California’s AB5, promising to take it across America if he wins. The Trump Republicans will campaign saying Democrat Biden will destroy small business across America. It’s powerful political messaging underpinned by the glaring reality of California’s AB5.

The Democrats have dug themselves into a deep hole. Their actions speak of hatred of self-employed, small business people.

What unfolds in the USA with the November Presidential and Congressional elections over the rights of self-employed people holds potential lessons for Australia—namely, can a political party attack self-employed, small business people and survive politically? Watch this space!

US Congress and Trump agree. Discipline the IRS to prevent taxpayer abuse. Message for Australia

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1 July 2019 proved an historic day for US taxpayers when President Trump signed into law the Taxpayers First Act.

The Act is intended to bring discipline to the US tax agency (IRS) after years of strong evidence of both its administrative incompetence and systemic abuse of taxpayers, particularly small business people.

The Bill passed Congress with support from all political parties.

There’s a massive lesson here for Australia. If we’re to be internationally competitive, we must bring justice and the rule of law to the way the Australian Taxation Office administers tax.

In Australia, particularly over the last 18 months, the evidence of ATO abuse of small business people has mounted and is overwhelming. See, particularly, the Four Corners program, ‘Mongrel Bunch of Bastards’.

The US Taxpayers First Act has specific provisions to protect small business owners from IRS seizures of their bank accounts. There is major evidence that the IRS has been wildly abusing its powers to seize bank accounts in cases where there was no evidence of small business taxpayers avoiding tax. The stories here strongly resemble those we see with the ATO garnisheeing bank accounts in Australia. Read the Small Business Ombudsman’s report on the ATO’s garnishee abuse.

Of the twelve-or-so measures in the US Taxpayers First Act, the following six are highly relevant to the sort of things we should be doing in Australia to reform the ATO.

  1. Greater Access to Independent Review: Guarantees taxpayer access to an independent appeal on an audit decision. Before an appeal the IRS must hand over to the taxpayer the taxpayer’s case file.
  2. Limited Seizure of Property: Property seizure limited to illegal cash transactions or concealing criminal activity. Post seizure and hearing requirements to protect taxpayers. (***Highly relevant to the ATO garnishee issue)
  3. Listening to the Taxpayer Advocate. The USA has an independent Taxpayer Advocate (NTA), a bit like the Australian Inspector-General of Taxation (IGT). The US law would grant the NTA significant new powers to give the IRS enforceable directives on taxpayer cases.
  4. Improved customer service: IRS required to adopt best practices of private sector customer-service providers.
  5. Easier Settlement Procedures: No fees by IRS if a settlement deal is done with the taxpayer.
  6. Earlier Notice of third-party questioning: The IRS must notify a taxpayer before it makes enquires of third parties about your tax (for example, a customer).
In 2018 we put together a position and discussion paper for a package of reforms of the ATO. Nothing in our reform package involves reducing the ATO’s powers to collect tax. It’s about ensuring checks and balances and the proper application of the rule of law to the ATO’s powers and behaviour. Since the federal election outcome we have started our advocacy campaign to make progress with ATO reform. We will release more on this over the coming weeks/months.