Summary: This article encourages usage of the revenue tariff as the first source for funding the U.S. federal government, calibrated at a rate to maximize the cash flow into the federal treasury. These funds should be used to exempt corporate taxation and other fees on U.S.-based manufacturing, allowing them to produce items at a lower, more competitively priced cost. More domestic employment and reduced cash transfers overseas will result in cost savings for the government that grow over time. Apply those savings in turn towards having ever-higher minimum income thresholds before the personal income tax comes into effect.
Revenue tariffs--a method of funding the government's responsibilities by means of a tax we place on ourselves when we buy a new foreign-made product--play just a minor role in the federal budget today. In 2018 they provided only about $41 billion or 1.25% out of a $3.3 trillion budget, with personal and corporate taxes providing about 57% (the payroll tax for Social Security and Medicare making up the bulk of the remainder). However, with the exception of an income tax for a twelve year period during the Civil War and Reconstruction, providing about 20% of the nation's income, we did not have an income tax until the passing of the 16th Amendment in 1913 which allowed the federal government to collect tax not proportional to a state's population. The 1960 Treasury Report (four pages in question, compare customs vs. total receipts) show revenue tariffs supplying 80-90% of government needs up to the Civil War, and about 60% through the second half of the 19th century and first decade of the 20th. Income taxes first overtook revenue tariffs in 1917 ($360 million to $226 million), and in the following year blew past them for funding World War I ($2.3 billion vs. $180 million). In the 1920's tariffs bounced back a bit, providing about 10-20% of government revenue, before decreasing in importance again. Since the end of World War II tariffs have been providing the 1-2% that they deliver to this day.
In discussing tariffs, it is necessary to distinguish revenue tariffs--the subject of this article--from protective (or prohibitive) tariffs, as they differ in their manner in which they boost domestic manufacturing and are at opposite ends of whether the purchase of foreign-made products should play a role in funding of government. Most journalists supporting tariff-free access for foreign-made products to the United States (i.e., free trade) use "tariffs" in the easier-to-rebut protective sense, causing revenue tariffs to miss proper consideration.
The revenue tariff is a tax placed on new foreign-made products that is intended to fill government coffers allowing taxes to be reduced elsewhere in a targeted manner. For the case of a $120 Chinese-made computer monitor that presently could not be made for less than $400 in the United States, for example, a 20% revenue tariff places $24 in the federal treasury, making the item $144 for consumers. It still does not cause one to buy the $400 U.S.-made monitor, however the tariff money raised allows for removing taxation on U.S. manufacturers of all products, dropping their prices and hence expanding the fields of other U.S. products which can now be competitively priced. For the case of a foreign-made item selling for $10 and a U.S.-made one that can be produced for $13, a 20% tariff raises the price of the former to $12 and removed corporate taxes and other revenue-generating fees from the latter may drop its price to $11, enabling that product to be domestically made.
Protective tariffs are not intended to provide revenue for the U.S. treasury but are instead meant to compel purchase of the American-made product. For the case of the $120 Chinese vs $400 US computer monitor, we place a 300% tariff on the former, making it $480, so the American monitor gets bought instead and no tariff revenue sent to the federal treasury. Without this additional source of government revenue, America's tax reliance on personal and corporate income taxes remains largely the same, although probably reduced somewhat due to higher employment creating more taxpayers. Protective tariffs form a direct way of forcing people to buy domestic even where it's not cost-effective, dropping standard of living in the process. Although American manufacturers would still need to compete against themselves, providing such competition exists, there would be reduced incentive to compete well against foreign manufacturers as they can always rely on a protective tariff to make the foreign product more expensive.
It is perhaps instructive to note that free traders and supporters of protective tariffs find themselves in agreement on the inappropriateness of government using the sale of foreign-made products to fund its responsibilities, but for different reasons, the former because that would mean the tariff rate is nonzero, the latter because that would mean the tariff rate wasn't sufficiently high enough to compel the purchase of the American product. Free traders and supporters of revenue tariffs on the other hand differ on whose manufacturing--domestic or foreign--they want to see taxed. With the former, corporate taxes on domestic manufacturing and income taxes are to be used however much is necessary to avoid needing to obtain revenue from foreign products, keeping the latter at the lowest possible price. Their position seems analogous to arguing that foreign-made products should be exempt from state sales taxes, as that would form an unacceptable "barrier to trade", with the sales tax doubled on American-made products to make up for the lost revenue, and when American products get sold less as a consequence, to raise the sales tax on those dwindling American-made products even higher to make up for that lost revenue, a snowballing effect pushing most all production overseas.
Supporters of revenue tariffs are not hostile to foreign-made products, as per this system imports are needed to pay the taxes. Due to wide divergences in labor costs and employee regulations many products will continue to be made overseas. It is not acceptable, however, for foreign-made products to gain an edge because the U.S. government, in exempting taxation on foreign-made products, had to place taxes on domestic-made ones to make up the lost revenue, unnecessarily inflating the latter's price and causing domestic unemployment. Free trade, the increasing of the price of domestic products via taxation in order to drop the price of foreign-made products by keeping them tariff-free, is really reverse protectionism of foreign products over American-made ones.
What makes revenue tariffs such an efficient form of taxation, and why government should therefore always look at them as the first source of funding, is that they not only provide income for the government but play an unparalleled role in reducing the need for government outgo, the latter of which income taxes simply don't provide. When we're not buying $450 billion a year from China, our military doesn't need to spend as much to defend against her (or North Korea for that matter), saving money and creating more peace of mind. With greater meaningful employment in domestic manufacturing, social costs (welfare, crime/prisons, drug addictions, etc.) are also reduced. While mitigating the economic ills of free trade provides lots of jobs for government workers--perhaps making many of them and their private-sector contractors among the bigger supporters of free trade--these public sector positions require high taxation and mounting debt to support. Further, with manufacturing providing more decent non-college-degree requiring job opportunities, there would be a reduction in people seeking university degrees in an attempt to avoid the main alternative of lower-level service-sector jobs, degrees that often provide little more but a return to the same service-sector jobs but with the additional burden of four lost years and sizeable college loan debt.
Support for the revenue tariff is based on the belief that paying one dollar in revenue tariffs will save several dollars in income taxes over time and the belief that the society brought about by revenue tariffs is much better than one based primarily on income taxes. With the latter, one is usually just fixing the problems of an underperforming society due to lack of meaningful employment and heavy cash transfers to our Chinese adversary. With the revenue tariff, we're instead directing our taxes towards fellow Americans having meaningful work in the private sector and taking advantage, at income tax time, of the societal benefits that result.
An eloquent defense of tariffs can be found in Abraham Lincoln's Circular from the Whig Committee of 1843, in which he compares tariffs vs. direct (property) taxes: The tariff is the cheaper system, because the duties, being collected in large parcels at a few commercial points, will require comparatively few officers in their collection; while by the direct-tax system the land must be literally covered with assessors and collectors, going forth like swarms of Egyptian locusts, devouring every blade of grass and other green thing. And, again, by the tariff system the whole revenue is paid by the consumers of foreign goods, and those chiefly the luxuries, and not the necessaries, of life. By this system the man who contents himself to live upon the products of his own country pays nothing at all. And surely that country is extensive enough, and its products abundant and varied enough, to answer all the real wants of its people. In short, by this system the burden of revenue falls almost entirely on the wealthy and luxurious few, while the substantial and laboring many who live at home, and upon home products, go entirely free. By the direct-tax system none can escape. However strictly the citizen may exclude from his premises all foreign luxuries,—fine cloths, fine silks, rich wines, golden chains, and diamond rings,—still, for the possession of his house, his barn, and his homespun, he is to be perpetually haunted and harassed by the tax-gatherer.
Another special characteristic of revenue tariffs is that it is no longer necessary to be concerned about buying made-in-America products. Either you're buying American (great!), or you're flushing money into the U.S. treasury, providing the financing to keep domestic manufacturing cheaper, with other U.S. products being more easily sold to others as a consequence. It's win-win. This is a considerable improvement over the status quo which punishes caring for your fellow Americans, where those doing the right thing by buying American end up paying more in taxes (both directly via sales tax on higher priced U.S. products and indirectly built into the product by the taxes the American manufacturers and their workers pay) than those buying tariff-free foreign goods.
An tariff rate for initial consideration might be 20% world-wide with the exception of China which would have a 30% tariff. Why more for China? Similar to the gasoline tax meant to pay for roads -- the more gasoline one buys, the more one is driving, and hence the more of the road upkeep one should pay -- when we buy Chinese products we're strengthening their military and indirectly, North Korea's, causing us to need to spend more on defense to counteract them. Therefore we should be helping to cover those extra costs at the point of sale, so the more Chinese products each individual buys the more of the tax that individual properly pays.
One of the concerns about relying on revenue tariffs is that "other countries would retaliate!" and that American businesses would be worse off as a consequence. That would be a stronger argument with protective tariffs, but with revenue tariffs the level of blockage is less (again, we need imports to pay the taxes.) It's also based on an incorrect perception, that they haven't already been putting revenue or protective tariffs on our products all along. Much if not most free trade the U.S. has engaged in the past is of the one-way variety of them to us, seemingly the only direction that most free-trade supporting editorialists care about. As Patrick Buchanan noted, most countries use a VAT system which they exempt on products leaving their shores and place on foreign products coming in, serving effectively as a tariff that a VAT-less USA isn't counteracting.
Ultimately, we can't sell a product in foreign nations unless we're first manufacturing and selling the product here, and exempting U.S. domestic manufacturers from taxation provides the broadest nationwide benefit in allowing us to find and produce more things that, after being sellable in the USA, can next be sold world-wide. Also, as for retaliation, the $100 billion or so China buys from us, usually in agriculture, is primarily paid from the $450 billion that we buy from them, so those sales are easily made up as we spend more of our money on ourselves. Being their military competitor on Japan, Korea, and Taiwan, China has clear strategic reasons to buy as little from us as possible, making that country a poor investment for us. As for the oft-stated concern that tariffs on manufactured products would hurt the economic situation of our farmers (e.g., tariffs on Chinese products resulting in China buying less U.S.-grown soybeans), President Calvin Coolidge noted in his 1927 State of the Union address:
It is often stated that a reduction of tariff rates on industry would benefit agriculture. It would be interesting to know to what commodities it is thought this could be applied. Everything the farmer uses in farming is already on the free [i.e., untariffed] list. Nearly everything he sells is protected. It would seem to be obvious that it is better for the country to have the farmer raise food to supply the domestic manufacturer than the foreign manufacturer. In one case our country would have only the farmer; in the other it would have the farmer and the manufacturer. Assuming that Europe would have more money if it sold us larger amounts of merchandise, it is not certain it would consume more food, or, if it did, that its purchases would be made in this country. Undoubtedly it would resort to the cheapest market, which is by no means ours. The largest and best and most profitable market for the farmer in the world is our own domestic market. Any great increase in manufactured imports means the closing of our own plants. Nothing would be worse for agriculture.
Finally, even if it may be considered retaliation, it should be noted that the revenue tariff system is a legitimate tool for all nations to expand their wealth, particularly those not relying on a VAT, ensuring the products that can be made domestically are done so instead of relying on environmentally wasteful cross-oceanic shipping. In so doing, revenue tariffs provide another effective way of encouraging "Buy Local."
Today for the first time I visited Old Fort Niagara located in Niagara County, New York State, where the Niagara River and Lake Ontario meet. Beautiful place, fort and scenery amazing, highly recommend. Saw something I didn't like though at the end of my visit -- there is one long and rather steep embankment that Old Fort Niagara maintains as a grassy lawn that apparently receives regular mowing. The embankment was to a degree that the two lawnmowing employees using push mowers seemed to be having trouble mowing it laterally (as gravity would presumably cause a mower to slide down to the bottom), and so I saw them instead push the mower up from the bottom to the top, such as that if they were to slip and lose their balance and fall while pushing it upwards, the unspeakable could happen.
Granted, I only watched for a minute or so before being alarmed, so pushing (well, driving, as it appeared the wheels turned on their own) the mower upwards may not have been the regular procedure that they follow, but just that of a few unfortunate edge cases, but after the second consecutive time seeing one employee do this I signaled my concern to an information guide and we then saw the second employee do the same thing. The guide said he would bring that issue up to management, and to further play it safe I raised my concern separately to two other employees on my way out. Even with dry conditions as we had today that would be questionable, but what if the grass was wet and slippery?
When a organization chooses to maintain a slope that steep, perhaps OSHA should come in and put in some safety regulations for employees asked to mow things such as that. My suggestion would be that any slope that is so steep that a person cannot cut laterally across it needs to be cut with a non-motorized grass cutter instead. Perhaps we can be more specific, saying anything above (say) 45 degrees must be non-motorized. Such a rule will give organizations the option of power mowing below 45 degrees, manual clippers of live grass above 45 degrees, or choosing options that don't require mowing (such as ivy or artificial grass) if they find slopes greater than 45 degrees to be the most attractive but don't wish to deal with any reduced effectiveness of the manual clippers.
The non-motorized tools are perhaps not as good at cutting everything, but any missed grass blade is all but certain to be cut the next time around, meaning one is not going to have stray grass blades several inches longer than others due to them being continually missed. And as for some mechanical mowers leaving the clippings while the real ones pick it up, an argument can be made that that's where they should remain anyway, instead of filling landfills, but even if not they can always be manually raked and collected afterwards. Alternatively, any concerns that it wouldn't be historically accurate for Old Fort Niagara to switch to ivy, well, it's certainly not historically accurate that the grass on those embankments was maintained impeccably either. Ultimately, we're here to see a fort, not oooh and aaah a gorgeously maintained baseball field, and we should be expected to make modern day adjustments for the safety of all.
Here's a collection of blog and external links for easy reference by topic.
Apache CXF Web Services:
It respects the Great Compromise between the states - The Great Compromise, meant to protect small states from getting overwhelmed by the larger ones, necessary to get them to agree to form the Union, extended not just to the legislative branch but the executive as well. By adding the equal number of senators to the number of congressmen to determine each state's electoral votes, small states were given additional weighting in the say they would have in choosing the President.
For example, one state A with twice as much population as B might have 6 representatives to B's 3. However, the number of electoral votes is not 6 to 3 or twice as much say but 8 to 5 due to the addition of the senators, resulting in just 1.6 times as much say, honoring the compromise. Switching to a popular vote would eliminate that weighing benefit, as state A would have roughly twice as many voters as B and hence twice as much say.
This benefit given to the small states has shrunk by about a third since the country was formed. In the First Congress there were 68 congressmen and 26 senators generating a total of 94 electoral votes, so that a state's population was only a 68/94 = 72.3% factor of its say. Since the number of congressmen was fixed at 435, population now provides 435 / 535 (leaving out D.C.'s 3 electoral votes which aren't based on representation) or 81.3% of the weighting.
States are better protected from voter irregularities occurring in other states - With the Electoral College, any ballot-box stuffing done by one state does not limit the say of others. Take one state with say 10 electoral votes, for example, they could have three, five, ten million falsified ballots for a candidate, they can go to town, it wouldn't matter, only that state's 10 electoral votes would be corrupted. Pennsylvania (20 votes), Iowa (6), Arizona (11), etc., would still have their say and their respective weighting. If we switched to a popular vote, those invalid votes would count to the national total, harming the say of states that run their elections more cleanly. In general:
With a national vote election, states which do a better job ensuring valid voting (photo ID, checking to make sure voter registrants are US citizens, alive, etc.) would lose say over states that tend to look the other way in such matters.
Conversely, because we use an Electoral College, there is much less incentive for ballot-box stuffing as it doesn't buy one party-dominant states tempted to engage in such activities anything. It results in cleaner elections, and hence a cleaner society, nationwide.
A national vote would encourage a race to the bottom in granting suffrage ("State A is now allowing their green card holders to vote, so we should also lest we lose our say...", "State B is now allowing 16 year olds to vote...", etc.)
Close elections are much easier to resolve - The 2000 election between Bush and Gore took about one month to resolve but the focus thankfully was just with Florida and its then-25 electoral votes. Because the Electoral College was all that mattered, the other 49 states could be ignored, 20 inaccurate votes in Idaho for example or 30 missed votes in California could be disregarded. However, if we had a tightly close popular vote election, then every precinct in every county in every state would be subject to re-examination, to grab 5 votes here and 10 votes there because they all count towards the national vote total, not a situation anyone would relish.
With the Electoral College, people are more likely to vote for a candidate based on his/her policies rather than on whether or not he/she has visited their state. - Voters in places like California and Tennessee where the outcome of the vote is not in doubt are perfectly fine with their candidate of choice never visiting their home state during the campaign. More than that, they don't actually want their candidate wasting time in their home states, instead wanting him or her to be in battleground states trying to win them over so their candidate can win. This provides a lot of relief to presidential candidates as it allows them to focus on visiting just 10-15 battleground states, a grueling enough task as it is.
With a national popular vote, however, it would still make sense to visit vote-rich states regardless of their leanings, causing many voters to get offended if their candidate does not visit them, and possibly switch votes as a result. So the Electoral College is more likely to result in voters casting votes based on the candidate's policies than whether they visited their state, good for the nation as a whole.
The Electoral College makes election night a lot more exciting to watch - A silly argument, but still true. With the Electoral College, viewers see a scoreboard of states that slowly get lit up in red and blue during the evening, for which viewers can celebrate or mourn each time a candidate wins or loses a state. With a national vote you're just waiting for a vote total at the very end, rather dull for all concerned. It would be similar to watching a football game in which all touchdowns and field goals are irrelevant but just the total yards gained within the 60 minutes of play determining the victor.
Finally, it should always be noted that a candidate who wins the popular vote and loses the electoral votes on an election based on the latter wouldn't necessarily have won the popular vote if it were based on the former, as the campaigning done--states visited, TV advertising strategy, issues chosen, voter turnout generated, etc.--is different under the two styles. A skilled candidate who can win with one set of rules quite frequently has the ability to win under another.
Journalist Michelle Malkin and Center for Immigration Studies fellow John Miano have teamed together to offer a new book Sold Out. It offers a critique of the various foreign worker visas offered by the federal government and its consequences on American workers. I just got the book yesterday and am still in its early stages but would highly recommend it for American IT professionals wishing to learn more about the consequences of these programs or (for those already well aware) just wanting to thank and support the authors for raising publicity about this issue during an election year. Happy to note at the time of this writing that the book is #1 on Amazon's Government and Management bestseller list.
My county has a website form residents can use to submit questions, comments and concerns, which I've used three times in the past five years. The county runs fitness centers of which I'm a member. This morning I submitted the below concern (slightly polished for grammar :) about the reduced cost passes for non-county residents 55 and over:
Hello, I'm [in my mid-40's] and a long-time taxpaying Arlington County resident as well as an Arlington County gym member. When I buy my annual County fitness center pass, I pay the $195 rate as a county resident, much less than the $558 charged to non-residents because residents pay Arlington County taxes and as much of Parks & Rec is supported by taxpayer dollars we should be discounted. No problems there, neighboring jurisdictions do the same thing.
The county, via its 55+ Gold Pass program, has recently dropped the qualification age from 62 to 55, any resident 55 or over needs to just pay $60. OK. But non-residents 55+ who aren't paying Arlington taxes have to pay just $90, a mere $30 more and less than half the $195 that I need to pay. That benefit seems too disproportionate to be giving to non-taxpaying non-county residents--should I really have to be paying $195 while a relatively youthful 55-year old Fairfax County resident just has to pay $90?
55 is hardly retirement age, many of those people are at the top of their financial situation at that time, and giving such a benefit to 55+ county residents must come at a significant price both to county taxpayers who have to subsidize the shortfall in fees and paying county members whose memberships would be cheaper if they didn't have to cover this subsidy. So be it, though, we take care of our senior residents. But asking taxpayers and gym members to pay more to be subsidizing *non-county* residents as young as 55 seems an unfair burden to ask. I'd like the county to raise the minimum age for non-county residents back to 62, and/or alternatively retain the same $195/$558 resident/non-resident ratio for the senior passes ($60 for residents, $172 for non-residents.) Gyms cost money to run, and non-residents should be expected to pay more to cover the difference that they're not paying in county taxes.
I've checked the Fairfax County Parks and Recreation website and they give no senior discount to people outside of their jurisdiction, they just take care of their own and then only when they reach 65. Alexandria does cover at age 55, but only a 20% discount and again only for city residents. Likewise, Arlington County reduced fee memberships correctly just cover Arlington residents, taxpayers don't have to support non-residents for that.
This rate is also bad for the County for another reason -- each of the fitness centers have a limited number of aerobic machines, the more you fill up those machines due to heavy subsidies of non-county residents, the $195 payers get upset because the machines are never available and instead go to private gyms that aren't that much more expensive for them. The percentage of those using the gym being full payers is going to drop as a result, with the lost gym revenue requiring more county subsidies in order to be supporting people who live outside the county's jurisdiction.
Update 12/31/2015, I got a response from the County today:
Dear Mr. Mazza,
I am writing to you on behalf of Arlington County Board Chair Mary Hynes. Thank you for sharing your concerns about the 55+ Gold Pass fee for non-residents and the change in age eligibility for senior adult rates. The issues you mentioned are actually part of a number of adjustments made to senior adult programs during the last budget cycle.
Each year, the Arlington County Board approves the schedule of fees and charges for the Department of Parks and Recreation as part of the annual budget process. In Fiscal Year 2016, fees for senior adult programs were realigned for consistency across the County programs. Prior to this, all persons 55+ were eligible for programs offered through the Office of Senior Adults. However, various other programs applied an age discount to 62+. As a policy change, the age of eligibility for all senior programs and discounts offered through the Department of Parks and Recreation is now 55+.
It is Arlington County policy to allow non-residents to use County facilities and programs and to require non-residents to pay a surcharge on top of the base participation fee. This surcharge varies based on the type of program. In the case of the 55+ Pass, non-residents are charged 50% more than residents. Non-residents, however, never receive a fee reduction (which is only available to residents with financial need).
The County is committed to offering programs for seniors to remain healthy and to age in place. As part of this mission, we are always looking at ways to further this focus. As such, the base fee for this 55+ Gold Pass is set at only $60 for an individual pass and the surcharge added to that for non-residents is the additional 50%.
Formerly, we offered a 55+ pass with limited fitness pass options, along with a separate senior fitness-only membership. Research indicated that very few seniors purchased the senior fitness-only membership. The vast majority of seniors purchased the 55+ Pass that included a variety of senior program options, including limited access to some fitness centers. Research also indicated that many of the seniors with the 55+ Pass were interested in expanded fitness access and were willing to pay for it. As our goal is to develop programs that support the interests of our community, it was decided that we would have two senior passes and eliminate the senior fitness-only membership. We kept the same fee for the 55+ Pass ($20) and created the 55+ Gold Pass ($60), which provides the benefits of the 55+ Pass plus access to our fitness centers whenever they are open.
As with all of our programs, we will continue to review what Arlington County is providing and adjust as needed. As of December 29, an additional 2,136 Arlington County residents have purchased a pass. Only 146 (6% of the total) non-residents have signed up for the program; the percent of non-residents has not really changed since we adjusted the program. Since the new pass went into effect, we have been monitoring fitness room usage and have seen no spikes in attendance leading to overcrowding. We will continue to monitor.
Our annual budget review is coming up, and again, as always, fees will be reviewed and adjustments made as appropriate. I hope this background is helpful and allows you to see our strategy to encourage more Arlington seniors to be active and engaged.
Please let us know if you have any further questions.Michael R. Peter, MPA
Rock 'n' roll and the twist have finally come to grips with Horror and the result is a startling eruption in the record-buying field. Now it's spreading to the screen and television.
A little .45 disc titled "Monster Mash," rocketing within a few weeks into a spot among the top 10 sellers, seizes upon weird species from the Frankenstein laboratory, man-made creatures who shake off their electrodes and, to the tune of a shudder-packed production number, stomp around the graveyard in a wild new dance.
The "Monster Mash" has become an overnight hit in Los Angeles ballrooms, and two film studios and at least one TV network are angling for rights to its use for specialty insertions in movies and air shows.
Chief proponent of the new order is Bobby (Boris) Pickett who, like his recording sponsor, Gary Paxton, is bewildered by the smash reception the record has won. Hurriedly, they have marshaled a musical troupe for an invasion of eastern cities, with Boston scheduled as the first stop.
To a set of frightening Karloff-toned lyrics ("I was working in my lab late one night when my eyes beheld an eerie sight...my Monster from his slab began to rise...and suddenly to my surprise...he did the mash. He did the Monster Mash!") dancers the country over may soon be stomping and flailing their arms into a new epidemic--a slow-beat dance which Pickett feels will come as a welcome relief from the swift torturous movements of the twist.
How did Pickett happen on horror as the stepping stone to a new dance madness?
"The door was wide open," replied the young singer, who leads the song and dancers himself. "Horror pictures always have been popular and it seemed funny no one hit upon them for a dance until now. We just drove into a red-hot vacuum."
A project I was on consisted of about 40 people chopped up in various sizes among four managers under a single division head. As is normal, the managers were responsible for determining assignments, writing performance evaluations and determining raises of their reports. One of the employees, a relatively high-ranking engineer, was due to have a child for which the company provided him twelve weeks paid leave. To celebrate the happy news of the birth (he had started his leave), one of the managers, having about twelve of the employees under her (not including myself), sent an email out to the office saying that she was collecting funds for a gift card to give to the employee. And, from what I could see, several employees responded happily, over a few days ultimately around $450 was raised. As the totals were increasing, the manager sent out periodic emails giving the current donation results and repeating each time how happy and appreciative she was with those employees who had donated. And the employee, receiving the gift card a few days later, promptly sent an email out to the team thanking them for their generosity.
During the fundraising, from what one could see in the emails, the manager seemed to have a heavy emotional investment in people contributing, causing me concern that her impartiality with her direct reports based on their participation may end up getting affected. One large company I had worked at in the past explicitly banned manager solicitations presumably for this very reason. However I saw a simple solution: I sent an email to my manager, the department head and Human Resources, suggesting that it might be better for HR to collect the cash in order to hide individual donation information to management, ensuring that manager impartiality would not be harmed. Management thanked me for my input, even if not fully sharing my concern (or adopting my suggestion), and that was that.
Thinking afterwards, although having an HR official collecting the money instead would provide anonymity, it would have its own problems ultimately making it a non-solution. For one thing, with true anonymity, one would never know if the HR official would end up pocketing a portion of the donations, however unlikely. A much greater concern is potential unfair and untrue reputational damage to the one doing the collecting if some start feeling that the donation amount should have been higher than it actually was, and nasty whispers start up as a result. There are also inherent safety and security risks in publicly announcing at the company that so-and-so is keeping hundreds of dollars in his/her desk for the donations. As I would not personally want to be asked to collect donations from employees for these reasons, I would not want to ask another to do the same, i.e., such a request violates the Golden Rule. So we're back to managers collecting the cash from their subordinates.
I must say the request itself to contribute to a gift card rubbed me the wrong way. Besides many on the team needing to work extra for the employee going on leave, companies fund parental leaves via lower salaries and benefits on everyone company-wide (money does not grow on trees), meaning employees are already making a very generous contribution. I don't know the per-employee dollar amount for this particular employee but making a conservative estimate of one hundred dollars per week paid leave per employee, that would mean every remaining team member is already giving the employee $1200. For those hardly jumping up and down over this required contribution (everybody would love to have twelve weeks paid leave, but not everybody is in the situation to be able to partake of this benefit), this additional gift card request from management easily comes across as unappreciative and greedy.
Indeed, the ongoing "thanks for those who contributed" emails sent by the manager as the donations were coming in made no reference to this much larger contribution that everybody was already giving, or for the extra time needed to fill in for the missing employee. This apparent innumeracy on her part—that team members were either contributing a generous (say) $25 or nothing, which is psychologically much greater than the actual both-generous $1225 vs. $1200—added unwanted risks that any damage that the non-donators could end up receiving at performance evaluation time would be aggravated.
With a generous per-employee contribution of $1200 or so already on the books, the on-leave employee is already well taken care of as he begins to savor his twelve weeks off. The start of an employee’s leave is the time for management to be focusing on those remaining in the office, those who will be taking them to the dance for the next twelve weeks, who will be working harder and effectively at lower salary to support the one on leave. Instead of a disingenuous "for those who would like to contribute something" gift card solicitation, why not have an office pizza party or similar on the first day of the leave to express appreciation for the remaining team? Such a move sends a strong signal that management remains focused on account goals and on the remaining team that will be accomplishing them. For managers who feel the twelve weeks already being provided by the team to be wanting, there are better options: Confidentially pay the on-leave employee a bonus via company funds, or just provide an extra gift using personal funds instead of those of their subordinates.
As for the more general case of direct solicitations, most managers don't solicit from subordinates for the same reason non-managers don't: It's rather tacky going around with your hand out asking for cash. We are all aware of fine charities from TV and the Internet and direct mailings for each of us to make up our minds on what is most worthwhile to donate to, we don't need additional prompting in the office. But astute managers are also immediately aware of the concern unique to them that donation requests may end up harming their impartiality. The concern is not only that they may reward a donator or punish a non-donator, but that, in the efforts of trying to counteract this knowledge and remain neutral, may end up undervaluing a donator or overvaluing a non-donator. Further, they realize such requests can make subordinates feel uncomfortable, as if their boss is selling performance evaluations, as well as foolishly leave themselves vulnerable to accusations of same, accusations that are difficult to objectively disprove.
The fact that a manager is soliciting cash, however, suggests that he spent little time evaluating these concerns but is rather someone who quickly moves from identifying a cause he wants to see funded to soliciting his reports to fund it. Among such impulsive managers there is a much higher risk of contribution knowledge harming their impartiality. Companies that allow managers to solicit cash from subordinates on the presumption that say 85% of managers aren't influenced by cash solicitations fail to take into account conditional risk, namely, that most of those 85% would never solicit cash to begin with, leaving those doing the requesting very heavily represented in that 15%.
Another concern regarding managers holding fundraisers is that few of them soliciting grasp the concept of undue gain avoidance as a driver of honorable employee behavior, causing an undeserved disdain for the employees choosing not to donate. Undue gain avoidance simply means that employees wanting to be responsible team members should avoid gains over their coworkers for activities not related to their job, such as dating managers, doing personal chores for them, or, as here, taking part in their donation solicitations.
For my gift card example, were I in her org, I know that I can give a generous amount to that manager and she'd be quite enthralled with me. However, as that would easily risk me getting a better performance evaluation over non-donating coworkers, an undue gain, it would not be appropriate. I’m to advance in the company by the work that I do, not by dumping money on the manager’s desk. In the case of a charity, if I indeed found the manager's requested cause to be of value, I would donate to the charity privately via their website without my manager's knowledge, allowing me to avoid the undue gain. Avoiding in-office praise for contributing to the manager’s preferred causes also contributes to a healthier work environment. Non-donating coworkers hearing that praise may end up worrying "Gosh, she's gonna be even angrier at me for not donating!" or "Man, people just get ahead around here by dumping green on the boss' desk!", poisonous concerns I don’t need to be aggravating.
For a company that properly blocked managers from soliciting cash from their reports, it would not be necessary for them to be aware of undue gain avoidance as a driver of employee behavior. However, with solicitations an option, a company is entrusting its most unthinking managers ("Hi! Would you like to donate to my hometown's United Way? It's perfectly optional but would make me very happy!") to grasp a concept that in all likelihood is going to blow past them, causing undeserved scorn of non-donating employees trying to serve their team in an honorable fashion.
But not donating is more than about avoiding undue gains. Within the context of a corporation, cash transfers from an employee to his manager are reputationally hazardous for the employee as well. To give another example, should a boss tell you that he would appreciate a contribution to his wife’s non-profit, to the extent that it is implied or assumed that you would be getting a larger, unearned raise for donating, that sounds suspiciously like embezzling money from the company. Managers walking around collecting cash from their subordinates are rather unusual, and it’s prudent to keep nonessential financial transactions with such people to a minimum. In case of there being questions over a fundraiser later, it is much better to be able to truthfully deny having made a contribution at all than to try to persuade others that your donation was made with no expectation of anything in return.
A common misconception regarding manager solicitations is that the merit of a cause is an argument for allowing the manager to solicit for it. That's frequently the first defense that managers resort to when questioned about soliciting cash from their reports, and they can often twist the matter into making an employee raising the concerns about the solicitation as being uncaring about the cause, intimidating employees from raising the concerns to begin with. The way the argument goes is as follows: "Yes, if this were some minor cause, like donating to the local PBS affiliate or public library, obviously no reason to allow managers to solicit cash for that purpose. But this is a wedding, a paternity leave, a children's hospital, a food bank, a heartbreaking situation I found on a crowdfunding website, obviously for such reasons solicitations should be allowed!" The counterargument is that it is precisely these emotional causes that sway managers the most, the problem one is trying to avoid by banning solicitations. In my case, I need only point to the continued giddy statements of appreciation from the manager soliciting for the gift card as a strong indicator of impartiality being affected, that participation in this super-important, gotta-make-an-exception-here cause will be unavoidably weighing in her mind when writing performance evaluations.
Just as an honest employee makes efforts to let his ranking within the company be primarily a function of the work that he does, good managers also make efforts to put blinders on themselves, limiting their evalutions of the employee to his work by not engaging in requests for personal favors or for donations to causes the manager has a strong emotional attachment to. When a manager expresses deep appreciation for the actions of certain subordinates, the reason for that happiness should be their work or else the manager is usually improperly distracting himself. Any big joyous smile you see on a manager's face as he/she is counting the $20 bills that a subset of reports provided is not the heartwarming scene that it appears at first glance but actually a concerning one, indicating an untrained manager with lost impartiality, that it may be indicated to have someone else start writing the performance reviews.
In summary, companies would do well to treat manager solicitations as the selling of performance evaluations and prohibit them, both explicitly in the company's HR handbook and verbally as part of new manager training. Managers should be consulting their own checkbooks rather than those of their subordinates for causes they hold dear, reports are not be viewed as ATM machines for satisfying the manager's philanthropic urges. But for companies that unfortunately allow for manager solicitations, employees can still show leadership to their team by politely declining solicitation requests, instead sending donations if desired via the charity's website without the manager's knowledge. Following a don’t-feed-the-pigeons policy also helps reduce solicitation frequency and the associated problems that they create.