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Monday, August 6, 2012

Why Too Many U.S. Federal Employees Are Tax Cheats and Rule Breakers

The House of Representatives passed a bill last Tuesday that would fire federal employees who’ve been seriously delinquent in paying their taxes. They did this because almost 100,000 federal workers are behind on their taxes, including 700 congressional employees. These workers owed more than $1 billion in unpaid taxes 2010, up from just under $600 million in 2004, according to the Internal Revenue Service. We could charitably call these folks “rule breakers.”

Of course, we’ve also learned recently that there’s been significant rule breaking in the General Services Administration (lavish conferences and now word of excessive bonuses) and the Secret Service (the prostitution scandal in Colombia). Combined, the problems of tax evasion and rule breaking generally point to deep ethical issues in the federal workplace.

The federal government really needs to know what Gallup knows: Rule breaking is very predictable. The more disengaged the workplace, the more employees will break rules. And according to Gallup’s 12-question employee engagement survey (Q12), U.S. government workers are mostly not engaged (52%) or are actively disengaged (18%).

Now, it may surprise many government leaders to learn that generous pay and benefits don’t predict a great workplace. Federal workers are generally well compensated and receive more vacation days and better healthcare and retirement packages than many private sector employees -- yet they remain disengaged and work within a growing culture of rule breaking.

Bluntly, incidents of rule breaking, and now serious tax evasion, by federal employees will never get fixed until the government creates an engaged workplace with engaged employees. The government’s biggest problem right now is failed management practices, pure and simple.

A fair question to ask: Why wouldn’t the federal government be the best managed workforce in the world? It has more potential than most other workplaces -- not only very good pay and benefits, but also a rich mission and purpose. What if federal managers suddenly attacked the problem of employee disengagement, turned it around, and transformed their workplaces into the best in the world? This would do more than anything else to restore honesty and integrity -- not to mention high levels of productivity -- to the U.S. government.


Anonymous said...
August 6, 2012 at 5:14 PM  

Thank you for going after this simple but powerful truth. This begets a simple question. When the real unemployement rate is close to 18 percent why should taxpayers be forced to tolerate a government service that is often subpar?

Anonymous said...
August 6, 2012 at 5:39 PM  

What else do you expect from a leaderless government. When the president selects a Jobs Czar and the Czar moves jobs and invests for his own company to China why should anyone get excited about not being able to manager/motivate/engage our own government jobs. We need to start fresh. The People need to take charge again and clean house.

Kevin said...
August 6, 2012 at 7:22 PM  

So what your saying is that the Tax cheats - rule breakers are now qualified to run for congress.

dbyte said...
August 6, 2012 at 8:27 PM  

Short sales in the last 2 1/2 years have had the perceived income forgiven. This lasts until 12/31/12. If you were losing your house and could not make mortgage payments, there was little chance you had the money to pay income tax on the forgiven debt.

Some would think you were a felon if your short sale fell out of the three year window. and you could not pay the tax. Not so, just bad timing.

Diego Arenas said...
August 7, 2012 at 12:53 AM  

Rule breakers everywhere. There is a lot of that in my country too.
Best regards,

Anonymous said...
August 7, 2012 at 7:44 AM  

There are just as many rule breakers in the private sector, if not more, since ethics and honor are no longer important in the US. If the federal workforce is disengaged, perhaps it is because those in charge (past and present Presidents and congress) are corrupt, break the rules with impunity and work only to enrich themselves. The government swiftly prosecutes insider trading except for congress which is exempt from this law. Leadership starts at the top and the US has no true leaders at those lofty levels anymore.

Anonymous said...
August 7, 2012 at 9:19 AM  

The managers are relentless rule breakers - note the highest level of reprisal complaints against federal managers and increased numbers of disability discrimination complaints, when there are specific federal laws and Executive Orders prohibiting this behavior. Federal employment is extremely broken.

Anonymous said...
August 7, 2012 at 10:49 AM  

Not that it isn't a concern about Federal employees owing back taxes, but I wonder how many citizens who are not Federal employees, corporations and small businesses are "tax cheats?"

Anonymous said...
August 7, 2012 at 11:33 AM  

100,000 Federal employees are behind on their taxes?
Do you realize that the US Army/Guard alone has more than 1 million people?
Factor in the rest of the Dept of Defense, the Depts of Homeland Security and Veterans Affairs (the three largest departments), does 100,000 seem like a high percentage?
What is the rate of delinquency in the private sector?

Grannybunny said...
August 7, 2012 at 11:59 AM  

Pray tell, what "rule" is being broken by those who fall behind on their taxes? And what does that -- not-workplace-related -- "rule" have to do with ones engagement at work? If government employees were "disengaged" -- and there's no evidence that they are -- articles like this, full of unfounded assumptions about them, might be a contributing factor.

Anonymous said...
August 7, 2012 at 8:16 PM  

Does this bill to fire federal employees for tax delinquency include senators and representatives?

Anonymous said...
August 7, 2012 at 10:12 PM  

When this data first came out, the list I saw included a large number of military retirees as being Federal workers. I think this is a case of data being in support of an anti-govt agenda.

I think everyone who is delinquent on taxes should be held accountable.

I am an engaged and passionate Federal worker. Please do not paint us all with the same brush.

Anonymous said...
August 8, 2012 at 8:35 AM  

I remember a few years ago, while I was still working at the IRS, that a similar study on Federal gov't employees owing taxes showed that the general non-compliance rate for Feds is less than the overall rate for the general public. It also showed that the compliance rate for Congress people and their staffs was 2-3 times higher. I am not defending tax scofflaws, but this sounds hypocritical to me; if the bill goes forward, it should include the firing of Congresspeople and their staffs.

Anonymous said...
August 8, 2012 at 3:46 PM  

Three percent of the federal workforce is delinquent, compared to almost 20 percent of the rest of the country. Congress should be focusing on providing the necessary resources to collect owed taxes, not firing people who could have made an honest mistake, and now can't fix it because they don't have a job.

Anonymous said...
August 10, 2012 at 8:54 AM  

Isn't there a saying "A fish rots from the head down"? Because that is what is going on here. I am a Fed employee (civil service, not an appointee), and I do agree about the disengaged workforce. We know that when we see a "reminder" about a rule, or a new regulation in place it is because a higher up appointee screwed up and got caught. So the natural reaction is to punish the line workers while they get a simple reprimand.

For everyone in the private sector complaining about government red tape - it's the same here or worse. If one actually tried to follow all the rules, no work would get done - and your review would reflect that. Skirting/bending the rules becomes the only way to get anything accomplished and that mindset leads to contempt for (appointed) management.

Appointees are even more disengaged. Many don't see their mission as important but their public sector job as resume fodder for their real favorite job: Think tank consultant, lobbyist, etc. They know they are in the job for 4 years or so, and act accordingly.

Segesta said...
August 10, 2012 at 8:56 AM  

To those who say that Federal employee compliance may be better than the private sector: It's about perception, not percentages. Government employees are paid from our tax dollars, so it looks worse when those employees are delinquent.

I bet auto mechanics have a better rate of car repairs than the rest of us; but an auto mechanic driving an oil-burning clunking POS makes all of them look foolish. If you see what I mean.

Anonymous said...
August 10, 2012 at 8:59 AM  

When prosecution becomes dependent on political support as it currently has then it becomes a tool for blackmail for more support not its true purpose.

These people know that if they support the "right" person, political party, union, or cause then they are free to act as they want.

Tim Geithner was a huge cheat and he was glorified because he supported the "right" people, while the "criminal, shameful" people were those who pointed out that he was a cheat.

M. Simon said...
August 10, 2012 at 9:00 AM  

I don't want a more productive government. I want a smaller one. Then the mischief is minimized.

Anonymous said...
August 10, 2012 at 9:07 AM  

I'm a govt employee. I pay my taxes. How would the IRS know the delinquents are federal employees from their 1040s? There is no block for identifying as a gov employee or not. I also agree with the others above - apply the law to EVERYONE receiving a federal paycheck.

Anonymous said...
August 10, 2012 at 9:14 AM  

This report continually uses the words "engaged" and "engagement." What do those mean--giving a damn? If so, then why should a bureaucrat give a damn? He has neither job jeopardy for doing a bad job or hope of advancement for doing a superior one.

Chas said...
August 10, 2012 at 9:27 AM  

Of course they are disengaged -- success or failure doesn't affect their livelihood -- in fact, failure means that next year they should get more money. Especially when the government is way over there in Washington and unaccountable to the taxpayer -- would any local government give a grant to a University with a $B endowment to study tree frogs? Only a gov't disengaged from the populace would. Don't believe they are disengaged? Go to the DMV. Now imagine how they would be if they didn't have to deal with pesky taxpayers each day.

Anonymous said...
August 10, 2012 at 9:45 AM  

The Brookings Institute states that in 2009 45% of Americans paid no taxes at all. A recent release by the Senate Budget Committee states that over 100 million Americans now receive welfare.

There are 2,500,000 (rounded) full time federal government employess. If 100,000 federal employess are behind on their taxes this equals .04 of one percent delinquency rate.

So, while half of all Americans don't pay any taxes, and in fact are recipients of the taxes that are paid, you jump up and down screaming about a group that has four one hundredths of a percent delinquency rate? Out of those 100,000 delinquents do you suppose is the number of people who are having genuine financial problems? You categorically called them all cheats and thieves, yet what do you want to bet that most of them are having legitimate problems and issues?

Then you make a leap of magic to tie that to the "engagement" of the federal work force? Then you continue with another leap of magic to declare that a single 12 question poll proves the work force isn't "engaged"?

I am a federal worker. I am surrounded by federal workers. I, and they, are engaged. We are no different than anyone else that works. We take personal pride in doing our jobs well. In spite of the constant haranguing and demagougery of the press and congress stating otherwise.

You Mr. Clifton, have written an article that contains sadly innacurate assumptions and hysteria. Typical.

Dantes said...
August 10, 2012 at 9:46 AM  

Another symptom of the problem. The federal government is too big and too unaccountable. Power corrupts and the Federal Government is absolutely corrupted.

Anonymous said...
August 10, 2012 at 12:14 PM  

It is the nature of government work places to produce disengaged employees. Bad employees can't be removed due to union rules. Employees who are mediocre are advanced, as they are no threat to their supervisors. New hires are not the best of the group but again ones who pose no threat to the people above them. Good ones who do happen to make it through are often not promoted while dullards are. At best government work places are demoralizing and are the result of perverse incentives. At the worst, they earn the appellation "snake pit" due to the hostile environment, back-stabbing, etc. People stay because of the benefits - health care and better retirement. Leadership can only do so much in such a hostile system. I make these claims based on close experience with two of the better government agencies - NSF and NASA, and have close friends who have seen non-science agencies from the inside.

Kev said...
August 10, 2012 at 5:16 PM  

"A fair question to ask: Why wouldn’t the federal government be the best managed workforce in the world?"

Two words: No competition. What's the incentive to do well if you have a monopoly over your particular "service," and when it's nearly impossible to be fired for doing a poor job?

In an ideal world, government would never be an entry-level position; there would be a requirement of X-number of years in the private sector first, so public workers would gain actual skills working in a competitive environment before coming in to devote those skills to a period of true public service before returning to the private sector after a decade or so.

In an even more ideal world, those requirements would be placed upon those running for office as well.

Anonymous said...
August 11, 2012 at 11:24 AM  

No person, union member or not, should be able to remain in their position, be it a govt' worker or a teacher. Another ridiculous "rule" set up by unions.

Harry said...
August 14, 2012 at 4:16 AM  

"A fair question to ask: Why wouldn’t the federal government be the best managed workforce in the world? It has more potential than most other workplaces -- not only very good pay and benefits, but also a rich mission and purpose. "

Hmmm That's a good point!

Anonymous said...
October 5, 2012 at 6:41 PM  

Actually you are wrong. do a simple google search for federal employee pay Vs Private sector. You will see the studies paid for by congress that show private sector pays nearly 20% more for the same Federal jobs. Private sector might not give employees health insurance or benefits (look at walmart they don't hire full time, offer any benefits or health insurance) but you can't seriously think that because some rich guy is too greedy to pay for health care for his employees that means federal employees are living high on the hog..
Federal employees pay has been Frozen going on 4 years now. No cost of living or inflation, no raises, and a freeze on hiring (3 people have to die or retire to replace 1) except in congress and the house where they can replace their aids(federal employees) since they are not effected by the pay freeze or the hiring freeze.

Before you believe the Hype that has been spewed here do some independent research. ten minutes you should be able to find the report the government paid for that shows Federal employees are under paid yet produce more.

Also think about the fact that Bush Jr required 1/3rd or so of all Federal jobs to be outsourced to private sector, most of those jobs were moved back to the federal government after it was shown that private sector couldn't do the jobs for 3 times the cost.

Hell private companies were given 40% of any taxes they could collect from people who owed and hadn't paid(just like collection agencys) and they ended up spending 81 cents on every dollar collected, then billed the government for 40 cents of every 1 dollar they collected. total bill to the government? 81 plus 40 equals $1.21 for every $1.00 collected. We lost 21 cents for every dollar the private companies collected while federal employees collected $1.00 for around 2.3 cents. yes so it costs 2.3 cents for federal employees to collect $1.00 and costs $1.21 for everyone private company could collect.

knowledge wants to be free

Christina Adams said...
November 1, 2012 at 11:42 AM  

I would have to say that I do find this very interesting to say the least. You'd think if you had generous pay and good benefits it would be a very professional work place, its shocking really that, that many workers are behind on taxes. Although one thing that I have noticed is that the economy has boosted some. Only reason why I say this is because I have been on and and noticed they have thousands of job listings. Which is great to finally see the job market go up. I can't necessarily say that this will help people out with back taxes but its good news for a change.

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