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Public Choice and Section 1706 2010/02/22
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Jun 5, 2025
Introduction to the concepts of public choice theory and how they bear on Section 1706 of the Tax Reforms Act of 1986. Austin Constitution Meetup Feb. 22, 2010. Part 1 of 4.
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0:02
good
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evening this is the February
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22nd
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2010 meetup of the Austin Constitution
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Meetup
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Group i'm your host John
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Roland this
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evening we're going to be
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discussing public choice and section
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1706
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section 1706 has come into the news
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recently in connection with the uh
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terrible
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tragedy of a man who had
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uh become uh
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uh adversely
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affected by section
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1706 of the tax
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code and decided that uh in order to get
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attention to the issue that he had to
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kill himself
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spectacularly by flying an aircraft into
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a building in Austin which housed
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offices of the Internal Revenue Service
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however the problem that he called tried
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to call attention to is a very real
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problem and it
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illustrates a more general
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problem that was discussed in terms of
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public choice theory
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public choice theory is a study of ways
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those most influenced by public choices
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invest more and more effectively to
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influence the ways those choices are
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made while those less affected tend to
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invest little if any or do so
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ineffectively thus seeding influence to
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a minority of those most powerful
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wealthy skilled or wellconnected
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there are several ways to influence
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public
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choice these are a few of the most
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important
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first the interest group can write or
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get adopted constitutional provisions
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this is very difficult to do in the
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United States and in general has not
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often been done in the last 200 years
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but there are a few key exceptions which
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we may go into
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later the second is they can write and
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get adopted
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statutes that favor their top interests
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uh section
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1706 of the
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1986 tax reform act was an example of
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that and we'll get into later how that
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was done and what impacts it has had
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third they can elect supportive elect
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public
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officials either the president members
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of Congress members of state
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legislatures governors and so
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forth uh getting the right public
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officials in office is the key to much
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else that needs to that they may want to
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get done
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you sometimes imagine that they work
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with the public officials that are
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already elected to persuade them to
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support their
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positions but as often as not they bring
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into office people who are already
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supportive of their
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positions and who don't have to be
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persuaded afterwards
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the fourth major method is to get
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supporters appointed to key
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positions especially judiciary positions
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or staff positions in the several
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branches and levels of
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government now having your own people on
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the inside is one of the shest methods
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of getting what you want done and it may
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not matter who the key people are at the
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top of the organization if you've got
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your key people in staff positions uh at
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various levels within the organization
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the fifth major method is to hire
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lobbyists lawyers and marketers
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uh to variously influence uh
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legislators judges or the
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public we'll get to back into more of
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that later
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next it the interest group can encourage
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supportive
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research this could be anything from u
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public opinion surveys to
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uh true scientific
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research or can simply be
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uh get getting
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uh research brought to the public
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attention
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uh it can be a matter of
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uh funding it and so forth to get the
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results that they want
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next uh one can put supporters in
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educational
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positions in high schools universities
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uh and in various other uh positions
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that are able to educate and inform this
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could be think tanks
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uh it could be uh uh trade associations
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but uh the the key here is to uh put
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people in positions where they can
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educate
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uh public officials the public and uh
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uh our nation's
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children then finally in this list they
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can get supportive things written and
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published
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this mainly means in the mass media but
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it can also include uh academic
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publications uh research papers and a
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host of other uh publications law
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reviews and so forth where uh they're
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likely to have an influence on opinion
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and on decision
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Section
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1706 is an interesting
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example of a provision in a larger act
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of
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Congress that had a that was cleverly
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designed to achieve a certain
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result before it was enacted
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many computer
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workers who
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were
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contractors did not have their uh
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contract status questioned if they
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declared themselves to be a contractor
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and they otherwise
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uh
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uh filed their taxes
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uh and paid them and did all the other
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things that an independent business
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would do uh there the client was not
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uh hit on to collect withholding taxes
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from them or otherwise treat them as an
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employee the investigation of the way 7
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section 1706 was adopted shows that it
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was at the behest of
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lobbyists for an organization of several
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leading technical and accounting
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services
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uh the exact sequence is a little
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complicated but uh it started with a
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small with one group and others climbed
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on board the most influential
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uh ones were what were then called the
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big eight accounting firms
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they had ambitions to corner the market
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on providing computer consulting
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services and to do that they sought to
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discourage their small competitors or
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drive them out of
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business and we will be getting into
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more of that as this proceeds
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