Should use of taxes be limited to their stated purpose?

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Lawyers in Wisconsin are fighting over $200 million that was withdrawn from a medical malpractice fund and spent on an unrelated government program. On one side of the debate are the lawyers who say that lawmakers should be able to spend taxpayer money in whatever way they see fit. On the other side of the debate are those who paid into the fund who are now seeing their money squandered elsewhere.

I'm squarely on the side of the doctors who paid into the medical malpractice fund. The fund was started in 1975, and doctors practicing in Wisconsin are required to pay into it each year. Doctors must have malpractice insurance that covers claims up to $1 million, and the fund pays awards in exceess of that.

I don't find a gray area in this case. The doctors paid a special tax (called a fee, but we know it's really a tax) for a special purpose. They deserve to have their dollars directed at exactly what the dollars were collected for.
The $200 million was spent on medical care for the elderly, disabled, and poor. You might think that's close enough to the original purpose for the funds, but I disagree. If lawmakers levy a tax for something specific, they should spend the proceeds on exactly that purpose.

Lawmakers are saying this doesn't matter. They say the medical malpractice fund has more than enough money to pay any claims that will arise. Historically, claims of about $20 million per year have been paid, and the fund had $840 million accumulated before the $200 million was stolen out of the fund.

If there's excess money in the fund, I say doctors are entitled to a refund of the fees they paid in. After all, who's going to be on the hook if the fund later becomes insolvent? Surely the doctors will be hit with increased fees to bulk it up again, and their $200 million will be sorely missed.

This isn't the first time a fund in Wisconsin has been raided to pay for unrelated things. Gas taxes and vehicle registration fees have filled the state's transportation fund, which is to be used for building and repairing roads. Several times in recent years, the transportation fund has been raided to pay other state government expenses. (One of these instances saw over $1 billion taken out of the fund!) When funds for roads are needed, where will the money come from?

It's time to hold lawmakers accountable. Taxing and spending has gotten out of control in the United States. Governments need to cut back spending and live within their means, just like all the hard working taxpayers in this country. Use our taxes for their intended purpose or refund them and stop collecting the taxes in the future.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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