fighting the lack of good ideas

tax day

Tax Day in the US is “late” this year because the 15th of April was a Sunday.

I was able to prepare and file my taxes early-ish (January) thanks to a proactive employer who got our W2s out quickly.

Every month I look at my pay stub, and am appalled at how much the various governmental agencies claim is “theirs” of MY worked-for pay:

  • 11.3% – Federal
  • 4.7%  – State
  • 3.8% – Social Security
  • 2.3% – Lexington-Fayette
  • 1.3% – Medicare
  • .5% – Fayette County
  • 23.9% total taxes claimed

And it’s only that “low” because I participate in (completely legal) programs to reduce my taxable income (401(k), FSA, etc which reduce my taxable income by about 12%).

We have not yet added-in the state and local sales taxes that are claimed, nor the federal, state, and local fuel taxes (over and above sales taxes in most states). Currently I am not a home owner, but when that eventually changes, I’ll be paying property taxes – a fee to the city/county for the privilege of living there!

Of my take-home pay, if I spend $2000 per month on “stuff” (groceries, eating out, gas, shopping, whatever), about 7% of that is going to the tax coffers of the county and state (and maybe city, depending on where you live). 7% of $2000 is $131 (or if you want to add 7% on top of the $2000, it’s an additional $140).

I am a proponent of pay-as-you-go – in all areas of life: if I want to make use of something that belongs to someone else, or that is maintained by the “people” (eg roads), I do not at all mind paying for that opportunity.

However, I despise double-dipping and multiple-paying on the same service/product. A prime example is the concept of a toll road: if the road is owned/operated by the “government” (which is really the people, but with a delegated responsibility to maintain the facilities), it makes sense to me that it should cost something to have to take care of that road. However, if the government wants to charge a toll for a road, then it must eliminate the fuel tax that every driver pays: by charging a toll and a fuel tax, drivers have double-paid for the privilege of using the road.

Double-dipping affects all consumers in every other purchase they make as well because corporations are charged taxes on their income, and since businesses are in business to make money, they have to cover that cost from somewhere, which means it comes from their customers.

Several years ago I wrote a paper on implementing a flat tax in the United States. In the intervening years, I have become convinced that the premise on which I wrote that paper is not the best (ie, taxing income), but that it was a solid start in the Right Direction™.

What needs to be done instead is far simpler, and would in the process also eliminate the need for most of the IRS, and give substantially more power directly to the people over the direction their government takes.

Abandon the concept of an income tax entirely.

Eliminate taxation on gifts (including estates). Eliminate the “special” Medicare and Social Security taxes.

Implement a flat sales (or “consumption”) tax on all non-food purchases in the country.

One of the beauties of the sales tax is that everyone pays it – whether you are “rich” or “poor”, it is equally, and fairly applied to all – and it’s shown every day on transactions around the country: you buy a $20000 car, you pay $1400 in sales tax. You buy a $40000 car, you pay $2800 in sales tax. That’s a simple, easy-to-understand model, and one that everyone can follow straightforwardly.

According to Wikipedia, in 2007 total tax receipts (income, employment, corporate, excise, gift, estate) to the Federal government was just under $2.7 trillion. That’s trillion – with a “t”. According to this site, total personal income in the US in 2010 was $12.3 trillion (in 2007 it was $11.9 trillion)*.

IF every American who earned an income paid a flat tax on that income (with no deductions, no special categories, no “loopholes”, etc) of 23%, that would *completely* cover the tax receipts of the Federal government. That would be a simple solution – if it wasn’t for what one of my favorite entertainers said:

The income tax has made more liars out of the American people than golf has. –Will Rogers

Let’s end that lying now.

In 2011, the US spent $10.9 trillion. Subtract out non-durable goods for the moment (a quick way to distinguish food out of the mix, though I’m sure people didn’t spend $2.5 trillion on food^). That brings us down to $8.4 trillion.If every person who bought something new in the US paid a sales tax of 37%, that would more than cover the tax receipts of the Federal government. With the far more probable $0.5 trillion spent on food at home, that gives $10.4 trillion spent. A sales tax rate of %26 would cover the Federal tax receipts.

Businesses already collect sales tax. Collecting a different rate is simple.

If the “average” citizen saw that on top of his $10 meal at Applebee’s he needed to pay $2.60 in taxes, it might help him budget better. It’s certainly more transparent – and easier to track.

Yes, it would put all kinds of tax attorneys, accountants, and the like out of work – but it would also mean that folks wouldn’t have to spend hundreds of millions and billions of dollars per year to worry about their taxes: pay when you buy. It’s really that simple.

Eliminate the overt, unnecessary complexity of our tax code, and make it the simplest to understand and comply-with in the world.

Oh, and make the US an enviable target for corporations wanting to headquarter/operate here: no taxes on business income would be a clarion call to start/operate here.

*See for more recent numbers
^according to, the average 2.5 person household spends $3750 per year on food at home (untaxable in my plan); there are 325 million people in the US; that’s 130 million households and $487.5 billion (just under $0.5 trillion)

fixing copyrights and patents

Following-up a recent post on copyrights, I want to share some further thoughts I have on the topic, and about patents, too.

First of all, the concept of a copyright is meant to protect the author from others unduly benefiting from their work. One obvious conclusion to make from that statement is that after the author ceases to live, they can no longer claim to receive any benefit from their work. I know I certainly wouldn’t care about royalties after I die.

Second, only individuals or their proxies should be allowed to claim copyright over a work. By proxy, I would include work created for a company in the context of something sold and/or shared publicly.

My proposed fix for copyright law would be to cap copyrights at 25 years, or the life of the author – whichever is shorter. If something is written for a corporation, the copyright could be retained either by the author(s) or the company, but it will expire no more than 25 years after it has been written (this would cover the case of one of the authors being tragically lost due to illness or accident). Knowledge grows when information is spread. The more people have access to information, the more applications of it can be made. And, overall, knowledge is a Good Thing™!

With regards to patents, I think there are many broken aspects of the current system: not the least of which is that non-physical “things” can be patented (algorithms, software, etc). While not an inherently bad thing to be able to protect a proprietary process or method for accomplishing work, the fact of the matter with regards to modern society (speed/quality of communication, the ability to analyze data, etc) is that whether you patent your process for accepting multiple inputs at once to a program or not, someone will be able to [nearly] instantly copy what you did.

My first fix to the patent system would be to cap patent life at 10 years from the date of issuance, and 15 years from the date of filing (honestly, if it take more than 5 years to get it issued, your competitors have already caught and exceeded you). I would also preclude the ability to extend the life of a patent through any means – innovate more if you want, but you cannot extend the life of a patent past its expiration.

My second fix will be to ban the ability to patent software. It would not be just to apply a new law to old thinking, so extant software patents would not be affected beyond the ability to extend their life.

My third fix would be to ban security orders being placed on a patent (as the NSA has been known to do with regards to encryption algorithms). No one – private individual, corporation, or government agency – should be allowed to “preview” patent applications and attempt to get the blocked or hidden.

My final fix to patents would come with streamlining the application and approve-or-deny process. The USPTO is overwhelmed with applications. Some of this comes from companies trying to file exceptionally-broad applications just to see what they can get away with (“I know! We’ll patent the process of processing patents!” – or some other silliness). Some of this comes from inadequately-informed patent officers – there is no possible way every patent officer can possibly know about all the fields that patents are asked-for and -about! There needs to be an improvement in the general population of the patent office, whereby more skilled/knowledgeable/talented people are put in place to review patents (not saying they don’t have talented people now, but that needs to be increased).

Lastly – and this would related to copyrights, trademarks, and patents – a public database of all current patents and trademarks should be made available. That database should also show all expired patents and trademarks. And, for those authors who have chosen to register their copyright with the USPTO, a database of authors, their work(s), and the copyright date (and, by calculation, its expiry) should be visible.

the gold standard

This is going to ramble a bit, and I’m not 100% sure my opinions are even remotely reasonable, but I had a great conversation on the Gold Standard recently, and thought sharing that would be fun. The quoted sections are relevant parts of the conversation from my friend*, and the unquoted segments are my responses.

I’ve seen pundits, or as I call them, “blowhards”, on both sides of the aisle claim that even suggesting we return to the gold standard is madness. Maybe it’s just because I’m not an economist, but I don’t understand that – we had like 3-4 thousand years of experience with the gold standard; we have less than a century with floating currencies. Why is it so crazy to say “we keep getting into trouble this way, maybe we should fall back until we’ve got this figured out better”?

The only issue I can see with returning to the gold standard (or the silver or any other), is that since gold is by nature a finite resource (whereas many others, while finite, are growable (eg crops, industry, etc)), there would be no reason to have an “exchange” between different countries, and that it would make an effective universal currency – to some extent, undervaluing the currency systems of every country that chose to use the standard, and globalize (even more) our economies.

Plus, it makes issuing loans (and receiving them) substantially more difficult – and loans are NOT always a Bad Thing™.

For example, if, say, Canada and the US use the gold standard and decide that $1000 US is one ounce of gold, and $500 Canadian is one ounce of gold, the exchange “rate” is fixed – and it’s fixed to something that is increasable, but only at a fairly fixed rate (how fast you can acquire/generate gold). Whereas if you have floating currencies with no “real” backing, exchange rates can change based on the relative health of each country.

By setting a fixed exchange (which is what the gold standard would do … like what China has been doing for years to the US, but only on paper), is that it can cyclically under- and over-value individual countries currencies and economies, ultimately bringing more down at once when a few fail (or, of course the reverse – bring more up when some few major ones succeed).

During the early part of the last century, we were still mostly working with gold, and we had both the Great Depression, and some of the greatest economic growth ever seen.

The Great Depression, imho (though, admittedly, a biased, and fairly-underinformed opinion), was about 90% perception, and 10% reality – a fairly commonplace occurrence in economics, but one that was exacerbated by the [initially] fixed relations between the various national currencies

Also, imho, basing currency on a fixed standard (like gold) was truly only viable in an era of poor communication (I’d personally argue that shortly after the telegram became more than a technological marvel, this became more and more true until it was universal) – with poor communication, perceptions take a LONG time to be transferred – which correspondingly means that “news” was A) old, and B) taken with larger grains of salt than we *tend* to take it with now, since comunication is [effectively] instantaneous. {I have no research or citations to this point – yet: it is currently only my opinion.}

In my opinion, by floating currencies against each other and the relative strengths of each country involved, crashes are slowed (not eliminated, of course). Of course, again, the reverse is also true – booms are flattened-out. So, I’d view the floating-currency approach as one that will *tend* to flatten local (and global) booms and busts into substantially smaller ripples, rather than major mountains and troughs.

Not being an economist, I’m not sure I understand why that should be. What’s the evidence for that? How can we be certain that’s a good thing? Maybe the cycle of mountains and valleys is important, socially?

[not being an economist either,] I’d *think* that it would be better to keep the mountains and valleys more stable / less high|deep, so that slowdowns aren’t felt by a disproportionately small community/niche of the economy, and so that speed-ups can have a “good neighbor” effect to bringing some of the underperforming sectors ‘along for the ride’.

As to question 2 – I don’t *know* that it’s “a good thing” … but I also can’t say it’s a ‘bad thing’, either.

I’d be happy to hear arguments that either oppose mine, or are different 🙂

I think my strongest one would be that we used the gold standard for like 4000 years, and it seemed to work very well for us nearly globally during that time. As far as any possible good neighbor effect from flattening things out, it may be that social upheaval is an important component of progress: almost all major advances thus far in history have had some component of socio-economic shift; flattening those upheavals could very well have consequences that we can’t foresee (I realize this is a weak, speculative argument, but it’s worth considering).

There’s also part of me that feels like floating currencies are so much handwaving and voodoo. You talked about how they allow countries to create exchanges that are tied to their relative health, instead of some fixed point – but isn’t how much currency they’ve arbitrarily decided to create often used as one of the measures of health? If so, that’s somewhat circular logic: if floating currencies let us control how much inflation we’ve got, and inflation is one of the health metrics, then what prevents nations from trying to hide economic problems, just the way that nearly every EU member has done over the last 15 years?

Isn’t it exactly the fact that their currencies were floating relative to one another before hand that allowed them to hide so much of their debt before entering the euro zone? Or have i misunderstood that?

Prior to the “euro zone” cluster****, country finances were a LOT less open/transparent, too … kinda like a private vs public company (not that public companies are as transparent as would be helpful, but the comparison stands).

I feel like if they’d been the gold standard, the euro zone negotiations would have been more along the lines of:

“ok, so how much gold have you got?”
“oh, quite a bit!”
“ok, well, we’re going to need to count all of it, so that we can figure out how many euros to give you.”
“oh, well, we have quite a bit of gold!”
“yeah, still need to count it.”
“oh. um. crap. …fine”

It’s a lot harder to hide how much actual wealth you have, when your wealth can be reduced to a physical object, instead of just assertions on paper.

However, if you’re going to count the gold nuggets (or whatever), it’s also trivially-simple to elect to *NOT* show your whole hand … which would seem to me to be the same economic sleight-of-hand as can be done when asked “how many barrels of oil do you have?” and you reply “we’re recovering 5million bbl/day”

That’s not an answer – it’s interesting information … but not an answer.

In this particular case, there’s no benefit I can immediately think of to hiding your wealth – the whole point was to get your finances into a good enough shape to be able to qualify for the euro zone. The shenanigans were more about hiding debt than hiding wealth.

I think that hiding wealth *could* be beneficial to make yourself *appear* weaker than you are, so that when you “need|want” to be “strong”, you can be. It could also be from a detail-vs-gestalt approach.

So now I ask all of you – is this plausible/reasonable/right? Or am I smoking some serious space crack?

*He gave me permission to quote him as appropriate if desired

fixing copyrights

ars technica has a great article on some short-term, easy-to-implement fixes to the current copyright fiasco in the United States.

I have a bevy of thoughts on this myself, but not quite enough time today to write them down.

nclb – you know, unless you’re in one of these 10 states…

Pick your slant report – Huffington Post or Fox News: it has been reported that President Obama’s administration will be issuing waivers to 10 states with regard to compliancy with No Child Left Behind (which, in my opinion, is one of the biggest debacles in public education ever).

If the point is to “leave no child behind”, why are waivers being granted over a decade later?

And why are there 28 more states who are planning to “seek flexibility” with regards to NCLB?

Seems like that’s MAJOR proof that it was distinctly NOT the best thing we could have done as a country to address education.

nj man suing the port authority

From NBC New York, “NJ Man Sues Over Toll Hikes, Claims Bias“.

A New Jersey man has filed a federal lawsuit in New York over the Port Authority’s toll increase.

Yoel Weisshaus of New Milford claims the increase is an abuse of power and discriminates against him because he is poor.

Cash tolls on the George Washington Bridge, Holland Tunnel, Lincoln Tunnel, Goethals Bridge, Bayonne Bridge and Outerbridge Crossing went up from $8 to $12 on Sunday.

Weisshaus claims the tolls are targeted to restrict minimum-wage earners and will be used to complete the World Trade Center project instead of improving bridges and tunnels.

Sounds like a USA Today story from 3 years ago.

world war z by max brooks

Max Brooks is likely the world’s foremost authority on zombies – how to survive them, what to do if there is an uprising, etc.

In “World War Z – An Oral History of the Zombie War”, he tackles the issue of reporting on what happened by interviews with those who survived. From first-hand accounts from a variety of sources – early spotters, military members, religious leaders – from around the world, Mr Brooks presents a thrilling, chilling, engaging narrative of “The Crisis”: both as it happened, and what we need to do to continue to avert any further repercussions.

I have yet to find another report as balanced and in-depth as Mr Brooks with regards to this horrific chapter in human (and zombie) history.

  • Quality of writing: 5/5
  • Entertainment value: 5/5
  • Historicity: 5/5
  • Viscerality: 5/5
  • Overall: 5/5