How would you change the U.S. tax system?

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D-503
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How would you change the U.S. tax system?

Postby D-503 » Sun Apr 30, 2017 7:14 am UTC

Since there is a lot of debate about tax reforms going on in the U.S. right now I'm interested in discussing what the ideal tax reforms would be. Here's my proposal which is aimed at stimulating the economy while decreasing wealth inequality. Looking forward to hearing about all the problems with it :)

1. The boarder adjustment tax (as described on planet money #751) actually sounds pretty good to me. Taxing U.S. revenue would be would be much simpler than taxing profits and it would stimulate the economy by reducing the use of foreign subsidies to avoid U.S. taxes. The regressive aspects of increasing the price of all goods could be offset by increasing spending on subsidies for the poor and increasing the standard deduction and earned income tax credit.

2. Phase out the mortgage interest tax deduction by caping it at decreasing amounts. This tax break helps the wealthy far more than the poor.

3. Add 10 percent or more to all capitol gains tax rates. To compensate for the decreases in investment this could cause increase the rate of inflation so that hoarding money is less desirable. This could be done by increasing the money supply by increasing government spending, especially on infrastructure, education and programs that help the poor.

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Re: How would you change the U.S. tax system?

Postby CorruptUser » Sun Apr 30, 2017 3:15 pm UTC

1: No separate capital gains tax; capital gains is income, pure and simple.
1A: Capital to be adjusted for inflation, i.e., you buy a house for 100k and sold for 500k, but 100k is now worth 200k, you are taxed in the 300k not the 400k.
1B: Dividends to be tax deductible for the corporation, to avoid "double taxation"

2: No home mortgage deductions. Giving people 20k extra to spend on their home raises the price of the home by exactly 20k; this is a wealth transfer from the taxpayer to the lender/broker.

3: Change in bankruptcy laws so that all bonuses and wages (and pension benefits) over 400k/yr (the President's salary) for the prior 5 years are to be considered company assets, so if the company goes bankrupt the creditors can seize the golden parachutes.
3A: Salaries and bonuses over 400k to be paid with after-tax money, not before.

4: Large increase in child benefits, but capped at 2 children.

5: Social security taxes all of income instead of the first 118.5k, but with little/no increase in benefits above this amount.

6: Companies' profits are taxed at where the revenue is made, not where they are headquartered. If you made 70% of your profits in the US, the US gets to levy tax on 70% of your profits even if that really good accountant working part time in Monaco is the reason you made all that money.

7: In the event that the difference in age of spouses is greater than 10 years, the pension is to be adjusted so that it's actuarially equivalent to a difference of 10 years. That is, if a 75 year old CEO dies and leaves the 25 year old spouse a fat pension, the pension is reduced so that the plan pays out roughly the same as if the spouse had been 65 instead.


Also, holy crap, I've been advocating for taxing profits based on where the revenue is earned for a decade or so now, and it's part of the Republican platform as of 2016? Yay, the Republicans aren't complete fuckups!

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Re: How would you change the U.S. tax system?

Postby sardia » Sun Apr 30, 2017 7:51 pm UTC

CorruptUser wrote:1: No separate capital gains tax; capital gains is income, pure and simple.
1A: Capital to be adjusted for inflation, i.e., you buy a house for 100k and sold for 500k, but 100k is now worth 200k, you are taxed in the 300k not the 400k.
1B: Dividends to be tax deductible for the corporation, to avoid "double taxation"

2: No home mortgage deductions. Giving people 20k extra to spend on their home raises the price of the home by exactly 20k; this is a wealth transfer from the taxpayer to the lender/broker.

3: Change in bankruptcy laws so that all bonuses and wages (and pension benefits) over 400k/yr (the President's salary) for the prior 5 years are to be considered company assets, so if the company goes bankrupt the creditors can seize the golden parachutes.
3A: Salaries and bonuses over 400k to be paid with after-tax money, not before.

4: Large increase in child benefits, but capped at 2 children.

5: Social security taxes all of income instead of the first 118.5k, but with little/no increase in benefits above this amount.

6: Companies' profits are taxed at where the revenue is made, not where they are headquartered. If you made 70% of your profits in the US, the US gets to levy tax on 70% of your profits even if that really good accountant working part time in Monaco is the reason you made all that money.

7: In the event that the difference in age of spouses is greater than 10 years, the pension is to be adjusted so that it's actuarially equivalent to a difference of 10 years. That is, if a 75 year old CEO dies and leaves the 25 year old spouse a fat pension, the pension is reduced so that the plan pays out roughly the same as if the spouse had been 65 instead.


Also, holy crap, I've been advocating for taxing profits based on where the revenue is earned for a decade or so now, and it's part of the Republican platform as of 2016? Yay, the Republicans aren't complete fuckups!

Where did you get some of these proposals from? And I don't think all of these are high impact changes, even though they feel very just. Like really, bankruptcy law changes? How much did that really distort the market? If you could state how big of a distortion or how big the change would be, that would be informative. 2 & 6 are big ticket items. The rest? seems minor to me. Or you just hating on certain things like large families.
Last edited by sardia on Sun Apr 30, 2017 8:50 pm UTC, edited 1 time in total.

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Re: How would you change the U.S. tax system?

Postby CorruptUser » Sun Apr 30, 2017 8:20 pm UTC

Just things I've thought up over the years. Or maybe heard them from someone else, memory is weird like that. The bankruptcy law comes from the Enron scandal; I remember thinking back then, if the company can just award massive bonuses to the executives when they know it's about to collapse, why shouldn't the creditors be able to claw those bonuses back?

I've despised the home mortgage deduction since well before the housing crisis, so over a decade ago.

The pension thing is more recent, mostly as a way to save pensions, especially considering that executive pensions tend to be the biggest, and everyone else's pension has to subsidize the CEO's pension when they marry someone young enough to be their grandkid.

Child benefits is, well, I don't actually have a right answer for this one. It's... complicated.

Social Security is from, well, ever since I found out that Social Security only taxes the first 110k (since raised), effectively causing the tax rate to drastically fall once you earn more than 110k, while growing up my entire life hearing "Social Security is going to collapse!". Raising the cap is basically the simplest way to fix it, because it's either that or we have to reduce payments, raise the age, or increase the tax rate.

And I don't think these will all be very high impact, just changes I'd like.

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Re: How would you change the U.S. tax system?

Postby D-503 » Mon May 01, 2017 10:13 am UTC

CorruptUser wrote:1A: Capital to be adjusted for inflation, i.e., you buy a house for 100k and sold for 500k, but 100k is now worth 200k, you are taxed in the 300k not the 400k.
1B: Dividends to be tax deductible for the corporation, to avoid "double taxation"

It seems like the inflation adjustment would mainly be a tax break for the wealthy. What would be the benefit of doing this? For 1B do you mean dividends received or payed?

CorruptUser wrote:6: Companies' profits are taxed at where the revenue is made, not where they are headquartered. If you made 70% of your profits in the US, the US gets to levy tax on 70% of your profits even if that really good accountant working part time in Monaco is the reason you made all that money.

Taxing profits is difficult since companies use foreign subsidiaries or hqs to sell their product in the foreign country to a companies that just import the product into the US. Technically the revenue is all accrued in the foreign country. The import company will buy the product at near the retail value and thus have a profit near zero. Using a tax on revenue instead would make it so this loophole doesn't work.

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Re: How would you change the U.S. tax system?

Postby Ranbot » Mon May 01, 2017 1:53 pm UTC

Implement the "Ready Return" nationwide. Details on NPR Planet Money podcast #760. Summary: The vast majority of Americans taxpayers' employers report their income to the IRS and they take standard deductions. For most people the IRS could easily prepare a completed tax return for them, which the taxpayer reviews, approves, and sends back; or make modifications as needed. Easy and simple. Other countries do this and their citizens like it, it improves tax collection rates, and reduces errors/audits. In 2005 there was a test case in California and participating taxpayers were overwhelmingly happy, but it died with politicians because conservative anti-tax groups think making taxes easy to pay and improving collection rates was effectively a tax increase. :roll:

I'm also with others to remove the home mortgage tax deduction, or at least cap it. It's regressive and just raises home prices. It also raises rent for non-home owners who are often poorer, making it harder for them to save and buy a house so can take advantage of the same deduction.

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Re: How would you change the U.S. tax system?

Postby Chen » Mon May 01, 2017 4:50 pm UTC

Ranbot wrote:Implement the "Ready Return" nationwide. Details on NPR Planet Money podcast #760. Summary: The vast majority of Americans taxpayers' employers report their income to the IRS and they take standard deductions. For most people the IRS could easily prepare a completed tax return for them, which the taxpayer reviews, approves, and sends back; or make modifications as needed. Easy and simple. Other countries do this and their citizens like it, it improves tax collection rates, and reduces errors/audits. In 2005 there was a test case in California and participating taxpayers were overwhelmingly happy, but it died with politicians because conservative anti-tax groups think making taxes easy to pay and improving collection rates was effectively a tax increase.


I did my Canadian taxes yesterday (right at the deadline baby :P) and it seems most of the tax software programs now do almost exactly this. I clicked a button, logged into my CRA profile and it downloaded all my info into the tax software. Only one box was off a bit from my paper T4 form which I corrected. I had to do manual deductions myself (childcare, RRSPs etc) but the vast majority of stuff was done automatically for me through that download.

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Re: How would you change the U.S. tax system?

Postby Ranbot » Mon May 01, 2017 5:44 pm UTC

Chen wrote:
Ranbot wrote:Implement the "Ready Return" nationwide. Details on NPR Planet Money podcast #760. Summary: The vast majority of Americans taxpayers' employers report their income to the IRS and they take standard deductions....


...it seems most of the tax software programs now do almost exactly this. I clicked a button, logged into my CRA profile and it downloaded all my info into the tax software. Only one box was off a bit from my paper T4 form which I corrected. I had to do manual deductions myself (childcare, RRSPs etc) but the vast majority of stuff was done automatically for me through that download.


Yes most tax software or websites are like this, but it's a service the IRS could easily provide to help everyone, particularly people without home internet access or are not technologically savvy. The easier a system is the more people will comply; and higher compliance for tax returns means more tax revenue [without legislating new taxes]. There's also a possible argument that the IRS should provide this service for the sake of personal security, so people can deal directly with the IRS instead of giving sensitive personal financial information to an intermediary software/website.

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Re: How would you change the U.S. tax system?

Postby slinches » Mon May 01, 2017 7:11 pm UTC

My proposal is more of a money-flow restructuring rather than trying to prescribe how it should be distributed.

The current tax system has some perverse incentives. Each congressman's job is to bring as much of the taxes sent to the Federal Treasury back to their home state as they can. The easiest way to do that is to propose new spending, so the federal budget grows with nothing to slow it down. I don't see any way to curb the growth of federal spending long term until people stop lending us money, unless there are more fundamental structural changes. Here's what I think would fix that incentive problem:

1. Eliminate the federal income tax. (no direct taxes from citizens to the federal government)
2. Federal treasury is funded out of the state treasuries and import/excise taxes.
3. Each bill passed at the federal level must be accompanied with a definition of how the funding will be apportioned between the states.

States are free to tax however they see fit (some states may want a flatter tax system while others can be much more progressive than the current scheme, if they want), but they must collect enough taxes to cover their agreed upon share of the federal budget and that's paid first. What that means is that our Representatives and Senators will have to weigh how they spend money at the federal level against how it could be used within the state and the desired level of taxation. I think this would essentially eliminate the more onerous aspects of the federal "power of the purse" while still being able to fund things that make sense at the national level.

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Re: How would you change the U.S. tax system?

Postby ivnja » Tue May 02, 2017 1:10 pm UTC

slinches wrote:1. Eliminate the federal income tax. (no direct taxes from citizens to the federal government)
2. Federal treasury is funded out of the state treasuries and import/excise taxes.
3. Each bill passed at the federal level must be accompanied with a definition of how the funding will be apportioned between the states.


Nos. 1 and 2 are essentially a return to the tax system of the Articles of Confederation, aren't they? Congress found it very difficult to actually get money out of the individual states under the provisions of the Articles - what sort of teeth would you give this modern version to ensure state compliance?

I do find it remarkable that from the ratification of the Constitution until the early 1900s the treasury managed to get along reasonably well on just tariffs and excuses, at least outside of wartime. The federal government did concern itself with a lot less during that period, though.
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Re: How would you change the U.S. tax system?

Postby slinches » Tue May 02, 2017 5:34 pm UTC

ivnja wrote:Nos. 1 and 2 are essentially a return to the tax system of the Articles of Confederation, aren't they? Congress found it very difficult to actually get money out of the individual states under the provisions of the Articles - what sort of teeth would you give this modern version to ensure state compliance?

Yes, there are some similarities with the system in the Articles of Confederation, but I think in practice the balance of power would be closer to the Constitution prior to the 16th amendment. Except, the avenues for federal funding would be expanded by allowing the Federal to draw from the States coffers. The reapportionment clause was a tight rein on the federal budget. It did need to be loosened to fund the war effort, but instead they dropped it entirely and let it run free. Now, unsurprisingly, it's out of control. I think the 16th amendment was short sighted. In the haste to resolve a serious issue, the states gave away more than they had bargained for.

And yes, there would need to be some teeth to enforce the "pay the feds first" part. I'm not entirely certain what form that should take, but due to the vastly increased interconnectedness of the state economies, I think there are a lot more options for imposing sanctions than there were under the Articles.

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Re: How would you change the U.S. tax system?

Postby CorruptUser » Tue May 02, 2017 9:19 pm UTC

The US government does a lot more than it did in 1900. Unless you plan to scrap the EPA, NASA, all the farm stuff, most of the military, SNAP, etc, to say nothing of SocSec and Medicare/Medicaid, government has to collect the taxes for these programs somehow.

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Re: How would you change the U.S. tax system?

Postby slinches » Wed May 03, 2017 5:14 pm UTC

CorruptUser wrote:The US government does a lot more than it did in 1900. Unless you plan to scrap the EPA, NASA, all the farm stuff, most of the military, SNAP, etc, to say nothing of SocSec and Medicare/Medicaid, government has to collect the taxes for these programs somehow.

Yes the federal government needs more funding than before. In my proposal, the states pay for such federal programs out of their treasuries. This does necessitate that states raise more tax revenue, but the citizens of the states no longer pay federal tax so there's room to do so without increasing taxes on individual citizens overall.

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Re: How would you change the U.S. tax system?

Postby CorruptUser » Wed May 03, 2017 6:02 pm UTC

And then you have the free rider problem, where you can enjoy the benefit without paying for it, so no one pays.

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Re: How would you change the U.S. tax system?

Postby slinches » Wed May 03, 2017 6:25 pm UTC

No free rider problem here. Each bill will define the share of the expenses each state is responsible for. And if a state somehow refuses to pay (wouldn't be able to do that legally), the feds can withhold the services.

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Re: How would you change the U.S. tax system?

Postby CorruptUser » Wed May 03, 2017 6:56 pm UTC

I... don't think you understand the free rider problem at all. For example, national defence. If Oklahoma decides it doesn't need to pay for that, it's not like Canada can invade only Oklahoma. Or medical research. It's not like a new vaccine would be made unavailable to Montanans if Montana decided it didn't need to pay for research. And then there's the problem with the homeless that exists today, where crappy states have decided that instead of spending money on housing and drug rehab, they can just pay for bus tickets to the states that did spend the money.

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Re: How would you change the U.S. tax system?

Postby slinches » Wed May 03, 2017 7:47 pm UTC

True, not everything can be treated that way. But there's plenty of programs that could be pulled if they underpay. Then there's other economic sanctions like denying any government contracts to companies in that state all the way up to adding tariffs, confiscation or blockading anything import to/exported from the state.

I'm sure we can find an effective combination of incentives and punitive measures to ensure that State obligations are met, if they're needed at all.


The intent isn't to allow states to withhold money that's already committed to the federal budget. It's intended to make our congressmen consider the costs before making the commitment in the first place.

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Re: How would you change the U.S. tax system?

Postby Euphonium » Wed May 03, 2017 8:25 pm UTC

0% income tax on all income up to $50,000 per household member. 100% tax on all income above $50,000 per household member.

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Re: How would you change the U.S. tax system?

Postby slinches » Wed May 03, 2017 8:31 pm UTC

Euphonium wrote:0% income tax on all income up to $50,000 per household member. 100% tax on all income above $50,000 per household member.

You know this is supposed to be Serious Business, right?

With your system, why would anyone spend time getting advanced degrees or investing in a business if their income was capped at $50k?

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Re: How would you change the U.S. tax system?

Postby CorruptUser » Wed May 03, 2017 10:50 pm UTC

65% is generally accepted as the point on the Laffer curve where tax revenue is maximized. Even then, this is still too high; while the tax rate is maximized here, the expenses increase as people work/produce less, so you are probably better off with a tax rate in the 55-60% range for the top bracket.

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Re: How would you change the U.S. tax system?

Postby Thesh » Thu May 04, 2017 12:52 am UTC

CorruptUser wrote:65% is generally accepted as the point on the Laffer curve where tax revenue is maximized. Even then, this is still too high; while the tax rate is maximized here, the expenses increase as people work/produce less, so you are probably better off with a tax rate in the 55-60% range for the top bracket.


I didn't realize that it was independent of what you set the brackets to. No one is going to work less because of a 90% tax on income over one million dollars.
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Re: How would you change the U.S. tax system?

Postby slinches » Thu May 04, 2017 5:07 am UTC

Billionaires might.

There is a balance that must be struck with progressive taxation. You don't want to create a disincentive against creating wealth while also extracting what you can.

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Re: How would you change the U.S. tax system?

Postby CorruptUser » Thu May 04, 2017 6:12 am UTC

Thesh wrote:
CorruptUser wrote:65% is generally accepted as the point on the Laffer curve where tax revenue is maximized. Even then, this is still too high; while the tax rate is maximized here, the expenses increase as people work/produce less, so you are probably better off with a tax rate in the 55-60% range for the top bracket.


I didn't realize that it was independent of what you set the brackets to. No one is going to work less because of a 90% tax on income over one million dollars.


Didn't want to get too far into the nuances, and welfare traps, and so forth. Yes, the tax rate impacts the labor supply differently based on a number of factors. But yes, a tax rate of 90+% mostly generates a "why bother" attitude among even the ultra rich. The US once had a top tax rate of 91%, but guess how many people were actually in that bracket? As I've said, we should raise the top bracket to about 55% or so, and if you think it should be higher than that, then we both agree that it should be at least 55% and we're on the same side here.

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Re: How would you change the U.S. tax system?

Postby Chen » Thu May 04, 2017 3:09 pm UTC

Thesh wrote:I didn't realize that it was independent of what you set the brackets to. No one is going to work less because of a 90% tax on income over one million dollars.


While you probably won't have people working less, at those high income brackets you'll have people leaving the tax jurisdiction entirely instead since they have the means to. Top tax bracket here in Quebec is ~25%. Top rate in Ontario is 13%. I know people who work on Montreal but live just across the border to avoid that already and those are not multimillionaires or anything. The top rate in Quebec comes into play at $150k and the Ontario one at $220k (its ~12% at the 150k mark). If the rate dramatically increased at even $500k to say 55% or something (which would put your combined federal/provincial rate near the 90% total rate mentioned) you'd have a huge number of people who'd move just across the border to avoid that higher tax.

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Re: How would you change the U.S. tax system?

Postby Thesh » Thu May 04, 2017 3:14 pm UTC

Chen wrote:
Thesh wrote:I didn't realize that it was independent of what you set the brackets to. No one is going to work less because of a 90% tax on income over one million dollars.


While you probably won't have people working less, at those high income brackets you'll have people leaving the tax jurisdiction entirely instead since they have the means to. Top tax bracket here in Quebec is ~25%. Top rate in Ontario is 13%. I know people who work on Montreal but live just across the border to avoid that already and those are not multimillionaires or anything. The top rate in Quebec comes into play at $150k and the Ontario one at $220k (its ~12% at the 150k mark). If the rate dramatically increased at even $500k to say 55% or something (which would put your combined federal/provincial rate near the 90% total rate mentioned) you'd have a huge number of people who'd move just across the border to avoid that higher tax.


I was talking at the national level, but they are only important because they have wealth; beyond the money, they contribute next to nothing. In fact, I'd say the wealthy are doing more harm than good, and taking the money away from them would be inherently beneficial to this country.
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Re: How would you change the U.S. tax system?

Postby CorruptUser » Thu May 04, 2017 3:53 pm UTC

Are you honestly going to say that Bill Gates, Elon Musk, Richard Branson, etc have all been terrible? Sure, the corporate raiders and junk bond sellers and their children are all shit, but not the people who became rich by inventing/creating something of value.

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Re: How would you change the U.S. tax system?

Postby Thesh » Thu May 04, 2017 4:02 pm UTC

Bill Gates and Elon Musk are fucking horrible people, and I'm not familiar enough with Richard Branson to comment. Elon Musk is just a rich narcissist; just because you throw money at things that people have been talking about for decades doesn't make you a visionary. Gates got rich by pushing crap software using the worst tactics of capitalism, and computers are worse today because of him.
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Re: How would you change the U.S. tax system?

Postby CorruptUser » Thu May 04, 2017 8:03 pm UTC

Ask someone who was around BEFORE Gates. Everyone knew that a universal operating system would would be a godsend, in much the same way that today we'd all love a universal programming language. Sure, MS Dos was a knockoff of Unix, but it worked. Turns out that most of Microsoft's current product shittiness isn't actually their fault; Microsoft has to build a universal product rather than dedicate it to one specific set of computers and programs, so you end up with all sorts of redundancies and spaghetti and other things so it's backwards compatible with things made before some of the users were even born. The result is a suite of software that can do everything well enough, but nothing great. It's amazing the amount of hate Gates gets, especially when everyone seems to love Steve Jobs, who was so far up his own asshole that when he opens his eyes he sees tonsils.

As for Musk, really? I actually am morbidly curious, what do you hate about Musk? Besides the fact that his company is massively overvalued by speculators.

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Re: How would you change the U.S. tax system?

Postby Thesh » Thu May 04, 2017 10:22 pm UTC

They made their wealth purely due to rent-seeking off of patent and copyright laws. They are continuing the same exact policies that are causing all the problems in this country, for their own personal gain, and marketing it if they are the greatest people to ever exist. They are hoarding patents and technologies to keep competitors out of the market, and they are doing everything they can to collect up all of our data. These are people that think that if only they had all the power they can make the world a better place, and that any harm that occurs in their wake is acceptable. Elon Musk takes it a step further and wastes massive resources on stupid pet projects so he can play out his idiotic fantasies (BREAK THE SIMULATION!!!).

But hey, at least he is being a good capitalist and making money, that's all that matters amirite?

EDIT: Just wait until Elon Musk gets everything he wants, then cars will not only have software vulnerabilities that need to be patched, but a support lifecycle that means they must be replaced every 10 years. He's Entrepreneuring so hard!
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Re: How would you change the U.S. tax system?

Postby CorruptUser » Thu May 04, 2017 10:42 pm UTC

Thesh wrote:They are hoarding patents and technologies to keep competitors out of the market,


That's patently untrue.

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Re: How would you change the U.S. tax system?

Postby Thesh » Thu May 04, 2017 10:48 pm UTC

Great PR move; not backed up with an actual license, just an unenforceable statement that will likely be rescinded the instant a competitor comes on board. The value of Tesla is mostly the patents, not the brand. Especially the charging network.
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Re: How would you change the U.S. tax system?

Postby CorruptUser » Thu May 04, 2017 11:28 pm UTC

Seems a bit like you have some circular logic going on there.

"Rich people are evil. Anything they do to get rich must therefore be evil"

Sure, patent trolls are a problem. In a world where all research was funded by the government/public, it'd be insane to have patents. But the government didn't do Tesla's engineering for them. Now, if we are talking pharmaceuticals, where the research IS done through the government yet somehow the companies get the patents, there'd be an issue. Fuck those fuckers, with a combination of sandpaper, lemon juice, and cacti. Sure, it'd be nice if everyone all worked for the Common Good, but that's not reality, and the numbers need to crunch for any company to do anything.

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Re: How would you change the U.S. tax system?

Postby ucim » Fri May 05, 2017 12:22 am UTC

Thesh wrote:They made their wealth purely due to rent-seeking off of patent and copyright laws.
What is your issue with "rent seeking"? If you own something, you should be able to control its use. That's what "own" means. Now there may be edge cases that warrant attention (I certainly agree with that) and patents aren't really "ownership" but more of a long term lease; the increasing terms of the lease being (IMEO) a problem, but you seem to have a problem with the very idea of ownership.

Thesh wrote:Elon Musk takes it a step further and wastes massive resources on stupid pet projects so he can play out his idiotic fantasies.
How does that make him a bad person? It's his resources he's wasting, not yours. I'm sure you have fantasies too, that you "waste" (according to anyone who disagrees with you) resources on; how is this different, except that it's him and not you? And it's "lots" of money?

Thesh wrote:that's all that matters amirite?
No, youarenotrite, but not for those reasons.

Thesh wrote:Just wait until Elon Musk gets everything he wants, then cars will not only have software vulnerabilities....
Isn't this true of anybody who does software?

Jose
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Re: How would you change the U.S. tax system?

Postby Thesh » Fri May 05, 2017 1:26 am UTC

ucim wrote:
Thesh wrote:Just wait until Elon Musk gets everything he wants, then cars will not only have software vulnerabilities....
Isn't this true of anybody who does software?


The software industry itself is run in a haphazard and disorganized fashion, which has resulted in a massively insecure software with a massively insecure infrastructure. The profit motive leads to software being developed around marketing needs, rather than the needs of the customers and this leads to various releases in which old software gets discontinued and no longer supported. Both of these things contribute to the massively insecure infrastructure.

We are paying significantly more money to get significantly worse products purely for the sake of satisfying the profit motive, all the while libertarians are swooning over the rich, justifying their massive wealth at the expense of the people who did the real work and have absolutely no entitlement to the resulting wealth generated. Our entire economy is going to hell because of people like them.

Yes, we know you believe that having massive power over other people is the only thing that could possibly provide motive to do good, but it does not do good. It only harms the world.

But go ahead and cling to the idea that any money made by the wealthy must have been made by merit, without any concern for how the laws are structured and the resulting power imbalances.
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Re: How would you change the U.S. tax system?

Postby CorruptUser » Fri May 05, 2017 2:10 am UTC

Thesh wrote:But go ahead and cling to the idea that any money made by the wealthy must have been made by merit, without any concern for how the laws are structured and the resulting power imbalances.


Way to strawman. I believe it's possible for someone to become incredibly wealthy through merit and providing to the community at large, but I don't believe it must have been made through merit. It's not most cases, and generally limited to emerging technologies, the arts and entertainment, and entrepreneurs. Entrepeneurs that even your prophet Karl Marx begrudgingly praised.

You seem to believe that it's impossible for someone to become wealthy in a manner that's through creating value. I ask you, who exactly did Notch screw over when he made millions from the game minecraft? Who did J K Rowling screw over on just the Harry Potter books alone?

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Re: How would you change the U.S. tax system?

Postby Thesh » Fri May 05, 2017 2:33 am UTC

Given a system in which pay is so obviously not based on merit (e.g. Microsoft makes money because the consumers are disorganized and Microsoft has the power to make each and every customer pay for the license, not for the cost of developing the software), why should we justify individuals making millions of dollars for doing absolutely nothing but having money, while other people are dying of starvation?

The entire world has been structured to concentrate wealth into a handful of areas, segmenting regions into single-industry producers in order to make them dependent on the wealthy so they can pay lower wages. They use patent, trademark and copyright laws to keep poor areas from being able to obtain wealth. They have used military force to acquire land and property throughout the last century, making countries dependent on their companies, and they are all making their wealth on this.

Capitalism in no way, shape, or form leads to a meritocracy.
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Re: How would you change the U.S. tax system?

Postby ucim » Fri May 05, 2017 3:03 am UTC

Thesh wrote:Capitalism in no way, shape, or form leads to a meritocracy.
So... what does? How should it be determined who "deserves" how much of what? (Yes, this looks like it's getting off-topic, but taxation is related to this; how do we figure out how much of my money the government "deserves"?

More on the OP's question - the first thing I would do is simplify the actual income tax forms, without changing any of the actual tax rules. I'm concentrating on the income tax because it's the most obfuscated, and a discussion of taxation is fruitless when people don't actually know what's really being taxed, and by how much. To oversimplify, different kinds of income are taxed at different amounts, but they are all rolled together first, and then they are picked apart afterwards. In the end, it's hard to know what any piece of (incremental) income is really being taxed at. I'd like the forms to calculate the tax for each (relevant) kind of income separately, and then add up the taxes.

Off the top of my head, and at a Presidential level of detail:

I'd like to see income averaging brought back; windfall profits should be able to be spread out rather than penalized just because circumstances (often beyond one's control) concentrates the income in one foop. (I work for ten years to develop {thing} and at the end of ten years, I sell the completed thing for {lots of money}. Well, "lots of money" divided by ten years isn't much, but I'd be taxed as if I were a rich man. Which I wouldn't be.

I do not agree that (long term) capital gains should be treated as ordinary income. Capital gains are what drives the economy in the first place. They represent the risk of losing everything; without that capital and the incentive to supply it, there would be no {expensive advances}.

I don't think I would eliminate the federal income tax; it is appropriate to appropriate money nationally for national things (i.e. defense, space program, interstate transport). To accept the argument that it should be done at the state level invites the next step; all taxes should be local. To me this is ludicrous.

I'd raise the alternative minimum tax threshold to much higher. It's there to get the wealthiest edge cases; if a significant part of the population has to fill out those forms (essentially recalculating their taxes under a different, more complicated, and more obscure system), then it's overstayed its welcome.

I also think that the welfare system needs to be discussed in the same breath. It's essentially an overlapping negative tax bracket, with reverse deductions (only certain things are funded...) and leads to the welfare cliff.

Keep in mind two definitions:

Business expense: The proper accounting of expenditures that lead to income; one should be taxed on net, not gross income.

Loophole: A business expense you don't get to use.

Jose
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Re: How would you change the U.S. tax system?

Postby Thesh » Fri May 05, 2017 3:31 am UTC

Meritocracy is impossible to achieve unless you can determine a way to measure merit. In a perfectly competitive market where everyone has equal power and equal information you should see the price of goods reflect only by their utility and the scarcity of resources that go into them. By extension, the price of scarce resources, including labor, should reflect the scarcity of the resources and the utility of the products being made with them. This leads to decisions that result in a higher utility for the given resources. Fixed resources like land, infrastructure, and natural resources should be owned by the public, and the income made by renting the land/structures and selling natural resources should be paid equally to all, possibly taxed (which is probably the most efficient tax possible).

All systems have some degree of inefficiency leading to prices not reflecting actual utility and resources consumption, but generally speaking the less transparency there is and the more wealth inequality there is the less prices will reflect actual resource usage or merit, and the more it will reflect the power imbalances in the market. Generally speaking, non-profit consumer cooperatives are probably a much better business model, as they can operate without the need for patents or even strong copyright laws - they spend money based on whether it is beneficial to their customers, not whether it will help them increase their wealth.
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Re: How would you change the U.S. tax system?

Postby ucim » Fri May 05, 2017 4:52 am UTC

Thesh wrote:Meritocracy is impossible to achieve unless you can determine a way to measure merit.
"I know it when I see it." One problem with measuring it however is that merit has different value for different people. You may value artistic talent and not give two toots for the ability to get ideas across. Fred may value teaching ability and not give two toots for acting ability. And so it goes... the measurement problem isn't one of metric so much as one of axes.

The same is true of government and government programs; some programs are more meritorious than others; we (collectively) simply (and legitimately) disagree on what makes a program meritorious. And we are easily persuaded by irrelevant and alternative facts - look how well advertising works. The best-selling car isn't the best car, nor is it the best-for-the-money car, defining "best" in some objective "consumer reports" type manner. Nonetheless, we still have to choose... and in the case of government, we choose one that we all have to live under. We can't each choose our own government (and survive).

Given all this, is a meritocracy "the thing to strive for" even if it's impossible to well-order "merit"? If so, we still need a method of well-ordering something that is inherently not well-ordered. And if not, then what -ocracy should we strive for that's better than one that values merit, however defined?

Thesh wrote:Fixed resources like land, infrastructure, and natural resources should be owned by the public
Why? Specifically why, that doesn't apply to non-fixed resources like cars, buses, computers, and clothing, and to intangible resources like the fruits of one's creative labor?

As to the tax system, the first question I would ask is why have any tax at all? The one obvious answer is to fund the necessary functions of government (whatever we decide they be). But that's not the only answer; another is to enact a social agenda. This is not always bad, but shouldn't be assmed to be a good. Sin taxes and the home mortgage deduction come to mind. Taxes used to enact social agendas lower the direct efficiency of the tax system (it's a distortion of the Laffer curve) but arguably accomplish legitimate (YMMV) government objectives in a more efficient manner. For example, spending money on health, education, and arts, could make the populace happier, lowering crime rates, police costs, and insurance rates.

The second question I would ask is whether (income) taxes should be earmarked; that is, should different kinds of income be allocated to different government programs. For example, maybe the treasury's budget should be funded through capital gains taxes, and the infrastructure be funded through sales taxes; the theory being that it pulls the income from those who benefit most from it. But that gets very thorny; there are many secondary beneficiaries and a lot of opportunity for complex exceptions and loopholes. So maybe not such a good idea.

Jose
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Re: How would you change the U.S. tax system?

Postby Soupspoon » Fri May 05, 2017 8:08 am UTC

CorruptUser wrote:Sure, MS Dos was a knockoff of Unix,
Rebranded version of a knock-off of CP/M which was developed from TOPS10, all of which stems from a separate design philosophies from different "white heat of development" source companies. Doesn't share much (at best sideways, and reluctantly) 'genetic' inheritance from the Unix family tree.

Spoiler:
Interestingly, my first use of DOS was with this thing, my first use of Unix was a few years afterwards. It was then about about a decade for the useful bits in UNIX shell scripting found its way (natively) into DOS, like advanced looping and trivial nesting of multilines within loop/branching (without using the single to-end-of-line-or-ELSE opportunity to be CALLing another .BAT (or, by cleverness, reCALL the originating .BAT!) or risk chaos with a IF/GOTO) and all those fancy drive:path/file.extension extractions that make up for the horrible FOR /F ("delims=...")-based kludges that were themselves a much-awaited proxy for the grep... But I digress.


Anyway, I have had variously rising and falling attitudes towards Bill Gates over the four decades of my aquaintance, but I find it hard to believe we could be reassured the same sort of path to the currently interesting age of information technology without him.

For sure, there were doubtless many innovations that we did not see due to the dominance of Gates on one side, Jobs on another, more recently Page, and then various more nameless and faceless figureheads from the pre-existing and veritably venerable companies upon whose shoulders yet more of our capabilities arose. But Torvald and Berners-Lee and Wales happened, etc, 'despite' all this.

As for Musk, so far I don't see him as Evil Genius material, even to the extent of Gates. But history (as written by the winners, or perhaps survivors) will perhaps shed light on what reality I am blissfully unaware of, right?


As for taxes, the US tax system is a stranger to me. (The UK tax system is almost as strange, with the comforting distancing effect of PAYE .) But incentive to 'create' wealth must be balanced against disincentives to hoard and hide it, so that investments in workforce (wider and deeper) uplift more of those away from the tip of the hierarchy. I would suggest that punishing those that abdicate their proportionally greater pecuniary responsibilities should be a priority, but I don't see the current CEO of America laying himself open to such measures...


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