Slashdot Mirror
Can Computers Be Used To Optimize the US Tax Code?
FatLittleMonkey writes "Science fiction author David Brin wonders whether the US tax code, described by President Obama as a '10,000-page monstrosity,' could be dramatically simplified. His idea is about using computers to shuffle the existing system: 'I know a simple way the sheer bulk of the tax code could be trimmed by perhaps 70% or more, without much political pain or obstructionism! ... it should be easy to create a program that will take the tax code and experiment with zeroing-out dozens, hundreds of provisions while sliding others upward and then showing how these simplifications would affect, say, one-hundred representative types of taxpayers... Let the program find the simplest version of a refined tax code that leaves all 100 taxpayer clades unhurt. If one group loses a favorite tax dodge, the system would seek a rebalancing of others to compensate. No mere human being could accomplish this, but I have been assured that a computer could do this in a snap.' With all the talk about Open Government, perhaps the computer code currently used in tax modelling could be released to the wider community, leading eventually to a Folding@Home type project."
That procedure would lead to the same results. Maybe some redundancy would be removed, but obviously he doe not understand why the Tax system is complicated. Its the politics, stupid. Many of these 10000 pages are just small little promises somebody has given to *his* voters at some point. And nobody wants to cut such things, because one time this starts, it could be soon the promises to *your* voters. So no matter how absurd something is, it will stay there forever.
Would work at face value. Genetic algorithms can easily be used to solve something like that.
However I think taxes have more of an effect than just bringing in money, if the system decides to highly tax something, it might cause an economic downturn on that item, which could have ramnifications. In fact, the more popular the item is, the more cash you'd get if you raise the taxes on it.
The system will still not be understandable, but this time computers will be blamed.
Slightly longer answer:
Maybe
Would politicians accept the solution without re-bloating it first? No
Scrap the whole thing and start over. All the cruft is from decades of putting in and taking out different provisions for thousands of groups of people. Start with whatever rates you want. Then stop. What's the point of taxing someone 30%, then giving them a mortgage deduction, education deduction, horse rodeo operator deduction, etc.? Same with corporations; if you're going to give them all tax breaks on their water coolers, just drop the rates. The IRS will be pissed, thousands (millions?) of accountants will be pissed, and everyone else get 4 hours of their lives back from stupid paperwork each year.
Vote monkeys into Congress. They are cheaper and more trustworthy.
Yes, you're the only person who has done research on this topic. Out of the hundreds of millions of people affected by the tax code, nobody has ever thought to sue the federal government over income taxes or to use this as an affirmative defense against charges of tax evasion. You could be the hero who leads us all into a tax-free future by finding that honest judge of which you speak.
Get to work on that. Good luck, and let us know how it turns out.
In what way? The power to tax is in the constitution itself and "general Welfare of the United States" is pretty much "whatever you think is good".
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
Also they added this amendment which is very, very broad:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
So do tell... what is unconstitutional?
Live today, because you never know what tomorrow brings
Most EU countries have VAT which amounts to a (different in every country but currently in the UK:) 20% tax on all sales except essentials (baby milks, children's clothing, most foods - but not "luxury" foods with chocolate in them, etc. - and, strangely, printed books).
Yet we still have high tax rates too, and it's not because we're being "stung" any more than other countries.
Hell, some EU countries just charge you 50% of whatever you earn which actually works out quite a good deal when you take into account all the tiny taxes and administrative costs of them over a lifetime. It makes taxes SO much simpler and you can actually spend time chasing those who cheat the system rather than having to need a degree in law and mathematics to understand taxation enough to tell whether something is right or not.
The UK has a tax mess too - and we really should go the blanket 50% way (although if we were to do it properly, it would be nearer the 60-something % that we're currently paying) - we have fuel tax, road tax, "tv licensing", income tax, VAT, land tax, house-buying tax, cigarette tax, alcohol tax, corporation tax, national insurance contributions, gambling tax, air passenger tax, insurance premium tax, inheritance tax, council tax, and a million others, all on sliding scales and requiring all sorts of legal basis and challenges (McVities were sued by HM Customs and Excise for classing a Jaffa Cake as a cake - untaxable - and not a luxury biscuit - taxable. The lawsuit cost millions.)
Whereas if you just said "any money or goods you earn or are given as a gift/inheritance, we want 50%", it's very easy to work out. Hell, most of the time it's almost impossible to work out what you need to pay. Self-employed people fill out a tax return and if they *don't* want to calculate their own tax, they have to send it in 6 months before those who do with the relevant data so someone else can work it out for you. And that's AFTER you've made sure to legally declare everything and put it in the right boxes and ask for the right forms.
The IRS and it's system certainly has ulterior motives. As do the congress critters who actually pass laws regarding taxes.
I can simplify the tax code without a computer. Just strike all the existing income tax laws, and in their place, pass a law that your gross income times .1 belongs to the government. No deduction, no shelters, no credits, nothing. The same tax rate applies for married, single, youth, elderly, businesses large and small, no matter who you are.
However, the tax system isn't about revenue for the government, so much as it's about politics, so my system would never be adopted. Politicians use the tax system to make a zillion little groups of people feel "special", and to redistribute wealth according to whichever special group has the most political clout.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
We're the lowest taxed generation since WWII. The highest rate now is 35%, and few pay it. The highest tax bracket in the 90s was 39.6. The highest tax bracket under most of Regan was 50%. Under Nixon was 70%. Kenedy was 91%. Eisenhower was also 91%. The rate coming out of WWII was 94%.
Try doing actual research before spitting out far right talking points.
I still have more fans than freaks. WTF is wrong with you people?
We do have "slightly" more government services to compensate though, or at least we do in Sweden. Our "marginal" tax rate is about 55%, though of course no one actually pays that much, the tax bracket up to about 380,000 SEK is about 30%, then 50% up to about 540,000 SEK, after which it's about 55%. When I take into account the things Americans have to pay huge sums of money for out of pocket (health care, education, daycare, parental leave, sick leave, etc) I'd say we got the better end of the stick.
Interesting, we really have different views on tax. I don't enjoy paying them, being in the highest income-tax bracket in my country (not hard to accomplish, trust me, not making millions) I sometimes think about how much better it'd be if I paid less taxes.
However, I survive on the amount I have left after I pay my taxes. I may not be in the category of richest people but I feel that health care, infrastructure, police, ambulance and so on, are services worth paying for. Why should I pay more (in %) then someone who makes less, well, because the money is needed, and where will it come from otherwise? There certainly are things I want, like a better car and a bigger house, but really, what I have now is not bad.
I believe in two basic things, freedom and helping those that cannot provide for themselves.
I do not believe that everyone has the same opportunities in life, even if my country provides free education (including uni) to all it's citizens.
I pay taxes because I think that free education should be the foundation of any country, I pay them because I think health care should be free for everyone. You shouldn't have to die of a disease because you cannot afford the healthcare, and I believe in helping those who come from countries that require help (I seem to be a minority in Europe having this opinion these days).
I fear that compassion is become rare, it seems to be gone from politics, and especially when talking about taxes. The debate now is often focused on cost, how much immigration costs, how much does free health care cost... rarely do I read debates asking how many lives were saved because we have free health care or because we let people from countries that are at war stay in ours.
Horse shit. Add payroll tax to that - both halves - state income tax, state sales tax, local income tax, local sales tax, property tax, and taxes masquerading as fees such as water, sewer, automobile registration, automobile insurance surcharges funneled straight into state coffers, and so on ad nauseum. I'm not much concerned with how high the top federal income tax bracket is. I'm more concerned with the total tax burden on the middle class.
Finally there's the unfairest tax of all - inflation. That's the one you get when the federal gangsters print money to cover their unrealistic runaway budget.
rm tax code | /dev/null
Computers CAN fix the tax code.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
It won't work for the very simple reason that the rich are much more able to optimize their tax paying to take advantage of what is in the tax code.
For example, in the UK the rich pay 50% tax on income (42.5% tax on dividends) but only 28% tax on capital gains (might even be 18% if they can get their taxable income low enough - I'm not absolutely sure what happens at this extreme)
So it currently makes sense for the rich to buy shares that tend to generate capital gains in favour of shares that tend to generate income - especially if there intention would have been to reinvest the dividends anyway.
Change that around and the rich will shift their investment strategies around to get the best deal they can. The poor (and in this case I mean almost everybody) will typically only have a single source of income (their job) and no opportunity to optimize their tax rates because they'll be "trapped" in a single taxation regime.
So if you try and optimize it so that nobody ends up better or worse off, what will actually happen is that the rich will then optimize their tax rates and end up paying less. The only way to recover the missing tax will be to put up rates so that, for at least some people, they will end up worse off.
Tim.
God said, "div D = rho, div B = 0, curl E = -@B/@t, curl H = J + @D/@t," and there was light.
This. I always laugh when people talk about how high European tax rates are compared to the US. If we count all of our taxes, and not just the federal rate, and we cat get competitive on high rates quickly.
it requires all appropriations to be made for the benefit of the people as a whole, not favoring any region or group at the expense of another.
Naive questions: if you look to benefit the people as a whole, isn't it to be expected that sometimes some regions or groups will be benefited more than others? Does this inequality in benefits mean that sometimes a group will benefit at the expense of another?
Slightly longer answer:
Maybe
Would politicians accept the solution without re-bloating it first? No
Actually, the original idea will never get off the ground, because most of those 10,000 pages deal with things like "companies employing less than 100 people and which are located in a depressed neighborhood and which have names ending in a vowel get to deduct the cost of the president's jet." Things like that are added to give one particular company a break, but they never mention the company's name, just a set of circumstances that describe only that company. The company knows who they are, but we are unlikely to figure it out since each of the intersecting sets is rather large. Unless that company is part of one of the clades, that particular clause will have zip effect and it will be proposed for deletion, leading to that company and all the others in the same situation to object to the entire process.
Nothing for 6-digit uids?
I look at taxes from an entirely selfish perspective. I benefit immeasurably from living in a stable society with relatively low levels of poverty and a high standard of living and free or cheap education. I can walk into the doctor's surgery and be given - either for free or for a token amount - cures for diseases that would have killed the richest man in the world a hundred years ago. I was paid by the state for the last stages of my formal education (my PhD).
Unfortunately, this costs money, and I have to pay for some of it. If it could be funded entirely by pixie dust, that would be great, but since that's not the case, this society is an expense that I consider worthwhile. I'd rather avoid paying taxes, in much the same way that I'd rather avoid paying for a new laptop, but I consider the price I pay to be very reasonable for the benefits that I receive in both cases.
Oddly enough, your line of reasoning from an altruistic perspective seems to reach the same conclusions as mine from a selfish perspective.
I am TheRaven on Soylent News
So it currently makes sense for the rich to buy shares that tend to generate capital gains in favour of shares that tend to generate income - especially if there intention would have been to reinvest the dividends anyway.
This is not a bug, this is intended. And if it isn't, it really should be. It makes sense that that taxation regimes should be designed to encourage the re-investment of surplus wealth into economic activities. After all, you might lose the 22-32% on income tax, but this is expected to be beaten by the increase in tax take from the recipients of the investment in the form of corporation tax, VAT where applicable and the income tax on employees of the organisation that was invested in. Having anyone simply sitting on huge piles of cash benefits no-one.
Rational thought is the only true freedom
Wow, it's great that you exposed him for the liberal he is. That is obviously not classical liberalism because it seems that he wants to justify higher levels of taxation, but perhaps it is social liberalism and he craves greater government revenues to support gay marriage or whatever it is that liberals like these days. Oh well, he's bound to be a liberal because you don't agree with liberals and he said something you don't agree with.
When did it become fashionable to display such a stunted view of politics by saying that "liberals/conservatives say X". As a self-confessed social and economic conservative I have to say that my own views are certainly not the same as most other "conservatives" and would much rather be in the company of a socialist or libertarian that can justify their position than someone who agrees with my own views for the wrong reasons.
When Argumentum ad Hominem falls short, try Argumentum ad Matrem
I take it you know more about economics than you do about the command line, right?
Welcome to 2011, 110% of you taxes and more goes directly to banks, and none of it gets spent on 'society'
You must have clicked submit too soon because you were about to explain how you have no publicly funded roads, bridges, air traffic control, police, army / navy / airforce, prisons, firefighters, justice system, schools, health care, welfare, parks & recreation facilities, sanitation or water supply where you live.
You understand it is true, though?
Income Tax in the United States originally applied only to profits from dividends and the like. Wages and salaries were explicitly excluded. It affected only the wealthy who could afford to invest, and were successful at it.
That is really the only way it passed, by exempting 90% of the population. For an example, see Tennessee State's income tax today.
Learning HOW to think is more important than learning WHAT to think.
Except that the tax code doesn't encourage that, in fact I'd go so far as to say that it discourages it by offering tax breaks for all sorts of antisocial behavior. For instance corporations like GE can book their losses in the US from foreign operations and offset their gains in the US without having to book profit from international operation, which makes it trivial for them to pay no taxes in the US.
Most of those bits of the tax code ought to be eliminated in favor of something less unwieldy so that people can actually understand what it is that they're doing without need for a professional.
And while we're at it, why doesn't the IRS just fill out our tax forms for us? Given that they already have most of our information in large databases, I see no reason why they can't fill them out like they do in other countries.
50%?!? I don't understand how anyone can justify giving up half of your income to the government.
If you think of "the government" as some outside thing, that does seem pretty unreasonable. If you think of it more as "society" or the "community" then it doesn't necessarily seem so unreasonable. What percentage does the publisher charge the author? The community provides the entire ecosystem within which each member operates. No individual can succeed to any great extent without the entire community around them working well enough to provide all the bits and pieces necessary for that success to happen.
How to reasonably account for all this sort of stuff is not particularly clear unfortunately. The current way we create and use money, and then tax it to fund the "community" is far from perfect.
One interesting system that Heinlein mentioned in one of his early novels (published posthumously - it wasn't really very good from a writing point of view) was "Social Credit". As I understood the society in the novel, rather than tax anyone, at the end of the year they would calculate the increased value of the society based on some sort of GDP measurement, and then "print" enough new currency so as to keep the value of the "dollar" at the same level - so if the economy increased by 20% you would print 20% more money. The government then drew its revenue from this pot and distributed the rest on a per-capita bases. Of course in this future society there was massive automation and little need for most forms of manual labour, so most people just lived off of their yearly societal income (thus the "social credit" name) spending their large amounts of leisure time in uplifting artistic pursuits and other utopian activities.
I don't really know if the wikipedia article reflects any of this understanding:
https://secure.wikimedia.org/wikipedia/en/wiki/Social_Credit
It does seem as thought it ought to be possible to design a society where increases in productivity and efficiency and technological advancements could have wider societal benefits. Since the 1920s our industrial systems have advanced tremendously and as a society we are way way way richer and more well off - but individually we have not advanced much. It seems like with all of these advances we should have been able to come up with a way to provide full employment while at the same time reducing the working hours of us all. By now we should all have an 8-hour work week and three months of vacation. Maybe such a system would come at the cost of speed of advancement, but I am more than willing to trade the decreased personal labour requirements today for a 1980s middle-class lifestyle which might be our level of advancement if we had somehow done this since the 1940s.
Of course I have no idea how to structure something like this in light of real human behaviour, greed, and the rewards of cheating any system we try to put into place.
Sure, the US was doing fine before the income tax. Let's go back to the way things were then. Let's see, the income tax was instituted in 1861. Hmm, the Emancipation Proclamation was in 1863. So how do you want to divy up the slaves?
Give me Classic Slashdot or give me death!
I think corporate tax is silly anyway. Just tax all income as income... capital gains, dividends, salary, benefits... and you won't need a corporate tax.
This would have the additional advantage of encouraging corporations to move to the US.
Corporate taxes only generate revenue in the $400 billion range. You could easily get this back with higher capital gains rates and deduction/loophole killing.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Fairtax effecitvely cuts taxes massively for the wealthy. it has a lot of good press (aka the best propaganda money can buy) combined with a healthy dose of magical thinking.
A real fair tax needs to address the fact that state taxes typically tax in reverse with the lower income paying 10%+ of their income in taxes while the wealthy pay under 1% of their income in taxes.
The best form of a fair tax would be
A fixed 20% tax on everyone with no deductions except ignoring all income at and below the poverty line.
The poor and middle class listen to this nonsense and slit their own throats while the wealthy are turning into an oligarchy and new nobility class.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
I tried to interest people in redistricting on the same idea. Have the politicians state what their trade-space is? state the value of having districts simply shaped versus ones that include more diverse/less divers people or follow natural contours like housing development or rivers. Then have a computer bark out lors of possible district maps.
No interest.
The problem is that politicians are interested in their own power not fairness. THey want certain companies in their districts. They want mayors that owe them favors in their districts. they want gerry mandered advantages.
If you want this you have to impose it by referendum or other force. they will not agree on their own accords.
In the case of the tax code. How is a politician supposed to promise intel a tax break if they give him a boatload of money? he can't unless the tax code is adjustable.
Some drink at the fountain of knowledge. Others just gargle.
Fairtax effecitvely cuts taxes massively for the wealthy.
Nope, not true. It eliminates loopholes for the wealthy
it has a lot of good press (aka the best propaganda money can buy) combined with a healthy dose of magical thinking.
Not sure where that's coming from - all I ever see in the press is people like you vilifying the FairTax with falsehoods and misrepresentation (like your post)
A real fair tax needs to address the fact that state taxes typically tax in reverse with the lower income paying 10%+ of their income in taxes while the wealthy pay under 1% of their income in taxes.
That's for the states to do, not the Federal government - state taxation is up to the states.
The best form of a fair tax would be A fixed 20% tax on everyone with no deductions except ignoring all income at and below the poverty line.
That sounds a whole lot like the FairTax (except that it's 26% instead of 20%)
The poor and middle class listen to this nonsense and slit their own throats while the wealthy are turning into an oligarchy and new nobility class.
Better that they just listen to you describing the FairTax as something different than it is, and never give it a chance?
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia
You mean it's a higher proportion of their disposable income. Case study:
Family A makes 30k per year, and spends 20k per year on the essentials, leaving 10k free. Any more than a 33 1/3% tax rate cuts into their ability to live.
Family B makes 100k per year, and spends 40k living a nicer life than family A, leaving 60k. They could afford a 60% tax rate without cutting into their standard of living.
Of course, KermodeBear probably thinks that Family A is pretty much worthless and deserves to live in the gutter, while Family B are the only productive members of society.
Is 1563649 a prime number?