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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.
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.
It's the same reason why we don't replace the income brackets [20k-30k$/year], [30k-50k$/year], etc by an exponential formula. It would be more correct mathematically, more just when you go from 29999$ to 30001$ but people are too dumb to understand it.
Going from 29999$ to $30001 means you would only be taxed the higher rate on $1 of income, not the whole amount. If it wasn't your intent to imply otherwise I apologize, but I see people making that mistake all the time for some reason.
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.
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!
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.
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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?
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.
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.