Can Computers Be Used To Optimize the US Tax Code? 730
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."
Re:My version (Score:5, Interesting)
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.
Simple solution (Score:4, Interesting)
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.
Re:Short Answer (Score:5, Interesting)
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.
Re:why pay tax? thats your real question (Score:4, Interesting)
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.
Re:Sure. (Score:4, Interesting)
Quite possibly true.
If such a revision could be worked out, its advantages would be tremendous, in several different ways. At the least, it would move USA politics away from back room horsetrading for tax breaks for special interest groups toward actually addressing revenue and expense issues.
However this is a major change, with greater impact than anything that has been done in the USA since 1775. It would take a real Tea Party movement-- not the play actors who have recently wrapped that name around their petty aspirations-- to make the thing work. That is to say, Trump, Palin, and the Pauls just do not come close to the stature of Jefferson, Franklin, or Thomas Paine. I do not think a massive revolution like shifting the tax structure from a political playing field to something with a rational basis can happen without real leaders doing actual leadership, and without a populace that is willing put aside the pleasures of bitching about the price of gas and take on some of the real risks involved in real world changes.
Re:why pay tax? thats your real question (Score:5, Interesting)
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.
Re:Short Answer (Score:4, Interesting)
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.
Re:Short Answer (Score:4, Interesting)
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?