An Engineer’s Approach to Tax Reform

A few years ago Malcom Forbes (I think it was) proposed a 17% flat tax – the same rate for everyone, no loopholes. That proposal would actually have increased revenue. How is that possible? Lower rates for everyone, but higher revenue? Crazy! But true. The increase in revenue comes from what Forbes (I think) called “loopholes”.

“Loophole”, when applied to the tax code, is a conservative code word that the liberals have not deciphered. Because really, no one wants loopholes in the tax code. Loopholes allow the rich to get richer, at the expense of the little guy. Of course liberals hate loopholes.

But in this case, “loophole” actually means “policy”. There are essentially two ways for our government to fund a goal: collect money and then distribute it where needed, or not collect money from where it’s needed in the first place.

Ideally, the tax code would be about exactly one thing: collecting revenue. But it is MASSIVELY more efficient, especially with our terribly inefficient government, to not collect money than it is to collect it, filter it through the bureaucracy, and return a fraction of the amount to the point of need.

Our current tax code is a relatively simple set of rules for collecting revenue, and a gargantuan codex of exceptions. Many, perhaps even most, of those exceptions are defensible for the good they do. Food for hungry children. Incentives for businesses to reinvest in themselves. It’s all over the map.

There are also purely evil clauses in the tax code, carefully designed to benefit specific campaign donors. Actually, there’s quite a lot of those. Actual loopholes.

So: we can’t just wave our hand and sweep tax law clean of all “loopholes”. A lot of people would suffer, and finally we’d pass a bunch of other laws to fund those goals in a less-efficient manner. But somehow we have to weed out all that evil.

From an engineering standpoint, it’s simple. Break the one huge, incomprehensible law into maybe five hundred smaller laws.

First you have the tax revenue collection law. It’s a simple baseline describing brackets or whatever. How we bring the money IN.

Second you have a framework that allows separate laws for single, specific exceptions to that rule. Single. Specific. Each voted on by congress separately.

“Madness!” you cry. “My legislator could never understand 500 separate bills well enough to vote responsibly.” You’re probably right, but your legislator already cannot understand the 500 exceptions in the one tax bill she votes on now. At least she could abstain on policy decisions she couldn’t get to.

So much debating, so much deal-making… so much more work for our legislators. THAT’S THEIR JOB! And when the chips fall, we will have a list of who voted for each provision independently. We would have an exact list of the people who supported “cash for bankers” and who supported “breakfast for children”. There would still be deals, but the deals would be a lot more transparent. And I think that’s a good thing. Each provision of the code would have to stand on its own merits. It is exactly what our legislators DON’T want. It’s a lot harder to hide the fact that you’re in the pocket of a special interest when that vote sits out there on its own.

Implementing this plan would be bloody and painful. Cash cows would wither in the light of inspection (vampire cash cows?), political careers built on hiding shit in the tax code would end. On the downside, the turmoil would probably paralyze government for a year or two, and more than a few of the programs I deem worthy would not survive. People would suffer.

But honestly I think the pain would in the end be worth it. If every “loophole” were scrutinized separately, we could eliminate a lot of pork while making the government a much more efficient expression of the voice of the people.

The First and Last Mile, and Net Neutrality

The hardest part about installing public transportation in a city not built for it is the first and last mile. That’s the mile one has to go to reach the nearest stop, and the mile they have go on the other end to reach their destination. People just plain won’t walk a mile anymore. Older, denser cities don’t have this problem; there is a tram stop nearby no matter where you live.

If Net Neutrality is torpedoed, we will have a new last mile problem. At least in urban areas, near where you live is The Backbone — the actual internet, the information superhighway. Your ISP is an on-ramp, but they’re about to be given the right to control your access to the highway. If you live in a rural area, the last mile might be more than a mile but the concept is the same.

The ISPs are just an on-ramp, but because they control the last mile (they have wires connected to your house), they control your access. That’s why there are currently laws to prevent them from abusing that power. If net neutrality goes away, we’ll have a new first-mile problem. So much information, so close, but held hostage by the wire-owners. That first step.

Some will pay the ISP’s extortionate fees. Some will be cut off from one of the key assets that decides who gets ahead these days. The rich will get richer. To be more specific, the rich people who floated this whole idea will get richer, and they don’t give a crap about anyone else. It’s not that they want the poor to remain poor, that would be evil. They simply don’t care what happens to those people.

Already here in Silicon Valley there is a company promising to be a neutral ISP, no matter what the law says. They solve the last mile with a radio dish pointed at a tower (if I’m reading their propaganda correctly), but at the moment cost/performance is not close to the guys with wires connected to my house. Even so, if the guys with wires make the slightest move toward controlling my access, They should know now that I will not remain their customer for long.