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Let's take a pause for a flight of fantasy, and imagine that we still had an America where political negotiation was possible, and people might listen to a "positive sum" proposal... one in which (at least in theory) almost everybody ought to be able to win. Yes, it is as far-fetched as a sci fi novel!  But bear with me as I talk about a way that the tax code might be simplified, without getting snared in the morass of the (insane/stupid) Left-Right Political Axis.

-----
President Obama said he would seek a reform of the U.S. tax code, calling the current tax system is a "10,000-page monstrosity." But that promise has been made by others before.  Whenever somebody proposes tax simplification, we run up against the fact that every “simplification” would gore somebody’s ox.  The more code-trimming you do, the more people will scream.

In fact, I know a simple way the sheer bulk of the tax code - its complexity, in numbers of rules,  words or exceptions - could be trimmed by perhaps 70% or more, without much political pain or obstructionism! Because the method is designed to be mostly politically neutral.  It does not aim at some utopian fantasy (like the Flat Taxers rave about.)  It gores only a few sacred cows. It would be cheap and easy to implement. And almost guaranteed to work! (Only accountants should hate it for the effects on their lucrative business.  Yet, to the best of my knowledge, this method has never been tried, or even proposed. Alas.

How can I promise such a thing? First let's note something interesting.

There is nothing on Earth like the US tax code.
 It is an extremely complex system that nobody understands well.  But it is unique among all the complex things in the world, in that it's complexity is perfectly replicated by the MATHEMATICAL MODEL of the system.Because the mathematical model _is the system.

Hence, one could put the entire US tax code into a spare computer somewhere, try a myriad inputs, outputs... and tweak every parameter to see how outputs change.  There are agencies who already do this, daily, in response to congressional queries. Alterations of the model must be tested under a wide range of boundary conditions (sample taxpayers.) But if you are thorough, the results of the model will be the results of the system.

Now. I'm told (by some people who know about such things) that it should be easy enough to create a program that will take the tax code and cybernetically experiment with zeroing-out dozens, hundreds of provisions while sliding others upward and then showing, on a spreadsheet, how these simplifications would affect, say, one-hundred representative types of taxpayers. As

I've said, this is done all the time. A member of Congress has some particular tax breaks she despises and asks the CBO for figures on the effect, should those breaks be eliminated. Alas, what inevitably happens is that, as soon as word gets out, her proposal soon faces a firestorm from constituents or powerful interests who will fight like hell to keep from losing millions.  

Hence, although American corn-ahol subsidies are propelling high food prices and hunger around the world, nothing is done to end the wasteful programs that costs more net energy than it delivers. There are thousands of other special interest groups that each wish the budget to be balanced... on somebody else's back.

So how would my suggestion get past this?
A key innovation would be to program in boundary conditions to the experiment.  The paramount condition would be “no losers.”  

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 by experts that a computer could do this in a snap.

Here's the key point:
If such an iterative search finds a new, much simpler tax structure that leaves none of the 100 groups more than 5% worse off than they currently are, then who is going to scream?

Oh, well, I suppose a lot of people will scream. Cheaters will holler of course, and those who benefit from the cloud of obscurity allowed by an overly complex tax code.  Even if farmers are guaranteed adjustments in other areas, they will reflexively protest over the end of Roosevelt-era subsidies.  In fact, everybody will complain! But...

...but a lot of the HEAT will be taken out of their complaints, if they see their bottom line is completely unchanged. And that is the secret trick to this approach.  To remove enough heat so that a critical mass of reasonable people may calmly re-assess, negotiate, and accept pragmatic change that's good for all.

Will "no-losers" really leave everybody unaffected? Nope.  One hundred sample-type American taxpayers won't cover everybody, especially at the upper end. Some in the aristocracy have arranged for tax laws to be enacted specifically to benefit them. They will hit the roof when simplification zeroes out those special exemptions (while leaving the typical 100 types alone). But if enough of the rich are included in "no-losers" they might tip the balance, canceling out the final obstructors, for the sake of a new simplicity. And for patriotism.

Will this method solve all tax-related problems?  Of course not!  Complexity isn't the only thing wrong with the Tax Code.  After simplification must come some genuine tax policy shifts that do advantage some and disadvantage others.  Like all of you, I have my favorite injustices I’d love to see redressed, behaviors disincentivized, business ventures stimulated...

 But, by starting with “no-losers,” you can use politically neutral optimization routines to find a much simpler system, trimming and slimming the machinery to use the fewest moving parts, in order to achieve the exact same output it is performing right now.  Then, and only then, will it make sense to argue about steering the vehicle in new directions.

Honestly, can you think of ANY other way that simplification might plausibly ever happen? Beside armwaving fantasies that will never get past angry interest groups. If so, I'd love to hear it.

====

... Ah well, I wrote all of the above back when it was at least possible to imagine negotiated positive sum politics.  But let's be plain. That is not the case today, amid the outright treason called "culture war," which has so desperately weakened the United States of America. We must face the fact that normal politics is dead. There is only one analogy for the state of simplistic, imbecilic rage that we are currently experiencing.

 We are in Civil War part III.

Originally posted to David Brin on Mon May 16, 2011 at 11:51 AM PDT.

Also republished by A Perfect Conversation.

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Comment Preferences

  •  Tip Jar (10+ / 0-)

    Things to repeat: "CITOKATE -- Criticism Is The Only Known Antidote to Error." "IAAMOAC -- I Am A Member of a Civilization"

    by David Brin on Mon May 16, 2011 at 11:51:20 AM PDT

  •  Is PFM your entire proposal? (0+ / 0-)
    Now. I'm told (by some people who know about such things) that it should be easy enough to create a program that will take the tax code and cybernetically experiment with zeroing-out dozens, hundreds of provisions while sliding others upward and then showing, on a spreadsheet, how these simplifications would affect, say, one-hundred representative types of taxpayers

    Pure Magic.

    •  I don't get the proposal either (0+ / 0-)

      What is it? it sounds like hocus-pocus to me too. What are the actually underlying numbers?

      Jennifer Brunner for Governor of Ohio 2014

      by anastasia p on Mon May 16, 2011 at 12:36:32 PM PDT

      [ Parent ]

      •  A parameter-optimization search with -- (2+ / 0-)
        Recommended by:
        Wee Mama, Dude1701

        -- boundary conditions is a very standard thing.

        For those of you who think I am proposing magic, it really is pretty standard stuff. It's called a parameter-optimization search with constrained boundary conditions. And let me re-emphasize, the Congressional Budget Office does it daily... they just (to the best of my knowledge) have never plugged in the specific boundary conditions that I've proposed.

        Alas, there's another matter here... the dripping hotility that you two displayed. What you two reflect is one of the things that is killing America.  A reflex that experts don't know anything if you can't understand it.

        Seriously, look at your response!  Very low on curiosity and high on angry sneers.

        Sure this kind of thing is far more common on the right, with their insane War on Science and War on Smartypants and everybody who knows anything.

        But if you guys act this way every time you run into something you don't understand, then the sickness is on the left, too.

        .

        Things to repeat: "CITOKATE -- Criticism Is The Only Known Antidote to Error." "IAAMOAC -- I Am A Member of a Civilization"

        by David Brin on Mon May 16, 2011 at 02:04:05 PM PDT

        [ Parent ]

        •  The only way you could have no losers (0+ / 0-)

          is to decrease taxes for almost everyone.  Nice idea, but not possible in reality.  I bet the Republicans would love the results though.

          The idea does have some merit, however, in assessing the impact of each individual cut, but you would have to use a much larger population to assess impact, since many aspects of the code affect only small numbers of people.

          Whether or not various individuals' "oxen would be gored", tax simplification is a worthwhile goal - the more complicated a system is, the harder for less educated people to understand or take advantage of, and the more likely it was designed specifically to provide hard to detect giveaways to people with rich accountants.  

          In many cases, those gored oxen are being stolen from everyone else anyway in tax giveaways that should have never existed to begin with.

          New favorite put-down: S/he's as dumb as a flock of Sarah Palins

          by sleipner on Mon May 16, 2011 at 04:57:10 PM PDT

          [ Parent ]

  •  Tax Simplification could be a BIG WINNER for Dems (1+ / 0-)
    Recommended by:
    sleipner

    If they keep the catfood commissions hands off it.

    Basically-

    You could set up the following:

    1) All taxpayers will be sent a "bill" by the Govt - basically, a piece of paper (electronically by option) that says how much you owe - they have all the 1099s, etc. anyway.  You can
    a) Sign (electronically) and say "I agree" and receive your refund or agree to pay this amount of taxes.  
    b) file a short, amended return

    2) This would only be possible if
    EVERY SINGLE TAX DEDUCTION WAS STRIPPED FROM THE SYSTEM EXCEPT
    a) home mortgage interest
    b) per child dependent tax credit
    c) charitable giving
    EVERY OTHER DEDUCTION IS BULLSHIT designed to enrich H&R Block.  

    Just tell me WTF I owe and make it so I don't have to spend hours doing my  taxes.  

    The object of persecution is persecution. The object of torture is torture. The object of power is power. --George Orwell

    by jgkojak on Mon May 16, 2011 at 12:38:54 PM PDT

    •  I doubt it. (0+ / 0-)

      Everyone (except for the tax prep industry) would like a new tax system that is (1) fair and (2) simple.

      It turns out that devising a fair and simple tax code is quite easy, provided that you alone get to decide what is fair and nobody else's opinion counts.  Getting everyone to agree that some new, simpler code is fair is of course impossible.  

      Getting enough people to agree such a code is sufficiently fair that it can be enacted is extremely unlikely, unless one party controls presidency and both houses of congress with a filibuster-proof majority in the senate. And provided that the party in question is the Democrats.

      I've lost my faith in nihilism

      by grumpynerd on Mon May 16, 2011 at 02:20:42 PM PDT

      [ Parent ]

  •  Here's the REAL reform: (2+ / 0-)
    Recommended by:
    tidewatcher249, Sark Svemes

    ---28% flat tax on ALL income, earned and unearned--dividends, capital gains, etc.

    ---the 1st $75k is exempt

    ---cut Payroll Tax to 3.8% but make ALL income subject to it AND allow anyone who is willing to pay more [up to 10% of earnings] to retire earlier or w/ higher benefit, depending on their contribution

    --do the same for Medicare tax: keep the current 1.45% tax but make ALL income subject to it AND allow those who contribute more to retire w/ medicare earlier

    ---10% corporate tax on revenue over $1 billion, 20% on corporate revenue earned overseas, no other exemptions and only deductions for US workers' pay/benefits and equipment made here in USA.

    [I chose 28% b/c it was the rate unearned income was taxed at under reagan]

    RESULTS:

    105,000,000 tax filers get tax break; most accruing at the bottom 50%;

    revenue from Income Tax $300 billion MORE than current;

    SS and Medicare flush w/ revenue;

    Corporations pay $100 billion more in taxes than now, but 90% of US businesses get a huge tax cut.

    My best guess was a reflection that did not look back, an image lost in every mirror.

    by Zacapoet on Mon May 16, 2011 at 12:55:45 PM PDT

    •  Bah... a rant for a ditzy "reform" that CANNOT -- (0+ / 0-)

      --pass for precisely the reasons this article was about.  Seriously, do you bother reading before ranting?

      .

      Things to repeat: "CITOKATE -- Criticism Is The Only Known Antidote to Error." "IAAMOAC -- I Am A Member of a Civilization"

      by David Brin on Mon May 16, 2011 at 02:05:33 PM PDT

      [ Parent ]

  •  The question must be asked, why is (2+ / 0-)
    Recommended by:
    Dude1701, tardis10

    the U.S. tax code still in its current state when its unfairness and complexity has been recognized for decades?

    Like so many questions concerning the government the answer is "follow the money". In this case the money trail  leads to Congress. The often touted commercial tax rate in this country is 37%, but the reality is that it is much closer to 27%. Why the difference? Because Congress has made a specialty of passing tax loopholes and subsidies to industry with the return of millions of dollars in campaign contributions. Simplfy the tax rate and this ongoing scam would become visible and put an end to hundreds of lobbyists who spred millions of dollars to outstretch Congressional hands.

  •  I don't know who the experts you consulted were, (4+ / 0-)
    Recommended by:
    Samer, Gabriel D, Wee Mama, sleipner

    but I'll bet they aren't computer scientists. This is precisely the kind of multi-factor decision problem which is almost certain to turn out computationally intractable for large numbers of factors.

    What you are talking about is roughly like solving a system of 100 equations that look like this:

    c(1)x(1) + c(2)x(2) + ... + c(n)x(n) = b

    where "b" is the clade's tax burden, n is the number of provisions in the tax code that contribute to the burden of any of our hundred clades, c(i) is the contribution of the ith provision in the tax code to the clade's burden, and x(i)is either 1 (for keep the provision) or 0 (for drop it).  In matrix terms, we have this equation:

    CX = B

    where C is an m x n matrix of contributions, m = 100, B is a column vector of clade burdens, and X is a column of 0/1 values corresponding to whether a tax code provision is dropped or kept.

    The good news is that the m < n -- the system has more unknowns than equations.  That means it is "under-determined": it is possible that this system has more than one solution [note 1]. That's important because we already have a solution (X = 1).  The bad news is that this is what is called the "binary integer programming problem". B.I.P. is a well-known problem in computer science, and unfortunately it is well known for being computationally intractable. The best solutions we have to this problem take time that grows exponentially in n.

    For mathematical reasons too involved to go into here [note 2], we are extremely unlikely to ever find a solution to this problem that is efficient for the number of terms we're talking about.

    note 1: if x was allowed to be any real number, we'd be guaranteed an infinite number of possible solutions forming points on a (n-m) dimension hyperplane, Because we're confined to the values 0/1 we aren't guaranteed any solutions at all, other than X = 1.

    note 2: Richard M. Karp (1972). "Reducibility Among Combinatorial Problems". In R. E. Miller and J. W. Thatcher (editors). Complexity of Computer Computations. New York: Plenum. pp. 85–103.

    I've lost my faith in nihilism

    by grumpynerd on Mon May 16, 2011 at 02:09:16 PM PDT

    •  I have asked guys right in the CBO (3+ / 0-)
      Recommended by:
      Samer, Gabriel D, Wee Mama

      It's called a parameter-optimization search with constrained boundary conditions. And let me re-emphasize, the Congressional Budget Office does it daily... they just (to the best of my knowledge) have never plugged in the specific boundary conditions that I've proposed.

      Your objection is theoretical. My proposal is based on simple, brute force trial and error, setting the mesh coarsely enough for it to be crunched on a modest supercomputer.  Moreover, once factors start getting removed (the goal of the exercise) each successive iteration gets easier.

      But thanks for objecting based on science and courteously...

      Things to repeat: "CITOKATE -- Criticism Is The Only Known Antidote to Error." "IAAMOAC -- I Am A Member of a Civilization"

      by David Brin on Mon May 16, 2011 at 02:21:13 PM PDT

      [ Parent ]

      •  Theoretical objections (0+ / 0-)

        have real world implications.  If you come to me with claims of a gasoline engine that's five percent more efficient than current designs, I might look into it. If you come to me with claims of an engine that was more efficient than the Carnot Cycle permitted, I could dismiss those claims purely on theoretical ground without any recourse to practical examination of them.

        What you are proposing is quite difficult, your friends at the CBO notwithstanding.  I don't doubt that they do this soft of thing, but with maybe a dozen or two provisions, not with the entire tax code.  You are making the kind of extrapolation that takes more than seat of the pants programming experience to evaluate. There are some very good programmers out there who might not see this because they don't have a background in the mathematics involved.

        This kind of thing comes up all the time, because many intractable problems have considerable practical importance even when restricted to small input sets. Exponential growth isn't such a big deal if you keep the numbers small. You can easily solve the traveling salesman problem by hand for four cities, and five aren't much harder; but ten cities is quite difficult and eleven immensely more difficult. Twenty is out of the question.

        Now something like what you propose is just conceivably within the reach of a large, possibly purpose-built computer cluster.  A comparable feat was achieved some years ago, computing an exact solution to 15,000 city traveling salesman problem on an 160 node cluster. Calculating the solution consumed well over twenty years of CPU time.  This is likely within two or three orders of magnitude [note 1] of what you are proposing. But it's not something some code monkey is going to crank out with an Excel macro, or even with a C program running on conventional computer hardware. Not unless you can wait a very long time for the answer.

        note 1: allowing for changes in input size due to problem transformation into a comparable form.  The good news is that comp sci theory says we can convert your problem into a comparable form in polynomial time, but it may well take up much more space as input.

        I've lost my faith in nihilism

        by grumpynerd on Mon May 16, 2011 at 03:32:32 PM PDT

        [ Parent ]

        •  I think you keep missing... (0+ / 0-)

          ...the point that this is a model that is easily truncated or made coarse-grained for the purposes we've established here. Especially if simplification begins by targeting those tax breaks that affect fewer than 1,000 people.

          Come on, you know darned well that if YOU were contracted to implement this, you would be able to come up with dozens of workarounds that would make it work.  You know you would!

          Things to repeat: "CITOKATE -- Criticism Is The Only Known Antidote to Error." "IAAMOAC -- I Am A Member of a Civilization"

          by David Brin on Mon May 16, 2011 at 04:16:50 PM PDT

          [ Parent ]

          •  Well, maybe (0+ / 0-)

            It depends on what you mean by "coarse-grained". I assume you mean put various parts of the tax code into buckets and then apply the simplification algorithm to that.  Since there is no way this procedure can add complexity to the tax code, it would inevitably remove some complexity. But once you unbucketed what was left, all the underlying complexity in those buckets would be reconstituted, and that'd still be far from "simple".

            I've also considered the obvious refinements to the procedure (e.g. iteratively rebucketing and optimizing the new coarse grained buckets), but such "greedy" approaches don't perform very well at this kind of optimization. I'd be shocked if such an approach produced even a 25% reduction in complexity before it grinds to a halt, becalmed in an endless sea of combinatorial complexity.  Remember, the mathematics do not require an integer solution to exist, much less a binary one, so no iteration is guaranteed to produce any reduction in complexity.  That means you'd have to try alternative "bucketings", and suddenly you're not doing much better than brute force trial-and-error.  That's typical of these optimization problems.  

            Problems of this sort have been studied for years, in fact the fundamental math for this particular problem was discussed in the classic CS literature from the 1970s.  Basically anything close to an optimal solution would be very difficult.  Without exotic hardware, we're talking approximation algorithms here.  These are often practical, if not perfect, and no doubt such a solution could knock a little entropy out of the tax code, but it'd be optimistic to imagine this would be big enough to have much practical effect. I suspect that the complexity of the current tax code is in part the result of some kind of equilibrium between serving special interests and the system becoming so complicated it just breaks down.  If so, it would be better to find a way to shift the equilibrium point.

            Which is not to say your idea isn't intriguing. The most interesting aspect is the strategy of making changes that the vast majority of taxpayers would rationally regard as neutral.  The problem with that idea is that much of the complexity of the tax code is entailed in things that don't fit your "100 clade" model.  I'll cite two examples of this. First, there are incentives for private parties to do things which are theoretically in the public good, like insulating your house or looking for oil.   Second, there are the goodies that are for the benefit of roups that are far too small to be represented in any way by a hundred, or even a thousand "clades".  Sometimes tax goodies are slipped in for the benefit of individual companies.  These small, non-representative groups are over-represented in the political sphere.  They get laws written on their behalf because they have clout, and  will not view the loss of their perquisites as benign.

            Personally, I wouldn't bid on a contract to attempt this unless most of the compensation was independent of any specific benchmark of success. I'd consider it if the RFP was for something far more technologically ambitious than I think you're envisioning. Given the political pressure towards elaboration of the tax code, any attempt at this shouldn't dick around with half-assed attempts at approximation. It should really try to knock as much entropy out of it as feasible. For that I think a special purpose computer might be called for, maybe built from a large array of FPGAs like the one used to crack DES in the 1990s.  Or possibly a high performance computing cluster and a team of high power programmers.   That'd be expensive, but not compared to the money spent on tax preparation annually.

            I've lost my faith in nihilism

            by grumpynerd on Mon May 16, 2011 at 06:56:06 PM PDT

            [ Parent ]

    •  You could use "genetic" algorithms to cut it down (2+ / 0-)
      Recommended by:
      Gabriel D, Wee Mama

      Since we're not trying to find the best of all possible situations, but merely one that is fair or fairer than the current one, you could take, say, 100,000 combinations, test those, and "recombine" the best 10,000 or so into another 100,000 or so to see if you come up with a better solution, and so on.

      [I did my senior research in college on genetic algorithms. The trick is that if you have time to run, say, 1,000,000 tests, you're almost always better off with 100,000 tests for  10 generations than 1,000 tests over 1,000 generations.]

      We don't want our country back, we want our country FORWARD. --Eclectablog

      by Samer on Mon May 16, 2011 at 02:24:25 PM PDT

      [ Parent ]

      •  It's still polynomial time reducible (0+ / 0-)

        to an optimization problem.  You are minimizing the Cartesian distance between B (the vector of current tax burdens) and B' (the vector of tax burdens under the simplified code).

        The decision version of this is whether you can guarantee that the |B - B'| < e, where e is the maximum permitted error.

        Also: you want X - X' < s, the minimum savings in complexity considered significant enough to warrant this program.  That's the tough bit.   I'm not saying you couldn't use this method to eliminate a few provisions of the tax code, and certainly a genetic algorithm would be the kind of thing you'd use.  But it's most likely going to arrive at only a trivial reduction in |X|.  Given that this is a integer programming problem, there isn't even guaranteed to be a solution for an acceptable choice of {e,s}.

        I've lost my faith in nihilism

        by grumpynerd on Mon May 16, 2011 at 03:41:55 PM PDT

        [ Parent ]

      •  Right on. (1+ / 0-)
        Recommended by:
        Samer

        Things to repeat: "CITOKATE -- Criticism Is The Only Known Antidote to Error." "IAAMOAC -- I Am A Member of a Civilization"

        by David Brin on Mon May 16, 2011 at 04:19:16 PM PDT

        [ Parent ]

  •  Dr. Brin: Is this what you mean? (2+ / 0-)
    Recommended by:
    Gabriel D, Wee Mama

    Let's say, for the sake of argument (I know this wouldn't work exactly as I'm writing it), that the computers found that if the gov't consolidated the lowest four tax brackets at 19.4%, and the top two tax brackets at 36%, we'd raise exactly the same amount of taxes, and, as you propose, none of those 100 taxpayers would see a change of more than 5% in their total tax burden.

    Is that an example of the sort of simplification you envision?

    Of course, this raises an interesting question: do you think you could get everyone to agree to pay the same percentage more (i.e., if you pay $10,000 you pay an additional, say, 5% or $10,500, if you pay $200,000 you pay an additional $10,000, etc.) if that extra money were to accomplish whatever we set as national priorities (health care, deficit reduction, what have you)?

    We don't want our country back, we want our country FORWARD. --Eclectablog

    by Samer on Mon May 16, 2011 at 02:20:00 PM PDT

    •  What you demonstrate is that a scratch version... (1+ / 0-)
      Recommended by:
      Samer

      ... can be accomplished even without computers.

      Now unleash practical men... not perfectionists... and the problem is tractable.

      I must say, the smarter bunch appears to have come out of the woodwork to argue... instead of sneer.  You are the folks who make the world.

      .

      Things to repeat: "CITOKATE -- Criticism Is The Only Known Antidote to Error." "IAAMOAC -- I Am A Member of a Civilization"

      by David Brin on Mon May 16, 2011 at 04:23:32 PM PDT

      [ Parent ]

  •  Intriguing. (0+ / 0-)

    Politically impossible now, as you point out, but intriguing.

    Is it true? Is it kind? Is it necessary? . . . and respect the dignity of every human being.

    by Wee Mama on Mon May 16, 2011 at 03:12:54 PM PDT

  •  I guess one underlying (2+ / 0-)
    Recommended by:
    Greyhound, Magnifico

    assumption of your argument is that this is a question of good-willed folks who just can't seem to solve a complex math problem. My apologies, but I think that's just impossibly naive. The tax code exists in the form that it does so that various businesses can steal from the taxpayer. This is not a problem of logic; it's a problem of corruption within a system that seems to have been designed for corruption. Of course, it was established by men who had a code of honor and, wit astonishing naivete, thought that all who entered the halls of Congress would be of like mind. Unfortunately, wholesale plunder of the public purse commenced almost immediately. So, I respect the logic but the politics make the tax code about everything but logic.

  •  I wish it were that simple... (0+ / 0-)

    With all due respect, I wonder if you're thinking too much like a physicist, despite your best efforts to be a realist:

    1. I am not sure that all 100,000+ plus pages of tax code have been reduced to computer code. When the government has to estimate the effect of a tax code change, they could simply take the tax revenue from the last year as a baseline, search all the filers to find out who used the affected parts of the tax code, and compute a delta using the proposed changes. I seriously doubt they recompute everybody's tax return since most people wouldn't be affected anyway by most changes.

    2. People challenge the IRS's interpretation of the tax code all the time. Anybody affected by an IRS ruling can go through IRS arbitration, and then to the courts all the way up to the Supreme Court (though that almost never happens). I'm not talking about nut jobs who think the government has no right to tax us, but people (and their tax preparers and attorneys) who interpret the tax code one way or another. My point is that nobody is making sure the tax code is internally consistent. In practice, the code gets interpreted one way by the IRS until somebody yelps, or somebody thinks the tax code can be interpreted another way and the IRS yelps. However, to do what you want to do, you have to go through and make all these interpretations and guarantee consistency before you can begin. If the right of somebody who is affected by an IRS ruling to challenge it is derived from due process of the Constitution, then you are constitutionally bound to deal with any challenges that arise before you can begin, or recompute everything if the IRS's interpretation is successfully overturned years later.

    3. A lot of taxes and tax credits are put there for social reasons. For example, the tax credit for buying a Volt, the upcoming individual mandate of the ACA, or accelerated depreciation schedules designed to encourage capital investment. Presumably you'd like to exempt these from being eliminated (even though doing so might produce no net tax change for the people affected) to preserve their social effects. However, which ones do you keep, and which ones do you allow to be possibly eliminated by the computer? The examples I cited are all controversial, and most people wouldn't support them all (for example, the oil company tax credits now being challenged in Congress are a form of accelerated depreciation). There are many, many others. Once again, there is likely to be a lot of debate before you can apply your algorithm.

    4. The people who put their special interests in the tax code probably will see a big increase in their taxes if their special interests are removed. After all, it costs a lot of money to buy off Congress so they're probably getting a huge return. These are few in number (certainly no one special interest tax provision will affect one of your 100 classes significantly), but by definition they are very powerful. All of them are likely to object since most of their special interest provisions will be removed. These people didn't play fair getting their interests into the tax code, and they're not going to play fair if those interests are threatened.

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