Tuesday, May 19, 2009

Net neutrality

The best argument I've read for net neutrality:  we host their wires.   It was written in the UK but applies to the USA just the same.

If net neutrality is not enforced, what are the traffic-shaping ISP's going to do when angry citizens start cutting the lines?  I don't really care, because they'll deserve it. 

Whole body imaging by TSA

Good: Rep. Jason Chaffetz introduced a bill to restrict the use of whole body imaging technology by the TSA.  

At the CNN website, some people commented that if people don't like the invasive security controls, they shouldn't fly.  I agree with that in principle, because we do have a choice.  But I don't agree with that comment in practice, because the TSA is already overbearing. Why is the government spending so much money -- and wasting so many people's time -- on checking aircraft passengers??  Is it because one in a few million passengers is a terrorist?  Why not check public busses and boats the same way?  Is it because a large airplane can seat a hundred people or more? What about the line that forms when passengers wait to go through the TSA security station?  Nobody checks the people entering that line; a terrorist could detonate his explosives when he's in the middle of the line.  Is blowing up planes really an issue?  Couldn't a terrorist just fire a missile at a low-flying airplane from just outside the airport perimeter?  I think the real scare that the TSA is trying to control is hijackings.  Well, I'd prefer it if everyone were allowed to take weapons onto the airplanes. Then if someone tries to hijack an airplane, the passengers can defend themselves.  

Bad things are going to happen.  We have to ask ourselves if the oppression is worth the safety.  This full body imaging thing basically allows the TSA folks to see through a person's clothing. It's in airports now. Will it be in our children's schools next?  Are we really going to continue prosecuting teenagers for sending naked photos of themselves to their friends while requiring them to be seen naked by security guards at the airport or at school?  How many more hypocrisies can we possibly add to our government before our national anthem becomes ironic? 

Would you prefer to live as a powerless slave in a country with no crime, or as a free citizen in a country where bad things sometimes happen to good people?  I'll take the free country, thanks.  

Wednesday, May 6, 2009

Taxes

I want our tax system to be simple and  fair. I want it to cost the government less money to administer, and I want it to be more friendly to the people it serves."

For everyone to have to cope with a tax "return" form every year is stupid. Especially since filing the tax "return" is mandatory even if you don't want any money back. 

I'm calling for the end of the personal income tax.  It's a hassle for poor and middle class people who pay it, and it's a hassle for rich people who have to jump through hoops to avoid as much of it as possible.  It's also a burden for the government to track every single citizen for taxes, and causes unfairness to both citizens and people who are sometimes called illegal immigrants or undocumented inhabitants.

Every person who labors should be free to keep all the income from his or her efforts. 

Corporations should continue to pay a corporate income tax. However, I think it should be a low flat rate, with no exceptions. Corporate income tax would be due even when there is a loss. That is, the corporate income tax is calculated on gross income, not net income.  The government could also accept a payment plan (with interest) if a corporation reports a loss and cannot pay the tax immediately. 

I say corporations and not businesses because a self-employed person doing business should not have to pay a corporate income tax on what is essentially personal income derived from personal labor. 

So only businesses who incorporate would pay the corporate income tax. There would be incentives to incorporate:  liability protection, fictitious name registration, and the privilege of engaging in interstate or international commerce. 

Liability protection for owners of corporations is already in our laws. If a corporation is sued then it may pay damages from its assets but not necessarily the assets of its owners. There are some special situations where that protection does not apply right now, like when the corporation is being run as a thin paper shell around an individual's personal actions. In my scenario, even such a person would be protected (as long as he or she is paying the corporate income tax and maintaining the proper corporate procedures!). 

Fictitious name registration would be available only to corporations. People doing business without a corporation must do it under their own name. This rule is an incentive for people doing business to incorporate and pay the corporate income tax and follow other regulations for corporations to keep our business landscape clean.

Privilege to engage in interstate or international commerce would be available only to corporations. This rule in my scenario has a practical purpose besides being an incentive to incorporate.  I believe it is the right of every state to control what is entering and exiting its borders, because a state is responsible for protecting these borders and the people within them. And such great responsibility must be matched with an appropriate amount of authority. So requiring importers and exporters to incorporate is a practical way for the state to regulate these activities and to identify illegal activities.  This rule would also be enforceable, as the highway patrol or border patrol can actually distinguish between passenger vehicles and trucks loaded with goods, and cargos for airplanes, trains, and ships can be checked at those ports.  A person sending a package to another state would not have to incorporate, because the package would be shipped by a corporation like FedEx or the USPS.  People who have home-based "ebay businesses" and the like would not be required to incorporate if they do it under their own name. However, states might impose a shipping tax on out-of-state shipments and lean on the corporate couriers to collect it, just like a sales tax, but give a discount to corporations shipping out of state, in order to provide incentive for individuals that conduct a lot of interstate commerce to incorporate, pay the corporate taxes, and comply with the state's reporting requirements of corporations. Individuals would be free to decide what is the best course for themselves.

The rules I propose would definitely change the way some people do business. A lot of the effort at finding and plugging loopholes in the tax codes would go out of fashion.  Employees and self-employed will keep what they earn. Businesses will have to plan for profit and pay for their privileges.  Parasite businesses that are created exclusively to be "tax shelters" will go out of fashion as their losses will no longer avoid taxes.  If all levels of government adopt fair tax schemes for other taxes that are not income tax, such as property taxes, then certain corporations whose business model involves influencing any level of government to give them discounts on any form of tax would not be able to engage in this practice anymore.

Our income tax system is unfair. Under the income tax system, citizens are taxed a higher percentage of their money just because they have more. There are a myriad of exceptions and special concessions - enough that an individual must pay a professional to figure out what discounts an individual may receive - enough that there is an elite group of tax professionals who are much better at this than average advisors. Now, in any profession it is expected that some practitioners will be better than others. But income tax is a law of the land that touches (almost) everyone. It should be simple and concise such that it can be taught to high school students. 

The government provides services that are funded by income taxes. To make those services available to people who do not pay taxes at all is unfair. To deny some essential services to people based only on their legal status may be inhumane. The way to reconcile this moral conflict is to eliminate the income tax. Driving licenses should be issued to any person who can pay the fees and prove their knowledge of the laws of the road and ability to read and understand road signs. Medical care, if it is to be provided for free or with a subsidy to any person, should be equally available under the same terms to any other person, regardless of how much money they have or earn (these are different) or have paid to the government in taxes.  

The personal income tax is a cornerstone of unfair discrimination and segregation and it must be eliminated.

Who are illegal immigrants and undocumented inhabitants? They are people who have dreams like citizens, suffer from crime like citizens, who work and pay bills like citizens, who benefit from our national infrastructure like citizens. And they should pay taxes like citizens, but they cannot pay income tax because it requires a social security number, which an undocumented person doesn't have, and won't get because any contact with the government carries a risk of deportation. Income tax forms and immigration laws prevent undocumented people from paying taxes.

There is another way. A tax system that is fair to all inhabitants - citizens, documented visitors, and undocumented people. A system that is fair to the rich and the poor. A system that is based on behavior, that costs less to administer, and that doesn't require everyone to file an income tax "return" form every year. It's the sales tax.

If one earns $50,000 in a year and pays 25% income tax, one is left with $37,500. If one then spends all ones money and pays an average of 10% sales tax on all the activity, one's spending power is really $33,750. If the income tax were replaced by sales tax, an average rate of 32.5% would result in one's annual income of $50,000 being reduced to the same  $33,750. In both cases, $16,250 is paid to the government. However, the manner in which it is paid and the socioeconomic results would be substantially different.

By moving the tax from income to sales, we make it possible for everyone to pay taxes without fear of being deported. We give all people the same opportunity to pay taxes. The sales tax is equal opportunity taxation. But more than that, we make the taxes equal for all people. People who spend (not earn) more money would pay more taxes in total. Any two people buying the same item would pay the same amount of tax on that item. Any two people with the same spending patterns would pay similar amounts of taxes.

By moving the tax from income to sales, we give a lot of incentive for people to invest money, to save money, to make more money at their job or business, and to give more money away to charity. And all of those are good behaviors. Investments are not sales so if a household has a total income of $50,000 a year and invests $10,000 of it into a business or saves $10,000 of it for retirement, that entire $10,000 will be going to work the way it's intended. That's a great thing for low and medium income families that are trying to "get ahead" or "get out of the rat race" or even just "save for retirement". It's also great for wealthy families that want to invest a lot more money into new businesses - the more dollars they can put into it, the more jobs they will create and the better chance they have of succeeding and making those jobs permanent. If a wealthy household makes $150,000 a year and donates $100,000 to charity, or if a wealthy household makes $1,000,000 a year and donates $950,000 to charity, and they spend the remaining $50,000 the way any other household spends their $50,000 annual income, the taxes paid would be the same. It's fair because the wealthier household isn't keeping any of that wealth - so why should they pay more in taxes? It's perverse to penalize people for earning more money. We should be encouraging people to earn more money and to invest it (good for the economy) or save it (good for retirement or a rainy day) or donate it to charity (good for the community). Moving from income to sales tax is a great way to encourage these positive fiscal and social behaviors.

The sales tax is not the only fair tax. Other fair non-income taxes can be used to promote good behavior for the benefit of the public. For example: pollution, workplace injuries, hunting or fishing of species headed towards endangered status.