[kenberg]

 Gilithin, on 2023-May-20, 21:58, said:

Simplify the tax system, specifically removing the vast number of exceptions and exemptions available to businesses and wealthy citizens. Reduce the nominal corporate tax rate a little to compensate. Adjust tax law so that businesses that do the majority of their trading in the US but use cheap offshore tax havens to register their shell companies that book all of the profits also have to pay US corporate tax. Basically every company doing significant business in the USA should be paying taxes. This on its own would make more difference than just about every serious proposal currently being discussed. I seem to recall the numbers on switching from a sales tax to VAT are also highly favourable but baby steps... It will take some time to get the tax system efficient even with political will. Most likely the country will collapse before it actually happens in reality.

At the upper income levels the tax laws seem to be a maze, with prizes for those who can twist the law in their favor. But even at lower levels it can get complex.


I started grad school in 1960 and had a teaching assistanceship, about 3K for the academic year, and I worked in the summer. I paid taxes. Then the government decided that teaching assistanceships were part salary, taxable, and part fellowship, non-taxable. Unfortunately, "part" was vague. I and others called the IRS to learn which part was which. We found that if you call three times you get three different answers. I did whatever I thought was right. I was not audited, probably partly because no one knew just what was what, but also because even if an audit found that I owed money the amount would not cover the cost of the audit.

I guess the rule making part of the assistanceship non-taxable was well-intended, but not well thought out. I think this happens often, and of course there are other times when the tricky rules are not at all well-intended. Well-intended for the rich, but not for the rest of us.

So yes, I agree. I agree that simplifying would be good and I agree that the economy might well collapse before our leaders do an honest job of simplifying.

[Winstonm]

 Gilithin, on 2023-May-20, 21:58, said:

Simplify the tax system, specifically removing the vast number of exceptions and exemptions available to businesses and wealthy citizens. Reduce the nominal corporate tax rate a little to compensate. Adjust tax law so that businesses that do the majority of their trading in the US but use cheap offshore tax havens to register their shell companies that book all of the profits also have to pay US corporate tax. Basically every company doing significant business in the USA should be paying taxes. This on its own would make more difference than just about every serious proposal currently being discussed. I seem to recall the numbers on switching from a sales tax to VAT are also highly favourable but baby steps... It will take some time to get the tax system efficient even with political will. Most likely the country will collapse before it actually happens in reality.

The idea that flat tax structures are somehow "fair" because everyone pays the same percetage is laughibly idealistic.

[Gilithin]

 Winstonm, on 2023-May-21, 15:20, said:

The idea that flat tax structures are somehow "fair" because everyone pays the same percentage is laughably idealistic.

I don't believe my post said anything about fairness and it certainly did not discuss the merits of a completely flat tax structure. We could have that discussion too if you like but it doesn't seem particularly relevant to the matter at hand that caused the subject to be raised.

[Winstonm]

 Gilithin, on 2023-May-22, 08:42, said:

I don't believe my post said anything about fairness and it certainly did not discuss the merits of a completely flat tax structure. We could have that discussion too if you like but it doesn't seem particularly relevant to the matter at hand that caused the subject to be raised.

I agree that you didn't say anything about fair; however, you are suggesting a method of taxation that penalizes the lower tiers of incomes comapred to higher.

[Gilithin]

 Winstonm, on 2023-May-22, 15:12, said:

I agree that you didn't say anything about fair; however, you are suggesting a method of taxation that penalizes the lower tiers of incomes compared to higher.

One of the primary characteristics of a taxation system that uses a high nominal rate but uses masses of write offs and exemptions to bring the tax rate down is that it massively favours well off individuals and large corporations, who are usually in a good position to use all of the benefits and end up paying almost zero tax, whereas less wealthy people largely have to pay the higher rate. Simplifying the system has the effect of increasing the tax on those wealthy personages without increasing it on the rest of the population, and also makes the system generally more efficient, easier to maintain and considerably simpler to catch illegal evasion schemes. The one thing simplifying the system does not do is increase the burden of the least well off. Of course you can design a simplified system that does do this: 90% tax bracket on the first 20k of income; 25% on the next 80k; 0% thereafter would qualify. But that is just silliness - I would hope you are above that sort of thing Winston. I find it really hard to believe that you do not understand how tax systems outside of the USA work...

[Winstonm]

At this point of my life I’m lucky if I can even spell “tacks”. 😜

[kenberg]

 Winstonm, on 2023-May-25, 06:59, said:

At this point of my life I'm lucky if I can even spell "tacks". ��

I see my early experience, described above, with tax adjustments for teaching assistants as a very good argument for simplicity. Grad students are too busy to be a voting bloc, somehow the powers that be, or powers that were, just decided to give us a tax break. It was a pretty simple situation and they screwed it up. After several years it was somehow decided that being a teaching assistant was a really good experience for becoming a professor so they called the entire salary a non-taxable fellowship. This was not the original intent but nobody could clearly state what the original intent actually was so they just let it go as non-taxable. I had already moved on by then.

At the higher levels of income the situation is often a great deal more complicated and there are players with substantial financial interest and influence. Not surprisingly, possibly good ideas in the abstract get transformed into giveaways. Tax lawyers get rich, the rich avoid taxes, the intended good things don't actually happen.

A graduated tax is fine by me. Those with upper incomes can afford the higher rates and the government needs the cash. But beyond that, I think that we should be very cautious about trying to use various tax schemes to influence behavior. I started doing my father's income tax for him when I was 14. He installed weather stripping. In one column I listed the material he bought and the price he paid, in another column, I listed the jobs he performed and what he was paid. I added each of the columns and took the difference. The tax was on that amount. Ok, there were occasional complications because he sometimes contracted for work far enough away that he temporarily lived near the job, and those costs were deductible. Still, a 14-year-old could handle this. We should look skeptically at any tax law that makes things more complicated than that.

Added: Sure, I realize that not everyone is a weatherstripper or a grad student so it is more complicated than I describe. But I think my general point is right. Even with the best of intentions, complicated things can go wrong, and when money is involved intentions are often not at all good.

[Winstonm]

 kenberg, on 2023-May-26, 07:19, said:

I see my early experience, described above, with tax adjustments for teaching assistants as a very good argument for simplicity. Grad students are too busy to be a voting bloc, somehow the powers that be, or powers that were, just decided to give us a tax break. It was a pretty simple situation and they screwed it up. After several years it was somehow decided that being a teaching assistant was a really good experience for becoming a professor so they called the entire salary a non-taxable fellowship. This was not the original intent but nobody could clearly state what the original intent actually was so they just let it go as non-taxable. I had already moved on by then.

At the higher levels of income the situation is often a great deal more complicated and there are players with substantial financial interest and influence. Not surprisingly, possibly good ideas in the abstract get transformed into giveaways. Tax lawyers get rich, the rich avoid taxes, the intended good things don't actually happen.

A graduated tax is fine by me. Those with upper incomes can afford the higher rates and the government needs the cash. But beyond that, I think that we should be very cautious about trying to use various tax schemes to influence behavior. I started doing my father's income tax for him when I was 14. He installed weather stripping. In one column I listed the material he bought and the price he paid, in another column, I listed the jobs he performed and what he was paid. I added each of the columns and took the difference. The tax was on that amount. Ok, there were occasional complications because he sometimes contracted for work far enough away that he temporarily lived near the job, and those costs were deductible. Still, a 14-year-old could handle this. We should look skeptically at any tax law that makes things more complicated than that.

Added: Sure, I realize that not everyone is a weatherstripper or a grad student so it is more complicated than I describe. But I think my general point is right. Even with the best of intentions, complicated things can go wrong, and when money is involved intentions are often not at all good.

I agree totally that the tax codes should be simplified, even simple. The only problem I have is with taxes like VAT that disproportinately penalize the less well off.

[akwoo]

 kenberg, on 2023-May-26, 07:19, said:

A graduated tax is fine by me. Those with upper incomes can afford the higher rates and the government needs the cash. But beyond that, I think that we should be very cautious about trying to use various tax schemes to influence behavior. I started doing my father's income tax for him when I was 14. He installed weather stripping. In one column I listed the material he bought and the price he paid, in another column, I listed the jobs he performed and what he was paid. I added each of the columns and took the difference. The tax was on that amount. Ok, there were occasional complications because he sometimes contracted for work far enough away that he temporarily lived near the job, and those costs were deductible. Still, a 14-year-old could handle this. We should look skeptically at any tax law that makes things more complicated than that.

Added: Sure, I realize that not everyone is a weatherstripper or a grad student so it is more complicated than I describe. But I think my general point is right. Even with the best of intentions, complicated things can go wrong, and when money is involved intentions are often not at all good.

I think, on the contrary, we already see in this example how simple things can go wrong. Let's say your father gets a bunch of jobs in Two Harbors (well, today's Two Harbors - it's now a nice tourist town on Lake Superior). Enough jobs, with enough of a consistent clientele, that it makes sense for him to buy a house and maybe set up a small office in it instead of renting all the time. Two Harbors is a nice place, so you start visiting it on the weekend. When can it not be deducted any more? What if it turns out to be a really nice million dollar house on the lake? You see the difficulty. You could just say it should be left to common sense, perhaps as determined by a court, but rich folks can hire very persuasive lawyers.

Simple rules inevitably have loopholes. Rich people hire folks who figure out the loopholes. You try patching up the simple idea to close the loophole, and they find more loopholes.

[pilowsky]

In order to patch up the loopholes the Australian conservative government decided that it would be a great idea to hire Price Waterhouse Cooper to work on confidential taxation material.
Which they promptly disseminated to wealthy customers to help them 'minimise' tax.
You just can't trust anyone to pay their share.

When the US govt decided it didn't want to deal with so many arms suppliers the Govt forced them to amalgamate into price gouging monopolies.
Now they can't afford to buy parts for their coffee-makers.
And now there's another debt ceiling crisis.

[johnu]

 pilowsky, on 2023-May-26, 16:05, said:

In order to patch up the loopholes the Australian conservative government decided that it would be a great idea to hire Price Waterhouse Cooper to work on confidential taxation material.
Which they promptly disseminated to wealthy customers to help them 'minimise' tax.

Sounds like PWC is trying to follow in Arthur Andersen's steps.

[Gilithin]

In other US news, the Supreme Court appears to be completely out of control now, following up on their obviously political and probably unconstitutional prior decisions by essentially repealing the Clean Water Act of 1972. One might ask how much the polluting companies paid Clarence Thomas and co for that one. In the end it will be the American people that suffer from this.

[shyams]

 Gilithin, on 2023-May-26, 23:23, said:

In other US news, the Supreme Court appears to be completely out of control now, following up on their obviously political and probably unconstitutional prior decisions by essentially repealing the Clean Water Act of 1972. One might ask how much the polluting companies paid Clarence Thomas and co for that one. In the end it will be the American people that suffer from this.

I thought it was a 9-0 decision, although 4 of 9 dissented with the majority 5 for the rationale behind the (unanimous) decision.

[Gilithin]

 shyams, on 2023-May-27, 01:52, said:

I thought it was a 9-0 decision, although 4 of 9 dissented with the majority 5 for the rationale behind the (unanimous) decision.

Even Kavanaugh dissented on the core decision to roll back more or less all of the Clean Water Act. The SCOTUS decision overturns over 50 years of precedent for how this was interpreted, even going further than the already extreme position of the Trump administration. The end effect is that there is basically no floor now to environmental impact, meaning that the US goes back to the pre-1972 days of purely local regulations.

[kenberg]

 akwoo, on 2023-May-26, 15:55, said:

I think, on the contrary, we already see in this example how simple things can go wrong. Let's say your father gets a bunch of jobs in Two Harbors (well, today's Two Harbors - it's now a nice tourist town on Lake Superior). Enough jobs, with enough of a consistent clientele, that it makes sense for him to buy a house and maybe set up a small office in it instead of renting all the time. Two Harbors is a nice place, so you start visiting it on the weekend. When can it not be deducted any more? What if it turns out to be a really nice million dollar house on the lake? You see the difficulty. You could just say it should be left to common sense, perhaps as determined by a court, but rich folks can hire very persuasive lawyers.

Simple rules inevitably have loopholes. Rich people hire folks who figure out the loopholes. You try patching up the simple idea to close the loophole, and they find more loopholes.

Thinking about it, I agree you have a point. Just for amusement: Back in the early 70s the annual Math meeting was in Las Vegas. There were many large signs welcoming some other groups and occasional small signs welcoming the American Mathematical Society. I recall seeing a group of mathematicians in a room full of slot machines, they were all discussing theorems, no one was putting money into anything. I did bring my wife, a previous wife, not Becky, and we did spend an evening watching Buddy Hackett entertain us after a warm-up performance by Charo, but I think the casinos and all were happy to ss us go. As I recall the decision to meet in Las Vegas was a last-minute one, We were scheduled to meet somewhere else but the somewhere else had overbooked so they had to cancel someone and mathematicians seemed like a good choice for cancellation.

As to my father, my mother and I, along with my dog Judy, did go with him once when he was taking a day or two to write up a cost estimate for a job up in Park Rapids MN. I was maybe 8 or so. We couldn't find a hotel, or at least not one that would take in a springer spaniel, so we slept in the park. I enjoyed it but we did not repeat the experience.

But yes, even simple things can go astray. But I do think that having the tax code be simple enough so that in most cases a 14-year-old can do the family taxes is a good goal.

[Winstonm]

I think most people miss the primary goal of the 35% of Republicans that make up the base, which, to be elected as a Republican, must be appeased; these people are not satisfied with a smaller federal government; they want no federal government, a return to the articles of federation where states have all the power.

Once this is understood, their actions are understandable and predictable.

The problem we have is rational people trying to deal with the irrational as rational. It is rather pointless to debate tax codes in a gunfight.

These people want to dismantle this country by holding hostage the Republican party and they are succeeding. Negotiating with a gun to your head is fairly pointless.

PS: I find this extraordinary: https://www.huffpost...4b091b09c2d4dbb
The last place I thought cared about corruption.

[johnu]

 kenberg, on 2023-May-27, 07:56, said:

I recall seeing a group of mathematicians in a room full of slot machines, they were all discussing theorems, no one was putting money into anything. I did bring my wife, a previous wife, not Becky, and we did spend an evening watching Buddy Hackett entertain us after a warm-up performance by Charo, but I think the casinos and all were happy to ss us go.

AFAIK, most math people who know statistics are terrible gamblers for Las Vegas because they know the house odds and have a hard time betting when they know the odds are against them. Basically the only time I play anything other than poker is if I get some casino lucky bucks, either free chips, or 2 for 1 coupons.

[johnu]

 Winstonm, on 2023-May-27, 14:24, said:

I think most people miss the primary goal of the 35% of Republicans that make up the base, which, to be elected as a Republican, must be appeased; these people are not satisfied with a smaller federal government; they want no federal government, a return to the articles of federation where states have all the power.

Once this is understood, their actions are understandable and predictable.
[size="3"]The last place I thought cared about corruption.

Basically Republicans think money grows on trees. They want lower or no taxes, but they love Social Security and Medicare, the most powerful military in the world by as much as possible, government handouts when disasters strike, and government programs that benefit them. And they definitely do not like it when government benefits go to "those" people.

[pilowsky]

And now the debt ceiling date has been moved to the day that was originally planned to be D-day before it was delayed by weather.

[kenberg]

Perhaps we are once again going to avoid catastrophe with the debt limit. I suggest a new law: Any needed adjustment to the debt limit must be enacted at least thirty days before that limit is reached. If this is not done, then 50K will be deducted from the salary of each member of the House and 100K will be deducted from the salary of the president.

Regardless of how budget planning should be done, the way that it is now done is an absurd embarrassment to the nation. I suppose that a lot f money can be made by following the budget talks closely day to day. One day it looks like default, get in there early and sell. Another day it looks like there could be an agreement, get in there early and buy buy buy. That's not me and I do not wish it to ever be me. I want these jerks to resolve the issues with a great deal less drama and preening.

We will see how this goes. Of course a deal isn't done until it is done. It is impossible to fully make it clear how fed up I am with this way of doing things. I'm an honest guy who wants the best for this country and high on my list is finding a better way to resolve budget issues. Yes it is money and yes there is political stuff involved but find a better way. The current way makes us all look like idiots. They look like idiots for doing it, we look like idiots for putting up with it.