Sunday, July 28, 2013
Unfortunately, there is a loud and well funded group pushing a radical tax reform proposal called the Fair Tax. This tax is based upon a fundamentally flawed understanding of economics. History shows that loud people can do great harm to the nation.
Last Month I challenged the Fair Tax supporters to a debate.
The challenge went unanswered. I will repeat the challenge.
I live in Salt Lake, I will be happy to drive to Denver, Phoenix, Cheyenne, Boise, or Las Vegas for a debate. I would like to stay within one day's drive of Utah to keep costs down.
The debate would be a simple format in which both sides present an argument to a group and the group voted on the path they find most promising.
The FairTax speaker would present the idea of replacing the income tax with a sales tax.
I would present the idea of creating an alternative to the withholding system that uses Tax Aware Accounts.
The audience would vote on the idea they like better. I contend that most crowd would prefer the path that empowers people and requires the least disruption. The FairTax disenfranchises workers and will result in massive disruption. I repeat the challenge I made last month.
Any group interested in hosting such a meeting could contact me.
In contrast, when people seek a Personal Covenant with Christ, they tend to become open, honest and valuable members of society. A society in which a large number of people are seeking a Personal Covenant with Christ tends to be a robust, open and welcoming society.
The difference between a society in which individuals are seeking a Personal Covenant with Christ and a society in which political leaders claim a Collective Covenant with God is the difference between individual rationality and group think.
The problem is not religion. The problem is with group think.
The history of radicalized anti-religion shows that group think is as dangerous in anti-religion (if not more so) as it is with religion.
Anti-religious group think is usually worse than pro-religious group think because it denies people their natural impulse to seek peace with their maker.
The politically ambitious seek power by dividing and conquering. The politically ambitious love promoting the angle that their group is either more righteous or more intelligent than the opposition on which the leaders project false images.
The politically ambitious love radical divisions because the division justifies a politics of rewarding friends and punishing enemies.
The politically ambitious simply religion (or anti-religion) as a path to power. Remember, Machiavelli taught the prince that he must appear religious while not being religious.
The paradoxical aspect of using religion to grub power is that the rogues who use religion to create division and gain power end up becoming the very image of evil that they project on the people they oppress.
The leader who claims a Collective Covenant with God in a quest for power often undermines the aspirations of the followers seeking a personal covenant.
While seeking a personal Covenant with Christ or speaking of a Global covenant with God is often beneficial, people should be wary of anyone claiming that their group has a Covenant with God and that they are in conflict with the evil outsiders who do not. More often then not, the political rogues taking this tact are using religion for personal ends. Their efforts often result in the very evils they claim to stand against.
It is group think that kills, not individual spirituality.
Friday, July 26, 2013
One of the most common accusations is one of greed. Workers accuse management of being greedy and giving stingy paychecks while management accuses workers for being lazy and greedy for not having the company's best interest at heart.
Unfortunately, I was not born with the ability to see the motivations of others. I do not have the magic ability to see if a person is motivated by greed or something else.
Anyway, social progressives make claims to altruism as they demand ever greater economic and political centralization. Small business owners openly admit to self-motivation as they build and defend their small businesses.
Bush, Clinton, Bush and Obama were social progressives. Each administration made big claims to altruistic motives.
As I cannot see inside their minds, I simply have to take these administrations at their word.
During each of these administrations we saw altruistic people who favored economic and political centralization over freedom. The result is an ever larger gap between rich and poor.
So, I will make a bold statement. The problem is not greed v. altruism. The problem is economic centralization.
Economic centralization will concentrate wealth and power even if the group promoting the centralization feigns altruism.
Conversely, economic decentralization does a better job creating and distributing wealth, even if the people involve admit to self-motivation.
If the freedom movement wants to turn around the ever increasing economic and political centralization, people in the movement need to start talking about economic decentralization.
Wednesday, July 24, 2013
Unfortunately, there is not a good tax reform proposal on the table. If there is not a decent plan on the table, we will be stuck with bad approaches to reform such as the Fair Tax.
I contend that, if a small group of patriots got together, the group could create a much better tax reform proposal that will bring people into the freedom movement.
Decades ago, when I was studying object oriented programming, I came up with a fun approach to reform that I took to calling "The Object Tax."
The reform uses ideas from the computer industry to replace the tax withholding system with Tax Aware Accounts.
A Tax Aware Account is a smart account. You put money in the account. You pay a progressive tax to get the money out. If your employer put $1000 in your account and your tax rate was 20%; you would get $800 in cash and pay a $200 tax when you withdraw the funds.
Smart accounts can accurately apply taxes throughout the year, ending the need to file an annual return.
Implementing the tax is not disruptive. The program starts by creating an object-model of the current tax code that can be implemented either as the current withholding system or through the system of tax aware accounts.
Accountants and financial institutions would create implementations of the object-model. Once tested these third party would present Tax Aware Accounts as a product.
People would switch to the Tax Aware Accounts at their discretion.
Employers wishing to reduce compliance costs are likely to change. Employees who wish to eliminate the hassles of filing taxes will appreciate the change.
Tax reform experts will notice that the Object Tax combines the best of a progressive income tax with a consumption tax.
For that matter, unlike the FairTax which is a business tax, the Object Tax is a true consumption tax. The money flows from the consumer at the point when consumers transfer money from their accounts for spending.
The really important part of the Object Tax is that it empowers individuals to take greater control over their personal finances. The programs that host the tax will give clients a full accounting of their personal spending and taxes paid. While the tax reform itself will not decrease government spending, an empowered electorate is likely to demand spending reductions.
The rogues in power fear an educated public.
Moving the Object Tax from conception to consideration as a viable alternative to the Fair Tax requires just a few people meeting and hashing out the plan. I started the Object Tax blog to start the process of developing the concept.
Tuesday, July 23, 2013
This is my belief and I may be wrong.
I believe that the best way to defeat the Fair Tax would be for the Freedom Movement to come up with a less disruptive tax reform proposal.
A long time ago, while studying Object Oriented Programming, I asked myself the question: "Would it be possible to use the system design techniques from the computer industry to streamline the tax collection process?"
In engaged in a thought experiment in which I used Object Technology to rework tax collection. I came up with the following idea which I called the Object Tax.
The first step is to create an abstract model of the current tax code that could be implemented as the current tax with-holding system or as a system of Tax Aware Accounts.
In computer jingo, a Tax Aware Account is an object. It is a smart account. You put money in the account and have to pay a tax to get the money out. You would have your whole paycheck (nothing withheld) put into an account. When you withdraw funds, the account would calculate and pay your taxes. If done correctly, the program would end the need for withholdings and filing an annual return.
With the Tax Aware Account, taxes are collected when a person withdraws money for consumption. It is a personal consumption tax with a progressive tax rate. According to the Fair Tax literature, this is the best structure for a tax code.
The Object Tax defines the behavior of a Tax Aware Account. We would then ask third party providers to implement the design. Implementation would include a rigorous system of testing and certification.
The Tax Aware Accounts would be hosted by local accountants and financial institutions. Banks could extend the Tax Aware Accounts by adding budgeting and financial management tools.
The Object Tax is not disruptive. We use principles from system design to create an alternative to the withholding system that is implemented by third party providers.
It is a fun idea.
In my opinion, this idea is worth exploring.
Now for the big hang up.
I live in Utah. The body politic in this state bought into the Covenant America argument.
Covenant America holds that the Constitution was revealed by the Heavenly Father to usher in his new church in the Latter Days.
Proponents of the Fair Tax claim that the Sixteenth Amendment that created the income tax is Unconstitutional and that the Fair Tax will restore the Constitution as it was reveal by the Heavenly Father.
This idea that the Sixteenth Amendment is Unconstitutional is complete and utter nonsense. Yes, the Founder sought to limit the Federal Government by barring the Federal Government from direct taxation. We had a foolish system in which the Federal Government taxed the states based on the census.
This is exactly like the system devised by Emperor Augustus in year zero. The Census of Quirinius had ordered everyone to return to their place of birth to be counted. Christ was born in a manager for tax compliance. Taxing the states based on the census data was stupid in year zero. It also proved stupid in the 19th century.
The Fair Tax actually is direct taxation and is as dependent on the sixteenth amendment as is the income tax. The Fair Tax is a tax set by the Federal Government and mandated to the states. It does not restore Constitutional balance. But that is a different story. The people who hold that the sixteenth amendment is unconstitutional don't exactly apply logic to their thinking.
In my opinion, the tax reform debate should be about the best way to proceed with the painful issue of tax reform.
I believe that the best approach is to use system design techniques to transition from the current withholding system to one based on Tax Aware Accounts administered by third parties.
I have all sorts of reasons why this would improve both the tax system and citizen involvement in their governance.
I have strong arguments that this is a better approach to reform. Unfortunately, I will never have a chance to argue these ideas because the argument is based on the idea that the Sixteenth Amendment is Constitutional.
I live in a state where I lose the argument that Constitutional Amendments are Constitutional.
The one and only way that I could work on developing the ideas I worked on is if someone outside of Utah invited me to a meeting. I don't see that happening.
The Framers of the Constitution did not claim that it was revealed by a divine authority. They did not claim it was a covenant to establish a new church. They actually said the opposite. They did not want the government to be in the business of establishing religions.
The Tax Reform Debate should be about finding the best way to engage in reform taxes. But that debate cannot happen because a powerful local church holds the notion that the Constitution was Revealed by God and that amendments are Apocrypha.
To me, this is pure insanity. So, I wrote a few posts critical of Covenant Theory held by the powers that control Utah.
The Covenant Theory holds that the US Revolution was staged by God. The Declaration of Independence and the Constitution were revealed by God to create the conditions necessary for the restoration of the church in the Latter Days. The Restoration of the Church occurred when God revealed to Joseph Smith the Golden Tablets that contained the Book of Mormon. Joseph Smith was instructed by God to establish a church. Revelations continue to flow through the Church and are written in the Doctrine and Covenants.
In the Covenant Theory, The Constitution was revealed to give rise to the Mormon Church. A goal of the Constitution was to give free agency.
Free agency is best understood as a test. Free agency gives people a choice of accepting their position in the hierarchy of the Church and following the doctrine or of being cast out.
Those who follow the Doctrine and Convents are the righteous. Those not in the Covenant are called gentiles.
The Book of Mormon tells of millennial old conflict with the righteous pitted in struggle against the gentiles.
(I am one of those evil gentiles).
The Covenant reaches back to the beginning of time in the Garden of Eden. Adam ate the apple, which is why men have Adams Apples. Cain killed Abel. The descendants of Cain were smitten and turned dark skin. The Covenant theory holds that the proof of the Covenant can be seen in the color of one's skin.
Africans are the descendants of Cain and have dark skin. Europeans are the descendants of Abel. They are whitesome and delightsome. This pattern repeated with the Native Americans who are descendants of an evil group called Lamanites, which is why Native Americans are savage and red.
(Personally, I reject these arguments as false. But what is truth?)
A covenant can only be seen by revelation. The epistemology of the Covenant Theory starts with the idea that The Covenant is the highest of all truths. Unfortunately attempts to say that the covenant is reveal to each person individually fails because we would all fantasize different covenants. The Covenant requires a central political hierarchy. Thus Covenant Theory holds that truth flows through the political hierarchy to the people; So, the higher you are in the political hierarchy, the closer you are to truth.
Since truth flows through the political hierarchy created by the Covenant with God, you can judge the truth of a statement by one's position in the political hierarchy. The higher one's position in the hierarchy, the greater one's authority. As you work your way up the rungs, you gain authority. (Pretty sweet, eh?)
Jumping back to free agency: The theory of free agency means that people are given the choice of accepting their position in the hierarchy or of being cast out. Satan works to cloud people's mind to make the truth appear false.
For example, Satan might compel an evil gentile so say something like "The idea that Africans bear the Mark of Cain is racist nonsense." Adherents to the Covenant are trained (indoctrinated) to see such statements as the work of Satan.
I happen to be one of those gentiles. From my perspective, the Covenant Theory ends up creating a closed society that is subject to group delusions. Even worse, Covenant Theory leads to a deeply fractured society with a closed group claiming they are the holders of the truth and shutting the rest of the world out of political discourse.
Covenant Theory divides people and creates a cultural climate in which is it nearly impossible to engage in discourse.
Readers of this blog will notice that I spent five years with the goal of holding a meeting about free market health care reform.
My goal was to present the idea that insurance is the problem and that to restore liberty, we need to restore a system in which most health care is self-funded and provided on a fee-for-service basis.
I know enough about the nature of logic and ideas to understand that my position might be wrong. My goal has been to find a group of people who are open to free market reform to listen to the idea. I believe strongly in the scientific method. Peer review is a cornerstone of this method.
The idea I wanted to present is that the insurance mandate is the weakest part of PPACA (ObamaCare). The Insurance Mandate is premised on the assumption that insurance (group funding of individual care) is the only possible way to fund health care.
If a group developed a mathematically viable alternative in which the majority of care is self-funded and delivered as fee-for-service medicine, that group would attack PPACA at its weakest link.
I live in Salt Lake City which is controlled by the LDS Church. The LDS Church suppresses open discourse. Because I live in Salt Lake City, I am unable to find people who would review the idea. So, I am stuck having to look outside of the state.
The only hope I have is that someone within driving distance (700 miles) of Salt Lake is willing to host a meeting.
People keep asking. Why is it that no-one in Utah is willing to discuss free market health care reform. The reason is that the leadership of this state believes in Covenant Theory. The leaders of this state believe that truth flows through the political hierarchy of the Church and that people not in this hierarchy are all evil. servants of Satan.
I've crashed local political groups. When I brought up the idea that insurance is the problem, people have looked directly at me and called me Satan.
That is just pure nonsense. In my opinion, anyone who believes in an ideology that automatically rejects all arguments outside that ideology is on the wrong path.
I have spoken with local Democrats and progressives about my thoughts. They reject the idea of self-financed care outright and will not consider any arguments in favor of self-funded health care.
I believe the Founders of the United States fought for liberty because they saw liberty being a good thing in and of itself. They fought for liberty and not free agency. I believe the Founders sought to protect freedom of speech because they believe that a system with healthy discourse spoken by people with different perspectives would lead to more fruitful results than ideas imposed by a top-down hierarchy.
I believe that the Covenant Theory (at least as it is practiced in Utah) is against the ideals of the Founders.
I enjoyed the Glenn Beck show. I am deeply disappointed to see Glenn Beck putting on a circus called Covenant America in Branson, Mo.
Likewise, I loved the book "The Open Society and It's Enemies" by Karl Popper. But I really dislike the direction of the Open Society Institute which I see as an enemy of freedom.
As for these last three posts. I am trying to explain why people in Utah are unwilling to discuss such as health care freedom. People in Utah believe that their group has a Covenant with God. Those who are not in their group need to be isolated and cut out.
I know, I've gone five years trying to find a group to discuss free market health care reform. I would still love to discuss that topic. I also would love to talk about tax reform. But I have to travel out of state and the only way I could ever have a chance to discuss these topics is if someone helped organize a meeting.
The picture below shows attendance of the 2012 Stand Up For Religious Freedom Rally. This was the largest anti-PPACA rally of the last four years. From a population of 2M, the well promoted rally attracted about 200 people. About half of the crowd was composed of speakers, the media and direct family of the speakers.
Sunday, July 21, 2013
For example, the monarchy had used a radicalized form of Christianity (the Divine Right of Kings) to claim that kings drew their authority from an ancient covenant with God. The monarchs of old presented a conflict driven view of history in which the monarchs were the righteous rulers in eternal conflict against tyrants and other rogues.
The Islamic jihad is a radicalized approach to religion that has been around for millennia.
By the time of the US Revolution, radicalized religion had lost much of its appeal. The groups that had used radical religion sought other paths to power.
The Hanoverian Kings of England were German. The Hanoverian Kings funded the Germany Universities and sponsored work to reframe the message of the monarchy as progressive. This effort spawned most of the "isms" of the modern age including progressivism, liberalism and (yes) conservatism.
The best example of this new thought was Hegel's Philosophy of History. Hegel was a royalist (a conservative). He presented a conflict driven version of history which staged the Germanic people as the up and coming nation on the world stage. Hegel was created pseudo-philosophical race-based religion. The Nazis were direct descendants of this chain of thought.
A central feature of Hegel's philosophy is a redefinition of freedom in which freedom is slavery and slavery freedom. This ideal continues today with people who seek freedom by creating ever greater dependency on the state.
Hegel was part of a royalist reactionary movement. His ideal was the restoration of central monarchy. The next generation (the Young Hegelians) produced a radical left wing philosophy.
Famous Young Hegelians include Feuerbach. Feuerbach realized that radical anti-religion could be as affective in consolidating power as radical religion. This was especially true in an age when people were tired of religious war.
Marx perfected the radicalization process and created a radical philosophy that was far more virulent then Hegelianism.
It is important to remember that Modern Radicalism took place on both the right and left. Many people hold up Naziism and Fascism as right-wing radicalism and Communism as left-wing radicalism.
The radical philosophies that led to genocide in the twentieth century were produced by the reactionary and radicalization process of the nineteenth century.
These reactionary movements trace back to the ideas of the Divine Right of Kings and the tradition of supporting secular authorities with fantastical conflict driven versions of history to support claims to secular authority.
For this reason, I am not happy to see Glenn Beck pursuing the ideas of Covenant America. The idea that one group has a direct Covenant with God which justifies its hegemony over others is the heart of the radicalization process.
The American Covenant theory holds that the American Revolution was run by God as part of a master plan. In this master plan, both the Declaration of Independence and the Constitution of the United States were revealed by God to establish the conditions necessary for the restoration of God's true church in the Latter Days.
The restoration of the church, of course, happened with the revelation of the Book of Mormon which taught man the true history of the planet. The specifics of the new covenant came with revelation of the Doctrine and the Covenants.
The D&C has many exciting revelations such as the restoration of polygamy for members of the patriarchy and the revelation that the Heavenly Father is not one God but one god in a political hierarchy of gods.
I agree that it is compelling to think that the Constitution was revealed by God as part of a greater revelation. It is compelling to believe that the words of the original constitution are scriptural and are equivalent to the Bible, The BoM and D&C. (NOTE: Amendments with numbers greater than ten are apocrypha).
The theory that the Consitution is of divine origins is truly compelling, but if the theory is not correct, then American Convenant Theory is a theory that might undermine and not strenghten the Constitution.
The idea that the words in the Constitution were revealed by God and are on par with other revelations of the Seer, Relevator and Prophet add religious authority to the Constitution, but what if the Seer, Relevator and Prophet is just a politically ambitious partisan, then our attempts to build a religion around the American Covenant has reduced the American Experiment in self rule to the long line of other false prophecies.
In practice, these theories in which one group of righteous people claim a special covenant with God have led to division. The righteous are thrown into conflict with those outside the covenant (the evil gentiles). Deep structural divisions tend to end poorly.
In WWII, the Nazis held that the Aryan Race was chosen by the world spirit as the master race that would rise to hegemony. In order for this stage in the evolution of man to reach fruition, they had to kill everybody from the previous stage of development.
Now, it is true that, throughout history, scholars have come up with all sorts of reasons to claim that their group is the chosen group and is empowered by providence to oppress the villainous others. This type of divisive thinking is at the root of much of the radicalization of the last two centuries.
I am really sad to see Glenn Beck pushing a type of thinking that led previous generations astray. By pushing the idea that there are righteous Americans who are part of the covenant with God and evil gentiles who need to be repressed, Glenn Beck is just making the world worse.
This type of divisive thinking undermines society as whole.
For example, I happen to agree with the idea that America could benefit with a widespread religious revival. However, if the revival revives radical religion, the radicalization will lead to an ugly end. Radicalized religion does not bring people along a road to enlightenment. Radicalized religion brings people along a dark road of division, dispair and increased conflict.
Friday, July 19, 2013
Many readers are new to the idea that the Declaration of Independence and Constitution were revealed by the Heavenly Father as part of a covenant for the Latter Days.
As one who live "behind the Zion Curtain" in Salt Lake City, the covenant is well known and is a driving force in local and now national politics.
So, please, sit back and I will tell you the story of the American Covenant.
The Covenant reaches back 6000 years ago to the Garden of Eden when God established the first covenant with Adam and Eve.
Eve ate and apple and they were driven from the Garden of Eden. To make things worse, their elder son Cain killed their younger son Abel. God was unhappy and smited the descendants of Cain with the "Mark of Cain." (For those of you who are ignorant of the covenant, the Mark of Cain is dark skin).
Noah had a covenant involving an ark and flood. Abraham had a covenant. The sons messed that one up and his descendants became slaves in Egypt. Moses had a covenant after freeing slaves from Egypt.
This is all well known. But what isn't known is that several tribes of Israel (The Lost Tribes of Israel, aka The Nephites) built a submarine and traveled to the Americas where they had a new covenant.
The Nephites had a thriving cultural until one day King Benjamin granted the people a Democracy. An evil group of people called Lamanites had a conspiracy in which they won the election. They took control and were evil. There was a big war between the righteous Nephites and the evil Lamanites. God was so upset with this turn of events that he smited the people in the New World and turned them into savages with red skin.
Back to the old world. Jesus established a new covenant with the crucifixion and resurrection.
Sadly, evil popes conspired with evil kings to mess up that covenant.
BTW, you may have heard of the "Divine Right of Kings." The monarchs in Europe claimed that that monarchy stretched back to an ancient covenant with the Patriarchs of Israel. People who believed in the Divine Right of Kings believed that the American Revolution was a sin against God.
But the monarchs didn't know the designs of the Heavenly Father. The Heavenly Father had plans to establish a newer covenant in the new world.
The monarchs of Europe colonized the new world, but it was in the designs of the Heavenly Father that the colonies would rise against the monarchs.
Today we admire the US Founders as great visionaries. In Utah, we are taught that the Founders were really just a big joke.. The US Founders were rabble of the worst sort who could barely tie their shoes let alone win a revolution.
It was the Heavenly Father who led the Revolution. The Heavenly Father had to resort to multiple outright miracles to make the war a success.
The divine plan of the Heavenly Father was to use the US Founders to create the conditions necessary to establish his new church.
The Heavenly Father revealed unto the Founders the Declaration of Independence. The Heavenly Father then won the Revolution through miracles. After The Revolution, The Heavenly Father gathered the Founders at the Constitutional Convention, where-in the Heavenly Father revealed unto the Founders the Constitution and a Bill of Rights. These documents were revealed to create the conditions necessary for the Restoration of The Church in the Latter Days.
Secular scholars (ie liberals) misunderstand the Constitution. These evil liberals believe the revolution was about fighting for freedom which they wrongfully believe is good unto itself.
The American Covenant holds that the Declaration of Independence and Constitution are scripture revealed by the Heavenly Father to create the conditions for the restoration of His Church in the Latter Days.
Evil liberals says the Constitution was about freedom. The Covenant holds that The Constitution was revealed to establish "free agency." Free agency simply means that people are given the choice of accepting the Covenant and following the dictates of the true church in the Latter Days or being evil gentiles to be cast aside on judgment day.
The Heavenly Father revealed the true history of the covenant with the revelation of the Book of Mormon.
After publishing The Book of Mormon in 1830, Joseph Smith hooked up with Sydney Rigdon and Oliver Cowdery who had been interested in establishing a utopian society.
Thus the promise of the American Revolution was fulfilled by the re-establishment of the true church on earth.
The Heavenly Father then revealed through his church the details of the American Covenant in the Doctrine and Covenants.The D&C reveal many wondrous things such as a command that the leaders of the church take on multiple-wives. It was revealed that there is not just one God but a multiplicity of Gods in a political hierarchy.
Of course, the story does not end with the re-establishment of the church.
As you see, man is locked in an endless struggle between the righteous and the evil servants of Satan.
Evil liberals pretend the Declaration of Independence and Constitution were products of reason, not revelation. Evil liberals attempt to lead people away from the American Covenant and the Restoration of the Church.
Evil liberals pretend freedom is something good unto itself.
They fail to realize that the free agency given in the American Covenant is a choice to become a member in the body of the Heavenly Father's true church in the Latter Days or being servants of Satan.
The nature of free agency means there is eternal struggle between the righteous who follow the Doctrine and Covenants and the Servants of Satan. These servants include evil popes, evil kings, evil gentiles, evil liberals, evil secular progressives, evil this and evil that.
The restoration of the church in the latter days is but one step in the great chain of covenants and struggles that have existed since the Garden of Eden.
Speaking of the Garden of Eden. It was revealed that the original location of the Garden of Eden was in Missouri. The founders of the church were instructed to establish a settlement in Missouri.
Southern Plantation owners hoped to establish Missouri as a slave state. So there was a lot of tension in the territory and open hostility between groups seeking dominance.
In one rather incendiary sermon, Sidney Rigdon (who was the president of the LDS Church at the time) declared a war of extermination against the other settlers in the state.
The evil gentiles (people who are not LDS are called gentiles) took this news to the Missouri Governor.Lilburn Boggs (1796-1860). On hearing that the Mormon settlers had declared an extermination war against other settlers, Governor Boggs had a George Zimmerman moment. He issued declaration that stated "... having made war upon the people of this State [...] the Mormons must be treated as enemies, and must be exterminated or driven from the State if necessary for the public peace..."
Can you believe this?
This was the single greatest act of persecution in the whole history of mankind! The evil Governor of Missouri ordered the extermination of an entire church!
So, just as Adam and Eve were driven from the Garden of Eden, the True Church was driven from Missouri (did I mention that Missouri was the original location of the Garden of Eden?). The new settlement was in Navou, Illinois.
The history of the covenant is one of eternal struggle between the righteous (those who have accepted the covenant) and the forces of Satan (those who have not).
God gave man free agency as a test to see if we will do as we are told or if we are evil servants of Satan.
Examples of the evils of man include evil apostates who built presses out Navou that printed grievances against Joseph Smith and the restored church. The heavenly father burned the presses.
Evil gentiles who believe that the freedom of the press extends to those who commit blasphemy were enraged at the burning of presses.
One day it was revealed by the Heavenly Father that the evil Governor of Missouri would be smited. On May 6, 1842 a shot gun fired through a window severely injuring former Governor Boggs (you know, the servant of Satan who issued the Extermination Order)..
Evil gentiles hold that the gun was aimed by Porter Rockwell and that the revelation that Governor Boggs was to be shot was an order to shoot the former Governor.
Anyway, the forces of Satan put together a bunch of trumped up charges against Joseph Smith and hauled him off to Carthage, Illinois. Joseph Smith was martyred after being arrest but before being put on trial.
Tension continued after the martyrdom of Joseph Smith. The keepers of the American Covenant were forced into exile.
The American Exodus was an event of Biblical promotions. In this event, the keepers of the American Covenant fled the United States into the Mexican Territories.
Brigham Young sought to establish the Empire of Deseret which was to include most of the land from Colorado to San Diego.
The United State purchased this territory from Mexico in the Treatises of Guadaloupe Hildago after the Mexican War. The US army marched into the Empire. Skillful diplomacy prevented a major war.
The keepers of the American Covenant slaughtered on wagon train of settlers at Mountain Meadows, but that was pretty much it for the violence.
The United States forced monogamy onto the restored church despite the fact that the Doctrines and Covenant clearly reveals the restoration of polygamy as a righteous and holy lifestyle and pruned the Empire of Deseret to a lowly state without a sea port.
Fortunately, for Native Americans and blacks, the American Covenant is a living covenant. Native Americans have become "whitesome and delightsome" after their contact with the renewed covenant. It was revealed in 1970s that Blacks can receive the priesthood.
Anyway, it is really exciting that Glenn Beck is bringing an infotainment event in Branson about the American Covenant.
Missouri was the original location of the Garden of Eden and the very first covenant between the Heavenly Father and the righteous.
Oh, I probably should have mentioned. I am one of those evil gentiles.
As an evil gentile living behind the Zion Curtain (a non-Mormon in Utah). I look at the idea that the Declaration of Independence and Constitution were revealed to usher in the rise of the LDS Church with a great deal of suspicion. If Joseph Smith made up the Book of Mormon, then the theory of free agency and the belief that the Doctrine and Covenants is the full restoration of the Church are negative and divisive developments.
Monday, July 15, 2013
Man is a natural being. The State and Corporations are artificial beings.
The economy exists only in the minds of human. Where there are no human minds, there is no economy.
The human mind is the source of the economy. As the source of the economy, individual minds should be the heart of the tax system.
The Fair Tax cuts people out of the taxation system. It replaces direct tax on people with a massive tax on retailers and service providers.
The Fair Tax buys support by giving people a prebate. The prebate is a new entitlement funded by a massive tax on business.
The Fair Tax creates a structure in which the wealth of the nation flows from big business to big government. People are shut in a gilded cage lined with entitlements, but not free.
Tax reform needs to place people at the center of the economic universe.
This can be come by replacing the withholding system with an account based collection system.
The withholding system was designed for a different age. It was designed for an age when accounting was done by hand in ledgers.
Today we have computer to maintain accounts.
I would not trust the Federal Government to create an accounting system. A better approach is as follows. The government would define a model for the accounting system that includes rigorous testing and auditing features. Private enterprise would then implement the design and host the accounts.
(This is how Object Oriented Design works).
Object Technology allows different systems to co-exist. We could start a reform by defining an object model that can be implemented as the current withholding interface or as a system of tax aware accounts.
The Treasury Department would define the object model along with testing, auditing, and certification procedures for the accounts.
Private businesses would design accounts. We would run the accounts through a rigorous testing protocol to assure that they calculate taxes correctly and that the tax is roughly equivalent to what people would pay in the withholding system.
The Object Tax can be rolled out in beta tests with a limited audience to prove the concept.
People are resistant to change. Once the system is in production, people would only change to the new system if they see a benefit. Since we have rigorously tested the new tax system to assure that it collects the same tax, the only benefit people would perceive is one of efficiency.
People would switch to the Tax Aware Accounts created by the Object Tax if they see a benefit, such as a reduction in compliance costs or greater ability to manage personal finance.
The Object Tax is not disruptive. The program simply creates an alternative interface for the existing income tax.
A Tax Aware Account works as follows: Workers get their whole paycheck (nothing withheld). They must pay a progressive tax when they withdraw money.
Hey, wait a second. This Object Tax magically transitioned our income tax into a consumption tax without the disruption of the FairTax. Go Figure?!
More importantly, this approach to tax reform places the individual mind at the center of the tax universe.
People will pay their taxes directly. Their accounts will maintain a complete and accurate accounting of their income, their taxes and other expenses giving the individual greater control over personal finances.
I say we scrap the FairTax, which cuts people out of the taxation equation, and work on a reform that re-establishes the individual as the heart of the economy.
Sunday, July 14, 2013
I need to repeat this point.
The reason the Framers of the Constitution denied the Federal Government direct taxation was because they wanted to constrain the Federal Government. They did not think an indirect tax based on census data was the best form of taxation.
Tired of convoluted tax schemes to fund governance with indirect taxation, people capitulated and passed the Sixteenth Amendment which states:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
There are many in the FairTax crowd who denounce the sixteenth amendment as Unconstitutional.
sought to deny direct taxation because they wanted to limit the Federal Government, not because they believe that indirect taxation is a better form of taxation.
They claim the FairTax restores the Constitution as it was revealed by the Heavenly Father.
But the problem with this position falls with the reasoning behind the original constraints on direct taxation.
The Founders denied the Federal Government powers of direct taxation to prevent growth of the Federal Government. That growth has already occurred. The cat is already out of the bag.
Today's challenge is to figure out the best way to reform the tax system. Switching from direct taxation back to indirect taxation because the Framers of the Constitution thought indirect taxation would limit growth of the central government.
This argument is like me wanting to go back to my third grade school uniform because I was happier as an elementary student than I am as an adult. The uniform just doesn't fit.
Many Conservatives argue that we should return to a system of taxation based on a census of the provinces is in the Bible.
It is true that a tax system based on a census of the provinces plays prominently in the Bible. In the Reign of Augustus Caesar (27BC - 14AD), the emperor ordered a general census for the purpose of Taxation. The census in Syria and Judea was administered by Quirinius who had ordered people to return to their place of birth to be counted.
To apply with the census, Joseph traveled with his pregnant wife to Bethlehem but was unable to find an inn. The result is that Jesus was born in a manger.
Tax compliance was as much a pain in year zero as it is in year 2013. The Nativity occurred as people complied with a tax system based upon a periodic census of the providences.
Conservatives are correct. The original system of taxing states based upon census data appears in the Bible.
Just because something appears in the Bible doesn't mean it is better.
In the Bible we learn that the state handled common criminals by crucifying them in a public square. Crucifying people as punishment is the single most important story in The Bible.
I don't think we should restore such barbarism. If the state started crucifying people, I would be in the street protesting ... even though crucifixion plays a central role in The Bible.
The fact that they sought to deny the Federal Government direct taxation indicates that they saw direct taxation as the strongest form of taxation.
A growing number of Conservatives are interested in The Covenant.
The Covenant holds that the Declaration of Independence, the US Revolution and the US Constitution were directed and revealed by the Heavenly Father to lay the conditions for the restoration of His Church in the Latter Days. This restoration was fulfilled by the revelation of the Book of Mormon, the Doctrine and the Covenants.
The church created by the Doctrine and Covenants uses a form of direct taxes called tithing. A tithe is a a direct personal tax. Tithing also appears in the Christian Bible.
I admit, I am out of sorts with the Conservative movement. I hold the opinion that the Sixteenth Amendment is Constitutional.
(BTW, I've had the conversation about the constitutionality of the fourteenth, fifteenth and sixteenth amendments. The conversations usually end with accusations that I am some sort of horned beast for believing that such filthy amendments are constitutional.)
If we accept that the battle to constrain the Federal Government by limiting it from direct taxation was lost, then we are faced with the question of finding the best way to collect tax. I contend the best way to collect taxes.
Saturday, July 13, 2013
All government spending must come from some sort of tax. When the government spends that money must be extracted from the people somehow.
The FairTax is selling the myth that if we replaced the Income Tax with a national sales tax that the United States would become a magnet for business and job creation.
There logic is as follows. They say the income tax creates an embedded 22% cost in American goods and services. Replacing the income tax with a national sales tax would remove this embedded expense.
But the tax is placed on wages. America would only attract if employers responded to the imposition of the FairTax by dropping wages.
If we dropped wages while adding a 29.87% to existing sales taxes, then American workers would see a dramatic drop in their standard of living.
The FairTax book starts with the assumption the assumption that workers will keep their entire wage with no taxes removed. The FairTax book then assumes that prices will drop by the amount of the embedded tax.
Theses are mutually exclusive ideas. Either worker keeps their tax money or the employer keeps the tax money by dropping wages. We would probably see a little bit of both.
A primary law of economics is that all government spending must show up in the economy as some sort of tax. No matter how one goes about collecting the taxes, the government spending will result in a tax burden on the economy.
A national sales tax does not allow us to avoid the burden on the economy created by wasteful government spending. The FairTax just shifts things around.
The FairTax creates the dynamic in which employers keep paying high wages so that their employees can pay high sales tax without seeing a drop in their standard of living, or employers will drop wages in which employees see a drop in their standard of living with the increase in the sales tax.
If wages stay high, the costs of the FairTax remain embedded in American goods or services. If wages drop, we will see the workers quality of life drop dramatically as they struggle to pay the new 29.87% sales tax added to the price of goods and services. The second scenario is problematic as it would cause a general drop in the US economy. The FairTax would simply turn the US into a low wage nation.
The tax burden on the American economy is set by government spending. Shifting the tax burden around just creates disruption along with winners and losers. The Fair Tax will either have no change in the cost of employment in the US or it will result in a drop of wages making the workers the big loser of the reform.
Friday, July 12, 2013
Infotainment works by presenting news as conflict. Infotainers who gain political power tend to engage in the politics of division.
Sadly, people tend to only see people on the other side of the issue as dividers.
President Obama worked as a Community Organizer. In the Alinsky-school of thought, a community organizer organizes one half of the community against the other. Organizing half a community against the other half creates deeper division.
Avid followers of Obama continue to see the president as a source of unity. When I look at our world, I see greater division.
I led in with Obama because I wished to ask conservatives to take a look at the infotaiiners who have been setting themselves up as policymakers.
Infotainers report news as entertainment. In the Man on the Moon and Covenant America, Glenn Beck presents the news of the day as a live circus show.
Personally, I don't mind infotainment. The heart of infotainment is that infotainers present news as conflict.
The infotainment industry is similar to the Alinsky style of community organizer. Infotainers use conflict and division to make information entertaining.
When such people move from the world of entertainment into the actual world of politics, things will go south.
Anyway, I am reading a book by a world class infotainer named Neal Boortz in which Boortz uses his well honed skills to push a bad idea called the Fair Tax.
The book is piled with disinformation and false assumption. Boortz uses the age old trick of dismissing criticism by attacking the motivations of his opponents.
BTW I am opposed to the Fair Tax because I see a bad law that will be disruptive and that will empower the ruling class to use an unevenly enforced law to attack opponents.
Boortz book made a little list of all the infotainers for the FairTax.
My heart sunk.
We appear to be devolving into a culture in which we let infotainers set political policy.
Policy set by infotainers is apt to be as bad and divisive as policy set by community organizers. Both paths to power rely on leaders who create division in their pursuit of power.
The path followed by conservative infotainers will not lead to a restored America, it will lead to even greater division than we have today.
Please America, just because an infotainer is able to build a large audience does not mean the infotainer is fit to set law. The reliance of the right on infotainment might well be the undoing of the freedom movement.
Wednesday, July 10, 2013
A few decades ago, when I was transitioning from C to C++, I asked myself a strange question. "Would it be possible to use Object Oriented Design to improve the tax system?"
I believe that, if we used solid system design principles, we could substantially improve the tax system.
The complexity of our tax code lies in the withholding system. I came up with a way to transition from tax withholdings to a system of Tax Aware Accounts.
A Tax Aware Account is simply a smart account. You put money in the account. You can't get money out without paying a tax.
These things already exist. An IRA is a smart account. You put tax free money it. You have to pay a tax to get the money out.
The cool thing about Tax Aware Accounts is that they are the ideal consumption tax. You put tax free money into a savings account. You pay a tax when you withdraw money for consumption.
Since the tax money flows from the consumer, it is a better form of consumption tax than a sales tax.
Sales Tax money flows directly from a business. So Sales Tax behaves negatively as a business tax and only indirectly encourages savings.
There is large and well funded group pushing the Fair Tax. The Fair Tax seeks to replace the income tax by adding a 30% sales tax on top of existing state sales taxes. The Fair Tax creates a new entitlement called a prebate.
This change is disruptive. Since it is a tax on business, it is like to have a disastrous effect.
The Object Tax is perfect for showcasing the faults of the Fair Tax. The program shows that a true consumption tax must flow from the consumer and be assessed at the moment a consumer decides to consume. It highlights the difference between a direct tax on individuals and a business tax.
Above all, the program shows how one can go about tax reform without major disruption.
The idea is worth investigating. The program might help save us from a disastrous FairTax.
It is actually a good approach to tax reform.
The idea behind the Object Tax is to take proven system design techniques from Silicon Valley and apply the techniques to the Tax System. The goal of the design is to create a new interface for the existing tax code that is easier to implement than the withholding system.
Using solid system design techniques to improve a broken system is not an outlandish idea.
Here is my problem.
Right now, the idea only exists in my head.
I live in Utah. Utah does not have a tolerant intellectual climate. Expressing ideas in public leads to immediate and deep ostracism.
I went to a meeting by FreedomWorks on Saturday. If that event has people wanting to talk about free market economics. I would love to host presentations on this idea.
For five years I worked on a presentation called "The Medical Savings and Loan." I was not able to find anyone within 700 miles of Salt Lake interested in free market health care reform.
I think a presentation that compares the Fair Tax and Object Tax would be really fun.
I made an offer to drive to Denver to debate the Object Tax v. the Fair Tax the week before or after WCS 2013. That offer is still up. Here is my contact form.
The difficulty with the Fair Tax arises when one tries to impose a 29.87% national tax on top of existing sales tax. (NOTE: the FairTax is 23% of the final price. (NOTE: If an item cost $77 the tax would be $23 bringing the total price to $100. It is really 29.87% additional tax.)
The Tax only applies to the end purchase of new goods and services by consumers. This creates an extremely confusing business climate in which B2C purchases get whacked with a 30% tax and B2B purchases are tax free. The rich and powerful will be able to avoid their tax because they live their lives so that most of their expenses appear as B2B expenses.
I really dislike how Boortz dismisses criticism of the tax simply by attacking the motives of critics.
My main objection with the Fair Tax is that the proposal replaces a direct tax on individuals with a tax placed on businesses. Surprisingly, on page 32 of the book Boortz says:
"There is only one entity in this country that actually pays taxes, and that entity is the individual. Businesses and corporations merely collect the taxes from individuals and poss them on to the government."
The Fair Tax is a business tax. It turns our retailers and B2C service providers into tax collectors. The money from the tax flows directly from the business to the government. Businesses pass the tax onto the consumer indirectly through increased prices.
It is better to have the money flowing directly from the consumer to the government so that people can see the full impact of taxes on their wallet. Later on the same page, Boortz repeats the observation that businesses pass on taxes:
"Businesses and corporations don't pay taxes, they merely collect taxes and pass them on."
To make matters worse, the FairTax uses money collected directly from business to fund a new entitlement called a prebate. The prebate is money that flows directly from the government to the voter. The FairTax creates a negative tax structure in a direct tax is placed on business which they indirectly pass on to consumers. This tax on business funds a prebate that flows directly from the government to the voter.
The Fair Tax replaces a direct tax with an indirect tax. It creates a new entitlement funded by coercive taxes on business. My criticism is that the Fair Tax accomplishes the exact opposite of what the Fair Tax crowd wants the tax to do.
NOTE, the Object Tax solves this problem. This proposal uses Object Design techniques from the software world to transition the income tax into a consumption tax.
My main criticisms of the Fair Tax are that the Fair Tax replaces a direct tax on individuals with a direct tax on business. By changing the point of taxation, they will accomplish the opposite of what they desire. I dislike the prebate entitlement, and the literature on the tax ignores the difficulties of imposing a national sales tax.
But I will end this critique by pointing out a math error that the author makes repeeatedly.
The book correctly points out that the income tax becomes embedded in the price of goods. If you traced a product through the supply chain, you would find that about 22% of the money went to pay income tax.
Boortz repeatedly claims that, with the removal of the income tax, prices will fall 22%. He also claims that people will keep the sum total of their income. He is actually counting the same money twice. Income tax is embedded in income. The removal of the income tax would only show up as a price drop if wages fell in reaction to the removal of the income tax. If people keep their full wages, then there is no price drop.
By counting the money twice, Boortz makes the Fair Tax appear rosier than it actually is.
I hate when pundits dismiss critics by attacking their motives. I dislike when politicians use stunts like counting money twice to make their proposal sound more intriguing.
The FairTax has compelling sound bites. But the devil is in the detail. This disruptive tax is likely to be as bad as the income tax. By replacing a direct tax with an indirect tax and by creating a new entitlement, the Fair Tax just might make things substantially worse.
As one of the greatest and wisest tax theorists of all time (Neal Boortz once said): "Businesses and corporations don't pay taxes, they merely collect taxes and pass them on."
Boortz then did the opposite of what he said. So maybe he is actually one of the greatest fools of all time.
Tuesday, July 09, 2013
The goal of the Object Tax is to create a new interface for the income tax. The income tax is a personal tax. Individual people are responsible for paying their taxes. This is true for the current income tax.
Currently, money is withheld by your employer and paid to the government. You receive a W2 Form and file an annual tax return.
If the HR department messes up their side of the process, employees can be in a world of hurt. Since the money flows from the employer, the IRS burdens employers with all sorts of compliance issues.
The goal of the Object Tax is to create an alternative interface for the income tax that is hosted by a third party financial institution (the financial institution could be an accountant).
The third parties would offer products which are registered, tested, certified and monitored by the Treasury Department (the IRS). If the third parties fail to execute the taxes correctly, they will lose their certification. Their contracts might include fines and even jail time for fraud.
I need to emphasize that people have the choice of sticking with the current payroll withholding system. If people opt to use a Tax Aware Account hosting by a third party the tax flow would work as follows:
Employers would send the employee's entire paycheck to a certified Tax Aware Account. When the employee withdraws money from the account, the account would charge a progressive tax. The tax money would flow into an account to be collected by the IRS. the employee receives the rest.
Let's say you withdrew $1000 and your tax rate was 20%. The Tax Aware Account would transfer $200 into an account in the Treasury Department's name and you would receive $800.
The financial firm that hosts the Tax Aware Account is responsible for seeing that the $200 actually goes to the IRS. If your accountant embezzles the money they claimed to pay the IRS, you would be in a world of hurt in the same way that you would be in a world of hurt if your employer embezzled the withholdings.
Essentially the Object Tax is transferring the compliance issues related to the income tax from employers to the financial firms that offer Tax Aware Accounts. The groups that host the accounts are offering to handle all of the compliance issues related to the income tax as a product.
This is already happening. A growing number of firms have taken to outsourcing their payroll. Many employers hire a third party provider to handle their payroll and all the compliance issues related to payroll.
The fundamental difference between the Object Tax and payroll services is that the payroll services work for the employer. With the Object Tax, the third parties work for the employees.
Please reread the above sentence. This is a truly fundamental change.
I will summarize the post. The income tax system is a personal tax. Individuals are responsible for their tax.
The withholding system creates a structure in which tax dollars flow from employers to the IRS. The IRS burdens employers with compliance issues to assure the money gets paid.
The goal of the Object Tax is to create an alternative to the withholding system.
Certified third party providers can host Tax Aware Accounts. These accounts will be tested, certified and monitored by the IRS.
People have the choice of continuing with current payroll withholding procedures. If people choose to use the new service, their employers would pay the workers' entire salary into a Tax Aware Account. The company hosting the account would handle all of the tax related compliance issues.
The fundamental change of this reform is that tax related compliance issues are handled by firms which are directly responsible to the individual taxpayer and not the taxpayer's employer.
In this regards I really dislike political campaigns that begin with slogans like "Abolish The IRS."
If the driving intent of a reform is simply to harm an enemy, then the reform is as bad the IRS Scandals in which government employees misused the power of the IRS to target political enemies.
The idea that one will create a tax reform that eliminates the tax collector is laughable.
No matter how one goes about tax reform, there will be an agency manned with people who collect the taxes.
The Fair Tax uses the slogan "Abolish the IRS." According to Wikipedia [drawn 7/9/13] the Fair Tax creates two new tax agencies called "Excise Tax Bureau" and a "Sales Tax Bureau." The Fair Tax will also require a massive build of State level taxing authorities.
Rand Paul is advertising a site called "Abolish the IRS" by Citizens United. The site is a bit like ObamaCare. It has no clear details on how it will accomplish this goal.
Hmm, the site has a huge donate button and no details. I am disappointed that Rand Paul endorsed this site.
Anyway, the slogan "Abolish the IRS" has me sitting up and thinking about the effects that the Object Tax would have on the IRS.
The goal of the Object Tax is to use Object Design techniques developed in the computer industry to create a new interface for executing the current tax code.
The program does not seek radical change. The program seeks to use proven design technology to make the current system better.
In the current tax interface, employers withhold taxes. They issue a W2 form summing up a year's salary. Employees file a tax return with is due by April 15th.
The IRS needs to audit both the tax withholdings and the tax returns.
The Object Tax creates an alternative interface for the income tax which relies on a program called a Tax Aware Account hosted by a financial institution (the institution could be a CPA firm, a bank, credit union, or independent ASP.)
The Object Tax is not disruptive. People would have the choice of continuing with the current withholding system or using a Tax Aware Account provided by a third party.
The Tax Aware Account eliminates payroll withholdings. People who choose to use a Tax Aware Account would receive their entire paycheck in their account. They would pay their income tax (at a progressive rate) when they withdraw the money.
Eliminating Payroll Withholdings would eliminate the need for businesses to send checks to the IRS. Businesses would simply have to prove that they deposited funds into Tax Aware Accounts.
If designed well, people would settle their tax bill as they interface with the account. This eliminates the need to file an annual return.
Since the accounts are doing all of the work, the primary job of the tax authority (The IRS) is to make sure the programs that execute the tax code are working correctly.
The taxing authority with the Object Tax would spend most of its time working with the financial service providers that host the Tax Aware Accounts.
People with tax questions will interface primarily with the customer service department of the financial institution that hosts their account.
The government will need to audit accounts. Since the Tax Aware Accounts do all the work, the government audits will largely be a matter of making sure people push their financial transactions through a Tax Aware Account (and not under the table).
When all is said and done, the Object Tax is likely to need a less intrusive tax authority than the Fair Tax, the Flat Tax or the strange tax reform proposed by Citizens United.
But I refuse to make any stupid claim about abolishing the IRS.
Personally, I wish everyone at the IRS well.
Because the Object Tax is not disruptive and allows people to switch to the new system as they desire, the program would allow an internal transition in the IRS without massive disruption.
Wikipedia says that there's over a hundred thousand people working at the IRS. That sounds like a ridiculously large number of people to work on tax collection. The Object Tax is likely to streamline the process and reduce the need for that large of an IRS. The gradual implementation of the tax would allow the staff reduction to take place through attrition and not blood letting.
I refuse to be led by hate. The conservative pundits who venomously attack the IRS with plots of abolishing the IRS turn me off as much as the IRS agents who target Conservatives.
Sunday, July 07, 2013
If the freedom movement gets pulled into promoting radical tax reform in the 2014 and 2016 election, the shrill debate will push people away from the movement.
There is no such thing as a good form of taxation. All taxation creates distortions. All taxation has winners and losers.
Tax reform is a losing issue for the freedom movement because it associates all of the negatives of taxation with the freedom movement and away from the progressive movement which is the cause of the reckless spending in DC.
That said. I think it would be worth the effort for a group of people to explore the approach I am taking with the Object Tax.
The Object Tax is named after Object Oriented Programming. Object Technology is used in systems from the internet to smart phones and manufacturing.
The goal of The Object Tax is to Object Design Techniques to create a new interface for the existing tax code that can implemented by third party financial institutions.
Currently, employers withhold income from paychecks. Workers are then required to file an annual tax return.
The Object Tax seeks to create Tax Aware Accounts as an alternative to the withholding system.
Employees who opt to use a Tax Aware Account will get their entire paycheck deposited into their account. They would pay taxes when they withdraw money for spending.
The financial institutions offering Tax Aware Accounts would extend the tax processing function with budgeting and financial planning software.
The Object Tax transforms the existing income tax into a progressive consumption tax.
Other than that, the program is not radical. It does not seek to force change on anyone. It simply seeks to create an alternative.
The reason that this idea is worth pursuing is that it develops the theme that the freedom movement is not about forcing change, it is about creating alternatives.
While the Flat Tax and Fair Tax push people from the freedom movement, the Object Tax invites the problem solvers of the world into the movement.
The Object Tax works as follows. It creates an abstract model of the current tax code that can be implemented as the current income tax. The program then turns to the problem solvers of the world and asks: Can you create a better way to collect these taxes?
The group that interests me the most is the massive open source community. The Object Tax looks towards the Open Source Community and asks: "Can you come up with a better program than the IRS?"
The Object Tax is not seeking radical change through tax reform. It simply seeks to create a better interface for the existing income tax system.
Contrary to what's been said of this proposal. The proposal does not start with an assumption that I am superior to others. The Object Tax starts by asking if the techniques that have been used successfully by Silicon Valley to create a smarter phone could be used to make a better interface for collecting taxes?
The tax structure is still written by Congress. The reform simply seeks help from the computer industry to come up with a better collection system.
Although tax reform itself is poisonous, I believe that a discussion about alternative interfaces for the existing tax code would create a conversation that draws people into the freedom movement.
When the freedom movement talks about creating alternatives, it draws people into the movement. When the movement seeks radical change by imposing a new tax system, it pushes people away.
If anyone is interested in pursuing this proposal, please contact me.
[ADDED 7/7: IMHO, Tax Preparers, Accountants and other Tax Professionals work daily with taxes. IMHO, the tax reform discussion should start with this group. In proper interface design, one starts with the people with intimate knowledge of the current system. The Object Tax reform effort would start by gathering input from professionals in the tax industry. The reform starts with the question: how do we make what you are doing easier? In contrast, the Fair Tax and Flat Tax start with political positions that they then force on the tax professional community]
Friday, July 05, 2013
I developed this idea a few decades ago when I was studying Object Oriented Programming. The idea started with a simple thought experiment that asked: Could we use Object Design to transition the income tax to a consumption tax.
The model creates a tax code that can be implement through the current system of payroll withholdings or through a system of Tax Aware Accounts. The accounts would be implemented by accountants or financial insitutions.
The goal of the program is to create a new interface for collecting taxes.
I will use the term "Tax Profile" for the data accumulated by the IRS on each taxpayer.
Taxpayers would have the option of continuing with payroll withholdings or moving to a Tax Aware Account. This minimizes disruption.
A Tax Aware Account works as follows. You have money deposited into an account. You pay taxes to withdraw money from the account. When you withdraw money from a tax aware account, the account will query your profile for your progressive tax rate. You then pay taxes according to that rate.
With this structure, you pay taxes when you decide to transfer money from a Tax Aware Savings Account for spending. It effectively combines the best of the progressive income tax with the best of a consumption tax.
The Tax Aware Accounts would be developed by private Application Service Providers. The ASPs will most likely be financial institutions. The groups that develop the programs will be able to improve the efficiency of collecting taxes.
The program does not seek to impose radical change in society. The primary goal is to create a clean interface for the existing tax system. The program opens a conversation about taxes and will make room for some reforms. For example, the current progressive tax rate is based on yearly income. I would like to to take into account both income and net worth; so that Warren Buffet would pay a higher tax rate than his secretary.
I would like to replace the capital gains tax as follows: People could hold stock in a Tax Aware Account. They could buy and sell securities in that account without being taxed. They would pay a tax at a progressive rate when they withdraw money for spending. This way people can make investing decisions without the distorting influence of taxes ... but are still taxed at the high progressive tax rate when they choose to consume.
The Object Tax does not seek to create radical change through taxation. The reform simply seeks to create a new interface for the current tax.
The program creates an abstract object model of the current income tax that can continue to be implemented through payroll withholdings. It invites third parties to develop new and better interfaces for paying taxes.
The programs created by these third parties are likely to included budgeting features and simulations that help consumers understand the full impact of their spending choices.
I like the idea of collecting taxes in a budgeting tool when people transfer money from savings to spending. Such programs would help create a financially astute society that is likely to prosper.
I should mention, I came up with this idea way back when people switched from C to C++.
The reason I am pushing the "Object Tax" at the moment is because I am scared that people might fall for the FairTax.
The FairTax is based on an academic argument that it is better to tax consumption than production.
The academic argument holds that if we tax consumption, people would put off spending and save more. A naive interpretation of this principle says it is better to tax at the point of sale than on income.
I contend that the difference between a consumption tax and production tax is determined by the flow of money and not the point of taxation.
The FairTax replaces a tax that currently flows through consumers and places it on business. Because the Fair Tax changes the flow of the money it will behave as a business tax.
The Fair Tax is a direct tax placed on sales. It is likely to impede sales which simply stops economic activity.
The argument for consumption is not that it stops sales, but that a consumption tax increases savings (which increases sales in the long run).
The Object Tax kicks in when a person transfers from savings to spending. This money from the tax flows from the consumer to the government. Because the tax flows from accounts held by the consumer, consumers will automatically receive a full accounting of the taxes they pay.
The Object Tax is a direct tax on removing money from savings. Any effect it has on retailers is indirect.
The Fair Tax is a direct tax on retailers. Any effect the tax has on savings is indirect.
The flow of money and not the point of taxation determines the nature of a tax. The Fair Tax is a monstrous new business tax. The tax replaces the IRS with two new government agencies called The Excise Tax Bureau and The Sales Tax Bureau. Because the Fair Tax is a direct tax on business, the new agencies will be able to directly target businesses and groups they do not like.
The Object Tax creates a new interface hosted by third party providers. These providers want to protect their customers and will help act as a shield to tax collector excess.
Now, America does not have a tax problem. It has a bloated government problem.
Creating a new tax regime will not solve the problem of government bloat. But tax reform is in the air.
The Object Tax does not seek radical change through tax reform. It simply looks to creating a new interface for collecting taxes that gives people greater control of their finances.
Creating a new generation of financial software that gives people greater control over their finances could lead to improvement. Although the Object Tax has a funny sounding name drawn from the computer industry, I believe that is is a better and less disruptive approach to tax reform.
Thursday, July 04, 2013
In this age governments, corporations and political entities have huge piles of data. These groups wish to use their information to advance of their various causes.
Information is power, and people should be extremely worried about the misuse of information in this age.
Unfortunately, our culture has not had a good substantive debate about the role that information should play in our society.
In the current superficial debate the media frames concerns about misused information as "privacy rights." I find this frame misleading.
Political players use the call of privacy rights in attempts to regulate the flow of information. Sadly, the political players who appoint themselves are protectors of privacy rights often do little more than throw up blocks for competitors while they continue to use the information for their political and financial ends.
A truly substantive debate about information in our society would start by looking at the information (and not a claim to a fictitious right). We should start by looking at the ownership and flow of information.
For example, a fundamental question is if the flow of information is highly centralized or if it is well distributed.
This issue of centralized control of information is far more important the vague and contentious issue of "privacy rights."
Centralized systems have single points of failure. In general people are safer when the information flows through highly decentralized systems.
The frame of "privacy rights" creates a false illusion. Highly centralized systems tend to have more lawyers than distributed networks, so we think they do a better job protecting "privacy rights." In reality, people are safer if they own the data and the data is held closer to home in a distributed network.
The key to creating a robust distributed network that empowers the people is the ownership of the data. Our current system treats our financial information as proprietary data owned by the government and financial firms.
If we saw people as the primary author of their lives and recognized that the people are the primary owners of their personal data, then we could create a system in which the data is held closer to home in a distributed network.
The flow of information is the common theme in both my work in health care and tax reform.
To explain my ideas, I need to jump in real quickly with one absolutely fundamental observation. The observation is that information follows the flow of money. This happens because money itself it nothing more than a little blip of information.
If you look at your checking account and it says you have $84. This is just a blip of information. When you use money to pay your phone bill, we see a flow of information about your spending.
Since money is information, talking about the flow of money is the same as talking about the flow of information. The flow of information has a real world impact.
In health care, money is held in a pool. When you receive care, money flows from the pool to the care provider. The information about your care flows from the care provider back to the pool. This system cuts people out of the flow of information about their health. Although we are spending record amounts of money on health care, the fact that we just cut people out of their care means we become less healthy.
In the tax system, money flows from your employer to the government in the form of payroll withholdings.
The flow of the money and information is going from large centralized groups to other large centralized groups. Individuals are sidelined in this process. This twisted system decreases the status of the people.
The widespread abuse of information in our society shows that this restricted flow from centralized bureaucracy to centralized bureaucracy is not protecting peoples. It impoverishes people. The restricted flow of information turns Americans into marks to be abused by the rogues of the world.
From a data perspective, I believe that the key to turning America around involves a restructuring of the flow of information so that people have stronger direct control over their information.
I actually start with the premise that, in a truly free society, one would see information flowing directly from people in a highly decentralized network and that we should measure the success or failure of reform efforts in how they affect they data flow.
The two reforms I put on the table are about creating such a data flow.
The Medical Savings and Loan creates a financial system in which health resources flow from accounts owned by individual people. Since the money (a piece of information) flows from individuals to providers, the health records will flow back to the information and improve health.
The Object Tax is a non-disruptive reform that creates a new interface for the income tax system. The reform creates an object model of the income tax that can be implement through the current withholding system or through Tax Aware Accounts.
A Tax Aware Account works as follows: People get their entire paycheck deposited in the Tax Aware Account. They pay taxes to withdraw the money.
This reform is non-disruptive. Employers can continue with withholdings. Only people who want to move to the new system will move to the new system.
The new system creates an information flow in which the money flows from individuals to the government. This new interface gives people greater power when facing the government.
In contrast, the Fair Tax does the opposite. The Fair Tax pulls individuals out of the flow of information altogether. Taxes are collected by retailers at the point of sale. Workers get a new entitlement called a "prebate" to compensate for this change. Pulling people from the flow of data dehumanizes the entire system.
I will end this post with an advertisement that makes a point.
The big box below is an advertisement for LifeLock. This program taps into the various consumer databases to see if someone has stolen your identity. The program introduces the public to a few of the databases that process information about us.
There is all of this information churning through centralized networks that sit outside of the reach of us mere mortal humans. This information can seriously affect our lives.
This information is highly vulnerable and subject to abuse as is seen by the growing crime of identity theft.
We are creating a nightmare in which these highly centralized are making more and more of the decisions that affect our lives. These databases are vulnerable and apt to abuse.
We are in a thing called "The Information Age." The Freedom Movement needs to include discussions about information that go beyond the frame of privacy rights. We need to discuss the distribution and flow of information.
For example we find that the Fair Tax pulls them out of the information flow. Pulling people out of the information flow appears to protect privacy, but it has the long term effect of disenfranchising people. The very fact that we have to buy a program to access the information that controls our fate in this economy tells me something is dreadfully wrong.
NOTE: I am required the FCC to point out that I would benefit from any sales made through the link below. The basic subscription is $99. It gives you access to databases that collect information on consumers. The goal of the program is to find people who are trying to steal your identity. Because information that affects our personal lives flows through centralized systems outside our control, we must buy programs to protect ourselves.
Tuesday, July 02, 2013
I am the worst salesman EVER.
For example, I spent the last five years and spent over $10,000 with the goal of finding a half dozen people willing to spend an afternoon discussing health care. I could not find anyone with 700 miles of Salt Lake City willing to attend a meeting. I drove to Reno, Las Vegas, Phoenix and Denver ... just to be put out at every turn.
My inability to sell people on attending a meeting is but one example of my inability to make sales. I've been unable to sell other things. My neighbor recorded an album with a dozen nice tunes. I offered to help him sell the album. In three years of work, I was was able to sell one CD for one penny (free shipping) on eBay. He ran screaming from Utah and is doing okay in San Diego. (The iTunes Button loads recent albums).
This a fundamental economic principle: When a business fails to make a sale, the economic activity that would follow the sale never exists. This is especially true with innovative new technologies.
When sales don't happen, economic activity ceases.
The FairTax adds a 23% national sales tax onto existing state sales tax. The sales tax will be around 30% in many states.
This sales tax is high enough that it will stop a large number of sales. When selling stops, the economic activity supported by the selling disappears. The suppressing force of a tax on sales can easily offset any savings.
A huge direct tax on sales is an extremely dangerous experiment.
There is an economic theory that holds taxing consumption is better than taxing production. The theory is that a consumption tax would increase savings. Increased savings would lead to more sustainable consumption down the line.
Supporters of the FairTax cite this belief. They claim that an income tax is a production tax and sales tax a consumption tax.
They are wrong in their assertions. The difference between a consumption and production tax is determined by the flow of money and not by the event that triggers the tax.
Sales tax revenue flows from the business. Therefore it behaves as a tax on business. A 30% tax on sales will adversely affect the ability of businesses to close sales. This will stop economic activity.
A true consumption tax needs to flow from the consumer.
It is possible to create a tax that flows from the consumer. I created a fun new tax method that I called the Object Tax.
The Object Tax is named for Object Oriented Programming techniques used to create things like the Internet, Smart Phones, modern operating systems and certain advanced manufacturing techniques.
The Object Tax creates a new interface for collecting the income tax called a Tax Aware Account.
To minimize disruption, the Object Tax modifies the existing tax code so that it can be implemented either as a system of payroll withholdings or through Tax Aware Accounts. The Tax Aware Accounts will be created by financial institutions.
The accounts work as follows: People would have their entire paycheck deposited into a Tax Aware Account. They will pay taxes at a progressive tax rate when they withdraw money for spending. People will pay taxes when they do their budget.
With the Object Tax, people pay taxes when they prepare to spend. The tax money flows directly from the consumer to the government. Object Design allows us to create a true consumption tax with minimal disruption.
Because people paid their taxes in the budgeting process, taxes will not interfere directly with sales.
This difference is huge!
The Object Tax directly affects a person's decision to take money from savings for spending.
The Fair Tax hits at the point of sale and can disrupt the sale and destroy all the economic activity supported by the sale.
The effect of a tax is determined by the flow of the money. With a sales tax, money flows from the business. It is a business tax that affects the ability of a company to close a sale. The effect such a tax has on consumption is indirect. The effect on business is direct.
The Object Tax kicks in when people transfer money from savings to consumption. The effects on savings are direct. The effects on sales are indirect.
For a consumption tax to have the positive benefit of increasing savings, the tax must be collected at the moment a consumer decides to remove money from savings.
My last two posts were trying to sell people on having a meeting about tax reform.
Sadly, I am the worst salesperson EVER. A meeting on tax reform that discusses the difference between the Object Tax and Fair Tax would be really fun. For three years I tried to help my neighbor sell his CDs. I sold one for one penny. Things got better for Ryan when he got out of Utah.
NOTE, Ryan went to LSU. In his senior year, he got caught up in a whirlwind named Katrina that dampened his New Orleans experience. Ryan completed his degree at the U and moved to San Diego.