Sunday, July 07, 2013

Tax Reform is Poison

Personally, I believe that tax reform is a poisonous issue.

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]


Chris said...

Tax reform is needed badly. The problem is you are openning up a can of worms maybe.

Owner Cel Financial Services
IRS Registered Tax Return Preparer
Registered bonded California CTEC Tax Preparer
Please visit my website for all your Income Tax Fillmore needs.

y-intercept said...

All tax reform is a can of worms.

Quite frankly, the primary reason I am pursuing this line of thought is that I truly fear the Fair Tax. A National Sales Tax leads immediately to a world in which the state classifies all businesses and is able to attack those businesses the ruling authorities do not like.

A big reason for this object tax is to create a less destructive different dialog.

The Object Tax simply seeks to create a better interface for collecting taxes.

Professional Taxpayers have more experience with the tax code and interfacing with taxes.

When designing an interface, one should start with the people who have the most direct knowledge.

This path to reform opens a door to professional taxpayers. The program starts by asking people who work in the tax field: "What can be done make this job of paying taxes easier?"