Wednesday, July 10, 2013

The Quandary

A have a problem of my own making.

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.

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