Open Meeting

America does not have a tax problem. We have a bloated government problem.

A series of scandals has pushed tax collection into the limelight.
 

Anger over tax collection draws people into the freedom movement. Tax reform is likely to be a major issue in 2014 and possibly 2016.

Unfortunately, a loud group is using the anger about the IRS to push a disruptive change called The Fair Tax.

The Fair Tax replaces the current income tax with a 23% sales tax on new goods and services. The program includes a massive new government entitlement called a "prebate." The vocal supporters use a number of questionable claims like the Fair Tax is somehow supposed to end the tax collector. What it does is replace the IRS with a different agency.

The Fair Tax uses the same basic structure as ObamaCare. It is a Federal Program mandated through the states. The states would be charged with collecting Federal Tax.

Even it the bill was not disruptive, I would consider it a bad law.

The problem is that the Fair Tax is currently poised to force their issue as the primary Tea Party Issue.

Passing the Fair Tax would require every ounce of political capital of the Tea Party and GOP. If it passes, then the Fair Tax becomes the definitive piece of legislation of the Tea Party. If it does not, the push for the Fair Tax is likely to split and destroy the freedom movement for a generation.

Wishing to avoid the Fair Tax, I challenged to debate the FairTax. To make the debate interesting, I took a thought experiment I performed a few decades ago as a counter proposal.

My counter proposal is "The Object Tax." The idea is that we could use Object Design Methods to transition from an "income tax" to a consumption tax. Object Design is used to create interfaces. It is used the Internet, Smartphones, etc..

The design starts by creating an abstract model of the current program. We then investigate news ways to implement the old design. Essentially, we would start with the existing tax structure and find different ways to implement it.

Quite frankly, it is an interesting way to explore a topic.

I doubt that supporters of the Fair Tax would take up the debate challenge. However, a Tea Party group wanting to discuss tax reform might be interested in a presentation that explores tax reform. I would be happy to give a presentation on the Object Tax followed by criticism of the Fair Tax to any group interested in a fun conversation.

The ideal meeting would combine both a presentation on free market health care and tax as the two issues are linked. If you would like to attend a meeting, please contact me.

A Challenge to Fair Tax Supporters

I've been reading web sites promoting the Fair Tax.

Most the sites do little except repeat empty talking points. Most of the talking points are absurd.

The Fair Tax will not eliminate the need for a tax collector and audits. There will still be a Treasury Department that collects the taxes and audits businesses.

The Fair Tax is not a true consumption tax. It is a tax on businesses. The flow of the money determines the nature of the tax. Money in the FairTax flows from business to the government. Money in a consumption tax flows from consumers to the government.

The Fair Tax places a massive 23% tax on the sale of new consumer goods and services. This sounds intriguing. The idea falls about when one attempts to apply it to the extremely complex supply chains in the current work world.

The FairTax attempts to place a uniform sales tax on all goods and services. If you look at state and local sales taxes, you will find that they are highly differentiated. A hotel pays a different tax rate than a department store. Many places tax food at a lower rate than clothes. Gas and utilities have a truly strange mix of taxes embedded in the price. In some places, Papa Murphy's Pizza iis taxed at a different rate than Domino's.

It is common for charities and government agencies to go untaxed.

When we have a sales tax in place, business associations will hit Capitol Hill with a vengeance demanding special treatment for their tax concerns. The FairTax will quickly devolve into a lobbyist's dream and a citizen's nightmare.

State Sales Tax is already highly differentiated. The idea that a National Sales Tax will remain pure is absurd.

The Fair Tax does not decrease political targeting. It actually makes it more problematic.

With the FairTax, all businesses will need to apply for tax IDs. All businesses will be subject to audit.

The Tax Scandals of 2013 involved the IRS delaying the processing of tax status applications for Tea Party groups. The Fair Tax gives the IRS (or whatever the new entity is called) the mandate to process tax applications and audits on a business by business basis.

You can be certain that the IRS will take the nature of the business into account when processing the tax filings and audits.

The Fair Tax does not decrease class warfare. It actually makes it worse.

The FairTax is a massive tax placed on business owners. The Fair Tax takes money from business owners and gives it to voters (who no longer directly pay taxes) in the form of a prebate.

A socioeconomic system in which the business owners pay all the taxes and the people receive the benefits will have even worse class related clashes than we have today.

A truly fair tax would have everyone processed through the same tax structure.

We can move toward such a reform without the disruption of the FairTax.

I engaged in a fun experiment in which I applied the general principles of computer system design to tax reform. I called the reform The Object Tax after Object Oriented Programming. OOPs is a programming method used in modern operating systems. It's used in the design of web browsers, smart phones, and the Internet itself.

I jammed out a short blog post called: "The Object Tax in a Nutshell."

I put forward to the Fair Tax crowd an open challenge to debate the FairTax. In the debate we will compare it to incremental reform made in The Object Tax.

The Western Conservative Summit will be in Denver on July 26th. I can't afford a ticket to WCS and I wouldn't expect them to host the debate anyway. The debate could take place on the July 24th or July 25th.

The gauntlet is down. Are any of the supporters of the Fair Tax brave enough to put their precious FairTax?

PS: I've never engaged in public debates, nor have I ever engaged in public speaking. Even though I have never spoken in front of an audience, I could destroy the fair tax in a debate because the Fair Tax is a phenomenally bad and disruptive idea.

You can take up my challenge on my contact form.

Design Matters

Design matters.

In Silicon Valley, engineers have learned that the way to create quality design is to start by creating a quality design process.

Tax Reform could be a winning issue for the Tea Party Movement. Unfortunately, the tax reform proposals on the plate are poorly designed and excessively contentious. Notably the Fair Tax seeks to create radical change through economic disruption.

Creating a quality design starts with a quality design process. If a Tea Party group were to discuss tax reform from a design perspective, they would draw people into the movement.

I believe that the best approach to tax reform is to start with a proven design methodology.

I named "The Object Tax" after a design methodology used in Object Oriented Programming. Object Oriented Design is a proven design technique. Elements of Object Design exist in all software projects. The ideas were used in the development of your web browser, smart phones, etc..

The Object Tax starts with the question: "Can we use the design techniques from Silicon Valley to improve our tax system?"

Please note. The Object Tax does not seek radical change. The goal is simply to create a better interface for the collection of taxes.

The best way to develop a quality interface is to separate the logic of taxation from the interface.

In the design process we create an object model of the existing income tax system. This is a critical design element of the tax. The Object Tax can be implemented as the current income tax. This eliminates disruptive change.

With the object model in hand, we can invite third party financial firms to step in and create new interfaces for the tax system. In the essay "The Object Tax in a Nutshell," I present my vision of how we could apply better design to the tax code.

One way to implement the code is through a system of "Tax Aware Accounts." A Tax Aware Account works as follows. Employees would have their entire paycheck deposited into a Tax Aware Account. People will pay taxes (at a progressive rate) when they withdraw money from their tax aware account.

The Tax Aware Account eliminates payroll withholdings. It eliminates W2 Forms and 1099 Forms. If done correctly, the program can even eliminate the need to file tax returns.

Please note, the system can be implemented as the current Income Tax or as Tax Aware Accounts. Only people who want to use the new interface will use the new interface.

The Object Tax allows third parties to develop new interfaces for the tax system. I imagine that people will come up with exciting new ideas.

The Object Tax taxes an abstract object between income and consumption. This allows us to create a program that combines the best of a progressive income tax with a consumption tax.

The Object Tax is a true consumption tax. The important aspect of a consumption tax is that the money flows from the consumer. (The Fair Tax is actually a tax on business). With the Tax Aware Account, people pay their taxes when they withdraw money from savings for consumption. This encourages savings.

By using proven design techniques from Silicon Valley, the Tea Party could create a better design for our tax code. Creating a better design for the tax code would help legitimize the ideals of the Tea Party.

The first step of bringing this idea to life is simply for a group of people to meet and discuss tax reform.

Cyber Begging Link

A ticket to the WCS is $295. If I raised money and went to the summit, the money I raised would go to the summit and not me.

My goal for attending the summit is to raise issues that I think would advance the freedom movement at an event.

If a person or group wanted to engage in a discussion about health care or tax reform, I would be happy to set up a completely independent meeting. I would not be able to pay the whole cost of the meeting. You can contact me through my Contact Form.

I'd love to go to the Western Conservative Summit in Denver. But, I lack the resources to do so.

I have two ideas that I think would be of interest to the freedom movement.

The first is called "The Medical Savings and Loan." This program provides an argument for a return to fee-for-service medicine.

The second proposal is called "The Object Tax." This argument applies Object Design to tax reform.

Object Design is the method used to create interfaces for things like smart phones and the internet.  The system that allows you to read this post was highly influenced by this design method.

The Object Tax starts by making an abstract model of the current income tax.  The abstract model says that we will tax financial objects between income and consumption at a progressive rate.

Taxing an abstract object between income and consumption allows us to combine the best of a consumption tax with a progressive income tax.

The program builds a tax model that can be implemented as the current income tax. We then invite private financial institutions to design and create products that implement the tax.

The program harnesses the creative genius of the free market to create new implementations of the tax code.

Anyway. Both of these topics result in fun conversations about free market reform.

For the last five years, I've been on a quest to find people with enough interest in preserving the American Experiment in Self Rule to engage in a discussion about market centric centered reform. I exhausted my personal resources tracking down leads.

But, I would dearly love to keep trying.  I notice that sites advocating The Fair Tax are covered with "Donate Buttons." I decided to create a donate button, which I put on a "Cyber Begging Page." If anyone donates to the cause, I would use the funds to attend the Western Conservative Conference or other event. If I can find no events interested in reform, I would host my own. Dagnabbit.

An Interface to Government

The Object Tax might best be understood as simply a new interface for the income tax.

Object Oriented Progrramming is often used in interface design and computer games. In many games, the graphic user interface is more important than the logical structure of the game.

The reform does not seek to impose a radical economic or governmental change. The goal of the reform is to create a more intuitive system for the existing tax code.

The current withholding system was designed by Milton Friedman. In this system, employers withhold taxes from an employee. They send employees a W2 firm. People are then required to file an annual tax return.

This is an awkward interface.

The Object Tax makes an abstract model of this interface and invites developers to develop a new implementation of the tax code.

I used the term "implementation" in "The Object Tax in a Nutshell," to emphasize that the reform changes the flow of money from the taxpayer to the government.

In the income tax, money flows from the employer to the government.  In the Object Tax, money flows from a Tax Aware Account owned by the taxpayer to the government.  Changing the flow of money transforms the tax from an income tax to a consumption tax.

Changing the flow of money is a substantive change.

However, most people will simply experience the Object Tax as an interface change.

People interface with the income tax through pay-stubs, W2 forms, an annual return and random tax audits. With the Object Tax, people will have a streamlined interface developed by their bank.

Anyway, I've been wracking my brains trying to explain why the interface matters.

This morning, I was reading through FairTax.org. To my utter astonishment I read the following sentence attributed to Leo E. Linbeck, Jr. (cofounder of the FairTax). This sentence was on the page www.fairtax.org/site/PageServer?pagename=about. I read it on June 23, 2013.

"The tax system is the most fundamental interface of the citizen with his government. And in America, uniquely, the citizen is sovereign."

I was astounded to see this wording by a cofounder of the Fair Tax because the Fair Tax effectively destroys the use of taxes as an interface between the people and the government.

The Fair Tax replaces the income tax (a direct tax on income) with a 23% sales tax imposed on retailers and service providers. The Fair Tax is a direct tax on sales. People pay the tax indirectly.

Advocates of the Fair Tax advertise that the tax would destroy all aspects of the direct interface between the governed and the government.

The primary claim of the Fair Tax crowd is that it will eliminate the side of the IRS that interfaces with taxpayers on an individual basis.

The Fair Tax is doing the exact opposite of what Leo E. Linbeck, Jr claims the tax will do. Replacing direct taxation with indirect taxation destroys the interface between the people and government.

If one believes that sovereignty flows from the people to the government, then taxes should flow from the people to the government. By chainging from a direct tax to an indirect tax, the Fair Tax destroys a direct interface between the people and the government. It also destroys individual sovereignty.

People who hold that sovereignty flows from the people to the government (as I do) should look for a mechanism like the Object Tax which uses computer design techniques to create a robust interface between the people and their government. People should shun the Fair Tax which replaces a direct interface between the people and the government and replaces it with an indirect one.

A Container of Objects

The Object Tax is an approach to tax reform. The program starts by creating an abstract tax model that can be implemented as an income tax. We then invite third parties to create new implementations of the tax. This process allows us to engage in tax reform with minimal disruption.

The abstract model involves abstract thinking about taxes.

The model starts with the assertion that all financial objects be taxed at a progressive rate at sometime between income and a tax year of consumption.

The model is very abstract. The financial object could be anything. It could be a cow, it could be a dollar bill, it could be a gold coin. It could be stock in a company, an adorable loveseat, a painting or anything.

All financial objects will have a tax attribute. The financial attribute indicates if the item was taxed and how much the tax was.

Accounting object by object gets tedious. We want a way to group objects.

We group objects by creating a thing called an "account." An account is a collection of objects.

NOTE: An account is an object. So one can include accounts in accounts or daisy chain accounts together.


A Tax Aware Account is a collection of objects that records summary information about the tax status of objects in the group.

The Tax Aware Account could be hosted by a bank or financial firm. It could be maintained in a standard five column ledger. Accounts could be written on papyrus scrolls of even chiseled as cuneiform into the sides of obelisks.

The Object Tax says that people are liable for a tax when they withdraw money from a Tax Aware Account for consumption. The way one collects the tax would depend on the nature of the account.

If the account is hosted by a bank, the tax would be an automated transfer to the government.

If the account is maintained by an accountant, it might be a quarterly tax payment.

There is room for third parties to innovate.


The object tax creates an abstract model of the current income tax. (The tax can be implemented as an income tax, which minimizes disruption).

The project invites third parties to develop innovative new implementations of the tax. These third party products would go through rigorous testing to assure they collect the same about of tax as the standard income tax.

Software firms will develop implementations of the tax for different markets. Accounting firms would develop a product in which the Tax Aware Accounts are recorded on standard ledgers.

A bank might create an implementation in which the tax aware account is a bank account. Trading firms such as E*Trade might incorporate tax aware accounts into their trading platform.

Groups that that advocate bartering will create software products to track one's bartering efforts. Barterers tend to have items they are holding for trade and items they wish to consume. A barterer might trade an old license plate for a string of beads, then trade the string of beads for a chicken. They would pay a tax on the estimated value of the eggs they consume from the chicken. The barterer pays tax on the eggs consumed but not on the trading chain that resulted in the eggs.

People with complex finances are likely to have more than one account. Developers will create products that daisy chain Tax Aware Accounts together.

The object tax creates an abstract tax code that can be implemented in numerous ways. This design should result in a new generation of innovative financial tools aimed at improving individual finance.
 
The products would go through rigorous testing for certification. The public would then be free to choose which products they use. People would use the products they find the most useful.

I suspect most workers would choose a Tax Aware Account hosted by a bank. People with complex finances would use accounts with software that daisy chains accounts together. Those who wanted to live off the grid, would have products that let them pay their taxes and use nothing but cash (or silver coins).

Separating the tax code from the implementation will result in a myriad of new software tools that let people pursue the lifestyle they dream of pursuing.

The Object Tax in a Nutshell

The Object Tax is named after a software design technique used in complex system design. It is used in products such as the smartphone. The smartphone is in incredibly complex device with an easy to use interface.

The Object Tax has the goal of transitioning from an income tax to a consumption tax with minimal disruption. The design is likely to create an intuitive interface for the tax system.

Object Design starts by making an abstract tax code that can implemented as an income tax or as a product offered by a third party.

The first step is to separate the tax from the implementation. The designers would create a model of the tax code stripped of the detail used in tax collection.

The abstract model might start by saying: "Financial objects will be taxed at a progressive tax rate at some point between income and consumption."

The abstract model can include things like standard deduction, exemptions, itemized deductions and other prominent features of the current tax code.

The abstract model can be implemented as an income tax or developed into a product delivered by a third party financial firm. The model will include rigorous test scenarios to assure that different implementations of the model come up with the same result.

With the abstract model defined, we would invite private financial institutions to step in and design products that implement the code.

The third party products would be put through rigorous testing and certification to assure the taxes collected are comparable to the income tax.

Financial institutions would line up to develop products because they are all competing for customers. The financial institutions that implement the code will compete on creating secure intuitive interfaces for collecting the tax.

The process is similar to the development of the smartphone. Providers compete to develop robust but intuitive designs for their products and services.

The Object Tax separates the tax from the implementation of the tax. The design creates one tax code with many possible implementations. Each person will choose their method of implementation.

The tax is designed so that it can be implemented as an income tax. We invite financial institutions to create other implementations of the tax. Taxpayers will not switch to the new taxing method until financial institutions come up with innovative designs that compel people to switch. The design is not disruptive.

The Object Tax creates an abstract tax code with many possible implementations. Accountants will develop implementations in which the tax is collected as part of the standard bookkeeping process. Others will create implementations of the code for people who want to live off grid and do their finances in cash.

There can be implementations for people who want to do all their financial transactions in silver coins and for people who engage in bartering.

The Tax Aware Account is simply one possible implementation. (BTW: The tax aware account design does not assume the account is held by a bank. The money in the tax aware account could be paper securities. It could be in gold coins held in a safe at the bottom of a pit under a doomsday bunker guarded by hungry pitbulls.

The Object Tax is one tax code with many possible implementations. Third parties create implementations. Third parties will create innovative products to process the tax.

One possible implementation of The Object Tax is a Tax Aware Account. A Tax Aware Account works as follows: An employer will deposit a workers' entire paycheck into the Tax Aware Account. (This eliminates the tax withholding and need to file a W2 Form). When the employee withdraws money, the Tax Aware Account will execute the tax code.


So, lets say you put $1000 into your tax aware account and that your progressive tax rate is  20%. When you withdraw the money; The Tax Aware Account will give you $800.and pay $200 in taxes.

The Tax Aware Account can implement a complex tax code with exemptions, deductions, tax credits and whatever Congress throws at it.

Since the account is processing the tax code in real time, it should be possible to eliminate the need to file an annual tax return.

A Tax Aware Account is a true consumption tax. Employees get their entire paycheck. The account is invested in securities of the workers' choice. The tax is collected directly from the worker at the moment the worker transfers money from the account for spending.

Collecting taxes at the moment the taxpayer prepares to spend money helps protect the taxpayer's privacy. The government does not see how the money is spent.

In contrast, a sales tax is not a true consumption tax. A sales tax is collected by a business. The money collected flows directly from the business to the government.

The goal of a consumption tax is to encourage savings. The goal of the consumption tax is best achieved when the money flows directly from a taxpayers savings at the moment the taxpayer chooses to spend.

The money collected in a sales tax flows from the retailer to the government. Because the flow of money is indirect, the sales tax does not create a direct incentive to save.

To understand an economic system, follow the money.

The effect of a tax is determined by the flow of the money and not the point of collection. The money in a sales tax flows from the business to the government. Such taxes suppress business. They have only an indirect effect on savings. The effect is often opposite of what we desire (more savings).

In a true consumption tax, the money should flow from the consumer to the government. The Tax Aware Account created by the Object Tax is a true consumption tax. Money flows from the consumer's savings. This directly encourages savings.

We can use the creation of the Object Tax to handle other complex challenges such as the Capital Gains and Inheritance Tax.

I would eliminate capital gains as follows. I would say that investors can buy and sell stock from a Tax Aware Account without any tax considerations. Investors would be taxed at a progressive rate when they transfer money from their Tax Aware Account for spending.

Money earned by investment would be taxed at the same rate as money earned by working.

I would like to tweak the progressive tax rate a bit. Currently the progressive tax rate is based on yearly income. I would like the progressive rate to be aware of the total size of an investment. Warren Buffet should pay taxes at the highest progressive rate even if his declared income is small.

The Object Tax handles inheritances as follows. It says that the heirs will inherit the tax status of  the assets. If the parents have a Tax Aware Account, the heirs will inherit that account in full. They would pay taxes at a progressive rate when they withdraw the money for spending.

If the family farm was held by a Tax Aware Account, the heirs could inherit and continue to work the farm without disruption. The heirs would be forced to pay taxes at a progressive rate if they chose to sell the farm.

I named the Object Tax after design techniques used in Silicon Valley to create complex software projects. The goal of the design is to create a new generation of software products that collect taxes at an individual level.

This approach creates a mechanism to switch from an income based tax to a consumption tax with minimal disruption. This approach will also end up creating a new generation of software products that help individuals master their finances.

Immigration is an Foreign Policy Issue

Immigration is an foreign policy issue.

We do great damage to our nation by treating immigration as a domestic policy, or by trying to derive immigration laws from first principles.

Comprehensive immigration reform is destined to fail because it attempts to treat a foreign policy problem as a domestic issue.

The immigration restrictions that we have at this point in time are a result of international conditions. A huge imbalance in migration almost always indicate some sort of international issue.

Most often the imbalance is a result of oppressive economic policies abroad.

Whenever we see a large imbalance in migration, we simply must address the cause of the imbalance.

Realizing that immigration is an international issue, our immigration debate should start by looking out international conditions. Where there are imbalances we must address the cause of the imbalance.

For example, if there is a large influx of immigrants from country X and we find that the imbalance is due to

America was built on a tradition of immigration. Throughout our nation's history we have had immigration laws that are liberal in contrast with other nations.

I am a fan of international travel. I would like to see the United States use its immigration laws to encourage a global liberalization of immigration and visa laws.

Unfortunately, our ability to use our immigration laws to influence the world is sharply limited by the culture war debate that presents immigration as a domestic issue.

I am for liberal immigration laws. I want the United States to be a leader in pushing liberal immigration laws around the world. Unfortunately, our unwillingness to enforce immigration laws destroys our ability to have liberal immigration laws.

The proper enforcement tool for immigration laws is deportation.

Deportation is not an excessive punishment. When one crosses the border one is entering a contract. The enforcement penalty for violating terms of the contract is deportation.

This fact is similar to repossession in the auto industry. A person might take out a loan at a car dealer and buy a car. The loan is a contract. If the buyer fails to comply by conditions in the contract, the dealership is in its rights to repossess the vehicle.

Taking a person's car is an harsh punishment ... in the context of a car loan it is a just punishment.

The effort to pass comprehensive immigration reform is fundamentally flawed. The debate starts with the false assumption that immigration is a domestic issue. The defining character of international immigration is that such migration crosses national borders. As such immigration is fundamentally a foreign policy issue.

I support liberal immigration laws. I wish that the United States would take an active role in supporting liberal immigration laws throughout the world.

Unfortunately, our unwillingness to enforce immigration laws means that we are unable to pass liberal immigration laws.

The world is being made worse by this poorly conceived comprehensive immigration reform.

The Income Tax is a Sales Tax on Labor

Proponents of the Fair Tax want to replace the income tax with a national sales tax on goods and services.

The proponents of the Fair Tax seem to have forgotten that the income tax is a sales tax.

When you are employed by a company, you are selling a service to the company. The income tax is a tax on the service that you are selling.


Income tax is a tax placed upon the service that people sell to their employer.

The Fair Tax is unlikely to achieve the positive effects its supporters imagine because the Fair Tax simply replaces one sales tax with another sales tax.

People who realize that employees are selling a service to the employer and that all jobs are a service performed by individuals to employers are apt to reject the Fair Tax.

The absurdity of the Fair Tax becomes clear if you look at it from the perspective of an individual contractor. Imagine for a moment that you were an handy man or plumber. The Fair Tax will create the following economics. If you sell your service to an individual, you will be required to pay a 23% tax. If you provide the same service to a corporation, you will not.

The people who created the sales tax realized that everyone engaged in the economy is selling a service. The selling of a service at an individual level is the most equitable place to place a tax.

One historical oddity is that the income tax system was designed by a radical free market thinker named Milton Friedman. Milton Friedman is the author of Free To Choose and founder of the Chicago School of Economics.

Milton Friedman realized that an individual sales tax on the sale of labor would be extremely difficult to collect; so he devised the withholding system.

The withholding system requires that employers take money from workers' paychecks. Each year, workers fill out a tax return. The annual tax return is the actual point that finalizes the payment of taxes.

Since the money flows from the business to the government, most people see the income tax as a tax on their employer. But the employer is simply withholding money on behalf of the employees. The income tax is a tax on the services sold by workers.

The income tax and the Fair Tax are both sales taxes. The Fair Tax simply changes the trigger for the tax.

The Fair Tax shifts the tax from the point where individuals sell services to employers to the point businesses sell products and services to individuals.

This change will relieve voters of the responsibility of paying their tax. It will put the entire burden of taxation onto the backs of business. Business associations will respond to the Fair Tax by demanding different tax rates for their members. The Fair Tax will quickly devolve into an unfair tax with businesses receiving different tax rates (based partially on the aggressiveness of business association lobbyists). A case in point is that state sales tax has different rates for different types of business.

The Fair Tax does not get rid of the IRS as its proponents claim. The accounting for a national sales tax will be as tricky if not more tricky than the income tax. The Fair Tax only charges a tax on business to consumer spending. But businesses will need to keep a full itemization (with tax id) of every business they do business with. The IRS will cross check the tax returns of each business against all other businesses giving the government a full matrix of all business to business spending in the nation.

This matrix will be misused.

Switching the point of taxation from income to the point of sale does not really accomplish anything. It will create a period of extreme disruption and opens American business for abuse.

A better approach to tax reform is to create a replacement for the tax withholding system.

My tax reform proposal creates an alternative to payroll withholding called a Tax Aware Account.

An employer would deposit employees entire paycheck into the Tax Aware Accounts. People would pay their taxes when they withdraw funds from the account. This reform will eliminate payroll withholdings and the need to file an annual tax return.

I would replace the capital gains tax by allowing traders to buy and sell stock through a Tax Aware Account. Investors would pay a full progressive tax when the withdraw money from their Tax Aware Account for consumption. The program would do away with inheritance tax by allowing people to inherit the tax status of the assets. The children would inherit a tax aware account from their parents. They would pay money when they withdraw the funds.

In conclusion. The income tax is a sales tax. It is a tax collected on the sale of labor. The Fair Tax simply shifts the point at which the sales tax is collected. Doing so will create disruption and complications.

A better reform is to simplify the payroll withholding system.

Western Conservative Summit

There is something called "The Western Conservative Summit" going down in Denver from July 26-28.

The event is out of my price range. However, if anyone is going to the event and wants to attend a presentation on free market health care reform (or on tax reform) either before of after the event. I would be happy to sneak across the mountains to my hometown. (I am a third generation Coloradan.)


I would love to have an opportunity to talk with people about free market reforms and ways that the freedom movement could restore the promise of America.

It is funny. I live in "The Most Conservative State." I have yet to meet a single person in this state who is interested in restoring the American Experiment in Self Rule.

I find it strange. In places where conservatives are a minority, conservatives support freedom. When conservatives have a majority they expand government. When conservatives have a super majority, they begin suppressing discourse.

Modern Conservatism and Modern Liberalism appear to simply mirror each other.

I agree with the things Conservatives say when they are in minority, and want to find ways to put the ideals of limited government back into action.

I have two presentations that might be of use to the freedom movement.

The first is called "The Medical Savings and Loan." This is a math heavy presentation that argues that the third party payment system is the problem in health care. I demonstrate that restoring the concept of self-funded health care would restore the pricing mechanism and provide people with better care at a lower price.

The presentation argue that we should create a self-funded alternative to insurance. Creating such an alternative would provide a path to repealing ObamaCare.

The second presentation is called "The Object Tax." the Object Tax is a framework for discussing tax reform. The Object Tax uses ideas from Software Design to create a tax code that would allow use to shift from an income tax to a consumption tax. It starts by creating an abstract tax that can be implemented as the current income tax or through a system of Tax Aware Accounts.

This mechanism allows us to transition tax to a consumption tax with minimal disruption.

The program creates a new thing called a Tax Aware Account. You would have your entire paycheck deposited into the account. You would pay a progressive tax when you withdraw the money for consumption.

People would have a choice of sticking with the income tax, or moving to a Tax Aware Account hosted by their local bank.

Small employers would love the new system because it allows them to streamline their HR process. They would no longer be required to withhold taxes and would no longer have to file W2 forms.

Anyway, the Western Conservative Conference sounds really fun. I can't afford a ticket myself. But I would enjoy a trip to my hometown and would enjoy the opportunity of speaking with people either before or after the convention.

It is humorous. Colorado is a swing state. To attract votes, Colorado Conservatives are eager to talk about free market reform. Utah has a super majority of Conservatives. It is the most oppressive state in the nation. Conservatives in Utah actively suppress open discourse.

I love the ideas at the founding of this nation. I think it be wonderful to cross the mountains to see my home town and find people who appreciate American ideals as well.