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Comment by avar | Hacker News Reader

This whole thread is full of comments from people who obviously haven't read the article / listened to the podcast in question[1].

Joseph Bankman proposed ReadyReturn in California, which is the kind of tax return pretty much the entirety of the rest of the western world uses. I.e. instead of an empty return, it's pre-filled in with the details the government knows anyway. This vastly simplifies things for most people, especially those whose main income comes from working one job.

This was in no way a change to the tax system, or what taxes people had to pay. The government would just hand you a filled-in form instead of an empty one, so you could make corrections instead of filling it in from scratch.

It had north of 99% approval ratings by the people in the test groups for it, something unheard of when it comes to government programs.

As a parlor trick Bankman would carry around a thick binder with the feedback the program had received from taxpayers. When he wanted to convince someone he'd start paging through it and ask the person he was talking to to say "stop", to ensure he wasn't cherry-picking. He'd then start reading raving reviews of the program starting at that page, some in all-caps from people who couldn't contain their excitement.

It didn't make it into law, partly due to lobbying by the likes of Intuit, but more interestingly, I thought, because Grover Norquist, the well known promoter of the "Taxpayer Protection Pledge" took the counterintuitive view that just making the process easier equated to a new tax, since taxpayers might end up paying taxes already on the books that they might have previously unintentionally evaded.

That to me is the most bizarre detail about this entire story. It's likely that it would have passed if not for the strange interpretation of one man to this not-a-new-tax of it effectively being a new tax, and his ability to sway the Republicans due to the political power his "Taxpayer Protection Pledge" holds over Republicans.

1. http://www.npr.org/sections/money/2017/03/22/521132960/episo...

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I think that a major component of Norquist's thinking is that the more painful people find taxes (including the process of calculating them) the more they'll support his agenda of "a government so small you could drown it in a bathtub".

Right! We can't make the government less awful, because happy people might not show us the support we need for our cause to make the government less awful.

it is not about the government being objectively awful, it is about the government regulating. A great deal of the tax code is about giving certain groups tax breaks while preventing other people from using those to create loopholes to avoid taxes. The conservative tax lobbyists actually want to reduce the effectiveness of taxation not its complexity.

> it is not about the government being objectively awful, it is about the government regulating.

Well, the government is no more awful than any other Mafia.

Think about it. If you don't pay protection money / taxes, you get kneecaps busted / imprisoned.

Neither is something you want to happen, so you pay up. Government is essentially just a vehicle for exploiting people on a massive scale.

Your average mafia couldn't possibly pull off extorting 300 million people, but a government can and does, because people believe it's necessary "for the common good".

While I completely agree that the incentives seem absurd on their face, a counterpoint I have is that while I worked in a CPA office for several years, I came to realize that a lot of people really have no idea how much they pay in taxes. Many people seem genuinely grateful to have received a refund, not realizing that it was money previously removed from their paychecks.

I have no idea what the correct policy would be, but I think a lot of people would feel very differently if they had to write a check for their taxes every time they received a paycheck instead of not thinking about it for 12 months and then getting a refund (which makes them feel like the government is doing them a favor). I'm not sure we can just dismiss out of hand the idea that the way people interact with their government affects their opinions on policy.

I certainly wouldn't go so far as to say we should make filing taxes painful, I'd personally just as soon never have to file a tax return, even if that meant my taxes weren't quite as optimized, but I know a lot about my tax situation. I guess it feels somehow more... honest (I'm not sure if that's the right word) if people viscerally feel how much they're paying in taxes, just like they feel how much they spend on utilities or groceries.

Most people in the U.K. (the only other place I have experience with) never file a tax return. It's just assumed that the government is doing the right thing. Taxes are taken at source for all things, and if you have things outside of the norm you can tell your employer about it and they'll take care of it.

Filing taxes was pretty alien to me. I'm used to it now, but it seems there are simpler ways.

I'm familiar with the UK system too. It is possible to get closer to it in the US than most people realize. For example you can calculate the correct tax to withhold and instruct your employer's payroll people to do so. Most people seem to not know this or nor care and as a result end up over withholding and the resulting "refund". It is perfectly possible to end up with roughly correct tax withheld although you do of course still need to complete the 1040 form. But software can do that.

You need to be careful with this though, if you underpay throughout the year by too much, you will end up both owing and potentially have a tax penalty.

Of course. To be assessed a penalty you have to screw up pretty badly though, at least on the first try.

In the US that's called "nanny state". The US has a stronger tradition of citizens who think and act independently, even when they are working cooperatively.

It's just assumed that the government is doing the right thing.

This strikes me as a recipe for disaster in the long run. For any group of people who have tremendous power, not just the government.

I think that's what has happened with health coverage and with college over the last several decades. Mass ignorance about what people are actually paying, since the costs are removed from our immediate view, via automatic deductions, 3-months-later billing, and student loans.

The goal of those types of politicians isn't to make the government less awful. Their goal is to make "the government" out to be the enemy so that the citizens don't start thinking that they can use government to actually offset the power that corporations have (through plain capital and through regulatory capture).

> they can use government to actually offset the power that corporations have (through plain capital and through regulatory capture)

You're saying people can "use" the government to compensate for the government itself preventing competition with their cronies.

Isn't that a bit of a fool's errand, even disregarding the fact that in reality we don't use the government - the government very much uses us.

>the government very much uses us.

No, we put the government and the rules it has to follow in place to ensure that it has our best interests and nothing else in mind. They are a tool we use to make sure the state is run the way we want it to be.

Oh come on, I'm the one defending the idea that government can be positive and serve the people. But we can't honestly suggest that this is what it IS already like it's the plain truth. It's just something it sometimes sorta is (lots of examples that live up to the ideal, lots that don't). It's a premise that is possible. Governments always have been historically run by powerful interests and not actually lived up to democratic ideals.

Which is also one of the big reasons the US is one of the few countries that don't automatically add on sales tax.

I thought that had more to do with the fractured taxing powers of the Feds, state and various local taxing authorities. For example Florida sales tax is 6%, but my county charges a 1% tax to provide sand road maintenance and paving. Pretacking is easy enough once in the stores, but somewhat odd when dealing with taxed and no taxes items.

It's the same in Canada: different sales tax/VAT rates in different provinces on different goods. E.g. HST on clothes in Ontario but no tax at all on clothes in P.E.I. I think it does have a lot to do with the federal system. The UK is unitary, so there is a flat 20% VAT on everything taxable, which is included in the sticker price. I wonder if Australia includes tax?

The Australian GST is national and included in the display price of all good sold.

(There are some goods - eg Fresh Fruit and Vegetables - that are exempt from it -- but if GST is applicable - then it is included in the displayed price)

The UK has three different VAT bands: 20%, 5%, and 0%. (And then there's VAT exempt items, which aren't the same as 0%!)

See, e.g., https://en.wikipedia.org/wiki/Value-added_tax_(United_Kingdo....

I think it's also akin to the withholding tax. If people had to write a check every year, there would be outrage to the amount people are actually paying. Instead, they are grateful for the government "giving" them a tax refund!

Maybe this is psychologically related to

https://en.wikipedia.org/wiki/Loss_aversion#The_endowment_ef...

I don't think so. 45% of Americans pay zero income tax, even accounting for withholding.

Yeah, zero FEDERAL income tax but most of those pay for SS, Medicare, and state taxes. Those in a lump sum vs withholdings would still be a different experience.

That's not withholding though (as the parent referred to; withholding towards your federal income tax bill); as you mention, that's payroll taxes, which you're going to get in retirement back as entitlements.

Consider what would happen if the IRS was efficient enough (through these automated tax accounting systems) to not get an interest free loan from working America for an entire year (ie dynamically modifying every pay period how much was collected in federal tax withholding based on estimated total year tax liability); the federal government would have to be more judicious about its cash flow.

You'd think that's something Republicans and small government advocates could get behind. Go figure. "Fiscal conservatives" in name only.

EDIT: For the pedantic: s/IRS/US Treasury/ in my comment.

"IRS gets a loan" is metaphorically true in a sense but really doesn't hold up to scrutiny. The IRS doesn't actually get money from taxpayers at all. The IRS is just the bureaucracy that determines things. The money that you "pay" in federal taxes is just dollars that are deleted out of existence so that the dollars created by federal spending don't create inflation.

The federal government's "cash flow" is made up entirely of creating dollars out of nothing by spending and deleting dollars out of existence by taxing. The federal government doesn't "have" dollars.

http://www.moslereconomics.com/wp-content/powerpoints/7DIF.p...

> The money that you "pay" in federal taxes is just dollars that are deleted out of existence so that the dollars created by federal spending don't create inflation.

Does it mean that taxation in another country is different than taxation in US? Especially in a country where local currency has a fixed exchange rate to US dollar? They presumably can't create money that easily.

Yes, it's TOTALLY different. The U.S. power globally is EXTREMELY tied to the use of the dollar internationally. Everyone else who uses dollars (or has currency pegged to the dollar) is under major economic control and influence of the U.S. Oil priced in dollars is huge.

When the U.S. left the gold standard it was giant fuck you to all the countries who held dollars and could no longer exchange them for gold. The U.S. maintains and exercises military power globally in part to protect the dominance of the dollar.

Note also that state/local taxes in the U.S. are completely different from federal because they can't just make dollars and can only spend dollars received through taxes (which are not deleted in that case) or received from federal spending (or in some cases through the state itself doing business in the market).

No it's not. Don't spread bullshit.

Taxation works pretty much the same way everywhere. The central banks are separate entities in any modern state/economy/monetary zone. The federal and state/local taxes are the same. The federal government takes on debts like states. You might remember the brouhaha about the debt ceiling and the big sequester in the past few years.

The Bretton Woods system was doomed to fail anyhow, it was a nice try to help the non-US post-war economies, but obviously as soon as some problem arose in the US (looming rise in unemployment), the system fell apart.

The petrodollar thing is real, but it's not important. The US import-export is enormous, the trade with China/India and the EU has a lot more influence on the dollar than oil interests. (And thus conversely the US power structure won't use the US central bank to try to exert power, because it'd fuck up its own economy the fastest - because the US benefits the most from global trade.)

Are you actually aware of the points in the link I posted?

The import/export issue is real in the sense that Chinese folks holding U.S. dollars could buy up lobbyists and land and such in the U.S. if we let them. It's not real in the sense that we could, if we wanted, just give every U.S. citizen an extra $50,000 to dilute the buying power of foreign holders of dollars. That would be aggressive for sure, but we have the power to do that. It's a complex set of arrangements here.

Yes, the U.S. benefits the most from the current arrangement, so we aren't interested in screwing that up. But we could and would take action if the foreign-held dollars started getting used in ways that were bad enough for us to do something about it.

No, it isn't.

The same cycle goes around in other countries, the fixed exchange rate (it's called "pegged to the dollar") means that the central bank has to do open market transactions (on/in foreign exchange market venues) to achieve that fixed ratio.

That means that in case the rate of inflation, economic growth, balance of accounts of foreign trade, etc. differs between the particular country's and the corresponding metric of the USA, then they will have to act. (Of course it's not a top-to-bottom thing, but it's directly influenced by forex markets, therefore there are a lot of speculation when central banks try to maintain a fixed ratio of anything to whatever. [You might remember when the CHF/EUR ratio started to go haywire and the Swiss central bank intervened ... and then suddenly stopped that intervention.])

Money is fungible. It doesn't make sense to say that these dollars that "disappear" are completely separate from these other dollars that magically "appear" out of nowhere. In real terms (we'll call it wealth, but you can call it purchasing power, or whatever other term you want to use for what dollars represent or enable), the wealth the US government spends comes from the actual people who get taxed, in the proportion in which they are taxed, plus the extra provided by inflation, which comes from everyone who holds dollars.

Yeah, but that's not contrary to what I'm saying. The real point is that the question of how much "revenue" in taxation vs spending is more of a matter of policy and purchasing power etc. to further economic and social goals and not something that has any inherent need to balance out.

> The money that you "pay" in federal taxes is just dollars that are deleted out of existence so that the dollars created by federal spending don't create inflation.

No, it's not. Federal government revenue is real revenue, federal government borrowing is real borrowing, and federal government spending is real spending. The Federal Reserve creates and destroys money, but that monetary action is separate from the fiscal action of government revenue, borrowing, and spending.

Yes, spending is real spending, but no taxes are not revenue. Read the link I posted. This isn't that hard to understand. The entire concept of federal budget is a balance between "revenue" and spending in order to keep the monetary supply stable. But seriously, just read the link, you don't seem to understand the basic facts I'm expressing.

> Read the link I posted.

I read it, and the point you are using it to support is still not true; the government could, Constitutionally, do what you describe (and what the linked article is part of the author's failed Senatorial campaign advocating), but it doesn't, for the same reason that the Fed exists; moneterizing spending and not unlinking fiscal from monetary policy undermines faith in the currency.

> But seriously, just read the link, you don't seem to understand the basic facts I'm expressing.

There's a difference between not understanding your claims and their relation to reality and disagreeing with the first and with your assessment of the second.

> you're going to get in retirement back as entitlements

No. Taxes are not prepayment for services in the future.

Social security is not funded to pay back what current workers pay in

The funds are not held in escrow. The obligation is a social contract with the government.

"which you're going to get in retirement back as entitlements."

I doubt it. By the time I retire I expect that SS will be bankrupt. It has been going further down that road for years, and I don't see anything stopping the train.

There is NO SUCH THING as SS bankruptcy. It makes NO SENSE as a concept at all. It's a complete fiction. There is NO scenario in which the federal government can't just cash every SS check.

http://www.moslereconomics.com/wp-content/powerpoints/7DIF.p... fraud number 4. Short read, but easiest to understand if you read the first frauds.

The number of US citizens that pay federal income tax is closer to 35%. All forms of income tax ought be abolished. A consumption tax of around 18% would provide the same federal revenue. It would simplify tax reporting (i.e. reduce expenditures on tax reporting), and increase the tax base (people living on trust funds would pay in at a higher rater). Look into the "Fair Tax" for a well reasoned proposal for such a tax.

Are you counting non-earners like kids and retired folks in that 35%?

Federal "revenue" is a mistaken concept. The federal government just deletes money via taxation in order to offset the created money from spending. The government doesn't need or have any dollars, they are the source of the fiat currency in itself.

The entire point of any tax or spend decisions is to further some political objective. For example, we tax everyone in order to assure the fiat currency has value. We also tax to discourse certain behaviors. We tax to have some impact on who has how many dollars in order to address social issues.

Answering to one of replies.

> Federal "revenue" is a mistaken concept. The federal government just deletes money via taxation in order to offset the created money from spending. The government doesn't need or have any dollars, they are the source of the fiat currency in itself.

Does it mean that taxation in USA works differently than taxation in a country with currency tied to US dollar by a fixed exchange rate? In that country government can't, I assume, so easily print money and delete them.

replied in other thread https://news.ycombinator.com/item?id=13992751

but YES, different

And sales taxes. And all sorts of fees to various governments. And parking tickets. And a host of fees associated with the criminal justice system. And lotteries/gambling. And and and. Nobody pays zero tax, except perhaps the most very wealthy "persons" (ie corporations) able to carry over bad years and write down previous losses/taxes against future income.

You've gone totally off the reservation. My argument was simply against parent's statement that Americans would be shocked if they saw their tax bill; I'll reiterate; hardly. A little less than half of America pays no federal income tax (after refunds are accounted for).

> "This statement, however, is obviously untrue since, if one cares to move one's eyes slightly down the page at the Tax Policy Center web site, one will find that 73.1 percent of all tax units (in 2015) do pay either federal income taxes or federal payroll taxes. In other words, plenty of people who don't pay the "income tax" pay taxes on income via the payroll tax. That income tax is assessed at a flat and regressive rate of more than 15 percent, once both worker and employer shares are included. (The employer share negatively impacts the employees' wages, of course.) In 2014, payroll taxes combined for a total of 34 percent of all federal revenues in 2014, or one trillion dollars. (Those who don't get a paycheck pay the aptly-named "self-employment tax" in its place.)"

https://mises.org/blog/myth-half-americans-dont-pay-federal-...

Income tax is not payroll tax!

Income tax -> Federal income tax (discretionary spending)

Payroll tax -> Social security and Medicare (non-discretionary spending)

Everyone pays into entitlements via payroll tax. Not everyone pays into discretionary spending (everything except social security and medicare).

Which is why the government borrows the SS and Medicare tax payments to use on other stuff and puts IOUs in the SS and Medicare trust funds.

The US government lends itself SS and Medicare funds because there is no safer asset class than US treasuries.

Bullshit. The government bond traded for SS and Medicare funds is not sold on the open market. It has got zero to do with the risk free rate of return. The government can default on all SS and Medicare payments without affecting any bond holders.

TL;DR Bondholders can go to zero. Special notes will not.

> The government bond traded for SS and Medicare funds is not sold on the open market.

https://www.stlouisfed.org/publications/regional-economist/j...

"Government debt of the United States is typically issued in the form of U.S. Treasury securities. These securities—simply called Treasuries—are widely regarded to be the safest investments because they lack significant default risk. Therefore, it is no surprise that investors turn to U.S. Treasuries during times of increased uncertainty as a safe haven for their investments. This happened once again during the recent financial crisis. In fact, the increase in the demand for Treasuries was sufficiently large so that prices actually rose with an increase in the supply of government securities."

http://www.cbpp.org/research/social-security/policy-basics-u...

"The Social Security trust funds are invested entirely in U.S. Treasury securities. Like the Treasury bills, notes, and bonds purchased by private investors around the world, the Treasury securities that the trust funds hold are backed by the full faith and credit of the U.S. government. The U.S. government has never defaulted on its obligations, and investors consider U.S. government securities to be one of the world’s safest investments."

https://www.ssa.gov/oact/progdata/fundFAQ.html

"By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.

In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash."

Special issues are literally more valuable than gold, backed by the taxing authority of the US government.

It shouldn't even have to hold bonds, it's a closed system, so why exactly? The Social Security system is funded by the current active population, and the beneficiaries are the inactives of past generations.

Sure, it's great that in theory your payroll tax is converted into a bond, and then when you retire they sell it and pay you from that, but ... that's not what's happening in the big picture, because if there's surplus then it just lowers the yearly deficit in the federal budget. (As it happened for years, but the fund will be depleted around 2034.)

>The Social Security system is funded by the current active population, and the beneficiaries are the inactives of past generations.

You start looking at it hard and the pyramid shape begins to appear.

I'm young enough that I plan my retirement assuming 0 money from Social Security despite the vast amounts I pay in. I see it as wealth redistribution from the young to the old who are already better off.

Can you provide stats about these old people who are already better off? Because most of them are just kept out of poverty by social security.

Just curious where you get your belief from since the data shows otherwise.

http://www.cbpp.org/research/social-security/social-security...

"Social Security Keeps 22 Million Americans Out of Poverty: A State-By-State Analysis"

"Social Security Lifts 15 Million Elderly Americans Out of Poverty"

"Social Security Lifts More Than 1 Million Children Out of Poverty"

https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf

62 million receiving social security.

Using your numbers, that means 40 million aren't in poverty receiving it, while there are 7 million non-elderly receiving it who are kept out of poverty.

My claim, if I make it a bit more wordy is that the elderly receiving social security have more wealth on average than those paying into it. To be a bit more exact, I was referencing those young enough to not be receiving it anytime soon. I didn't exactly give an age range, but we can go to the following site and see some interesting findings.

https://dqydj.com/net-worth-by-age-calculator-for-the-united...

For example, $10k for a 25-29 year old was about the 50 percentile. For someone 65+, it is the 12 percentile. You can try a number of data points and see that the trend is that the older have more wealth.

>Because most of them are just kept out of poverty by social security.

Most? Even with the worst numbers, it is only around 2/5 of the elderly who receive it.

Social security is a large regressive tax. It is generally paid by younger people who have less wealth and goes to older people who have more wealth.

"The US government lends itself SS and Medicare funds"

And that should have NEVER been legal. That money should have stayed in the funds. Any growth from those funds should still be in the funds. If they had not effectively stolen the money for other uses, those programs would not be in the mess they are in now.

The US government borrowing is how that money is invested. If you're upset it was all spent on wars and the military and not on productive uses, that's a governance problem; hold your reps accountable.

Unless you realize that Social Security and Medicare taxes are actually income taxes: they go up directly the more you make.

No. Social security is only taxed on your first $127,200 of annual income. Anything over that is not assessed social security tax. Medicare is 1.45% of your income with no limit, and an additional 0.9% on income over $200k/year. I'm unsure where you would get the idea that those rates increase as your income increases.

Parent did not say rates increase.

Not sure why you are getting down voted. The taxes are both rates, so they do increase in amount the more you make.

I was replying to someone who was saying that 45% of workers pay no Federal income tax, so the upper limit did not enter into consideration. For the mathematical concept of direct variation, which I meant, but did not quite explicitly call out, see: https://www.freemathhelp.com/direct-variation.html

I can't find a reputable source for this. A google search comes up with sources like Breitbart. The top source is marketwatch, which I can't remember if they've a slant or not. Even in that, it mentions that, "Note that this does not necessarily mean they won’t owe their states income tax". Of course, it includes a chart, but considering the other sources in the first page results, I'm not sure I can trust this source.

> If people had to write a check every year, there would be outrage to the amount people are actually paying.

Historically the french have done pretty much that.

In fact it was even more painful as the historical method was to provide advance payments by thirds (IIRC the first two thirds would be based on your tax estimate, and the last one would be the net, or a reimbursement in case of misestimation) so you'd send the taxman a check 3 times a year (or go to the bank for a wire).

No more outrage than most anywhere else, just a lot of wasted time and necessity to plan for and remember to send your advance payments.

Yeah, the psychology of that is fascinating. I don't give the bureaucrats credit for doing it for that reason though. I think they did it because they wanted the cash flow earlier. Nonetheless, it does a wonderful job at making people grateful that they've been given the gift of having a portion of the money that was taken from them returned.

Unfortunately "starving the beast" doesn't seem to actually work. Low tax revenues don't lead to lower spending, just fiscal indiscipline.

I personally would prefer a leaner federal state but it's not clear how to get there.

http://econlog.econlib.org/archives/2013/04/starve_the_beas_...

https://en.wikipedia.org/wiki/Starve_the_beast#Economic_anal...

https://niskanencenter.org/blog/cant-make-government-smaller...

When I read this "starve the beast" thing, I can't avoid to ask myself where this people think the money is coming from in the first place?

In order to tax, the government have to spend before.

There's this thing called the economy, full of private entities, all transacting throughout the year, creating wealth, expanding the money supply, generating a bit of inflation, and so on.

Yes, the fiscal multiplier is important, but simple problems like corruption (regulatory capture and federal/state/county/municipality contracts to clients) and (very) unequal accumulation of wealth leading to serious power inequality seem more relevant today.

Expanding the money supply and controlling inflation are precisely the things the Fed does (with monetary policy, the fiscal multiplier is only part of it).

Re: corruption and concentration of wealth, I see no reason why government should have a monopoly on that. The 2007 crisis, and Enron before it, and countless other scandals, are evidence of the former being rampant in capitalism. The observation that without exogenous (non-capitalistic) forces, return on capital will always outpace economic growth (popularized by Piketty) is evidence of the latter.

The fiscal multiplier is the US budget (public spending, funded by taxes) set by Congress, doesn't have much to do with the monetary thing.

Private corruption is many orders of magnitude a smaller problem, because there the agent-principal problem is less relevant. Enron had shareholders, they were lazy, but it was their money. The voters in public elections are playing with others' money too.

My point is that fiscal policy is only part of the influence the government has on the economy, and likely the less important part. Monetary policy has far greater consequences for inflation and money supply.

How do you come the conclusion that gov't corruption is "orders of magnitude" worse? I see nothing quantitative in your reasoning. Voters in public elections are playing with others' money, as are lobbyists for corporate interests. Private corporations play with others' land sea and air regularly. It's a flawed system as a whole, agreed, but getting rid of government influence is not the answer, as that leaves the economically powerless truly and utterly powerless.

And it seems you don't have an answer to the accumulation of capital. Left to its own devices, any capitalistic system will concentrate and grow wealth at a faster rate than economic growth. This is why a countervailing force is necessary, whether in revolution or governance.

edit re the agent principal problem: you forget the vast majority of people who are too poor to be shareholders or board members anywhere. The only shares anyone is guaranteed in society (in theory) is the equal and inalienable share in governance amounting to 1 vote. I shudder at the thought of a future America where your votes are directly proportional to your wealth, and seats on the Board of Directors of the USA are bought.

" I shudder at the thought of a future America where your votes are directly proportional to your wealth, and seats on the Board of Directors of the USA are bought."

That would be just business as usual. In most countries and until very recently, only the owners of property were allowed to vote. We forget that 'natural state' of things to our own danger.

The Fed however responds to the markets in the form of bank loan origination, defaults, returns and general market productivity. So it's a delicate balance that the Fed is trying to play with money supply and interest rates to accelerate or brake the economy.

"There's this thing called the economy, full of private entities,[..]"

Sure, but in order to interact, private entities, use money, that it's backed and come from the government. If you "starve the beast" you could discover that it's all of us who are feeding from its blood.

That's not so strange, because, after all, the beast is all of us.

Oh dear oh dear. Private banks create money. If only it were state lead.

Sure, but there is money and there is money.

Banks create an asset in their balance, but they create a liability at the same time. Only governments spending create net financial assets in the economy (that is not the same that real assets, of course).

https://fernandonogueiracosta.files.wordpress.com/2011/08/cu...

(If it's too long, see 'vertical transactions')

Don't cryptocurrencies break that model? They are financial assets in the economy that are not created or presently controlled by governments.

It depends on your definition of money.

From my point of view, cryptocurrencies are financial assets but not money. They are not an IOU (https://en.wikipedia.org/wiki/IOU).

Government money is a IOU because you are promised that it (and only it) will be accepted as a payment by the state.

Anyway, state money can never be totally replaced at least that the government accept payment taxes in the new currency. And why people would start using other currency if they have to get the official currency for taxes payment?

Agreed. Acceptance for tax payment is what imbues money with value.

I read your comments and I think you are missing only a few pieces of the puzzle.

I recommend you to investigate Modern Monetary Theory. It's what made me fill the holes in my understanding (the bigger holes, at least).

I'm familiar with MMT and my understanding is that sites like positive money push this perspective, that banks create money:

http://positivemoney.org/how-money-works/how-banks-create-mo...

Will read this but not sure I'll agree. Banks create money and it is fungible with state tax payment money

http://www.bankofengland.co.uk/research/Pages/workingpapers/...

It's a different kind of money, because in a case debt is created and in the other no (even if we use the fiction that it is):

https://pediaview.com/openpedia/Modern_Monetary_Theory#Verti...

http://www.nakedcapitalism.com/2015/01/bill-mitchell-demysti...

(thanks for the link)

I'm going to read these too. I think nakedcapitalism is such a great blog.

I agree one is created as debt which will be destroyed ultimately on repayment. However this is the nub - they create 100 and demand back 110 at a later date, therefore more must be lent in the interim to avoid a deflationary collapse.

Starve the beast has never been about making federal agencies work better. Its been about creating a path to privatization

They can work better, or they can work for what we can afford (our collective value of them). Washington is in a constant struggle to make sure we get neither.

I think that's backwards. Fiscal indiscipline leads to not lowering spending when there are lower revenues.

You get there by enacting rules that make it really hard (politically damaging) for the government to spend what it does not have.

Yeah, I don't buy it. A complex government seems the opposite of a small government (which presumably is lean as well).

So for ideological reasons government is regarded as bad in the US and to remind everyone of how bad it is citizens are forced to endure a painful process for paying money to the government to reinforce just how bad it is?

I'm nearing the point of being completely convinced nothing is actually improvable anymore in the US. If you touch anything, even the most broken or inhumane thing, you'll find someone defending it until the death either because of vested interests or ignorance.

Yup. US system of passing laws through congress is now broken to such an extent that the only things that can pass unmolested are esoteric bills that (usually) shift money from the taxpayer to big corporate lobbying group in such a way that the common person can't (or isn't bothered enough) to understand. That's one of the reasons most of a President's power is expressed through executive orders directives to federal agencies selectively enforce or ignore laws passed by congress. That is also why passage of Obamacare will forever be remembered as a huge legislative accomplishment the likes of which will probably not be replicated again in our lifetimes.

It reminds me of this story: "Connecticut bishops fight sex abuse bill" [1]

[1] http://edition.cnn.com/2010/CRIME/04/11/connecticut.abuse.bi...

I wouldn't stress too hard. US politics has always been like this. Slavery and then later civil rights are the two biggest examples. As long as there are those who keep up the Good Fight change does happen.

Sure, as long as you don't mind waiting a century or two. Meanwhile, in other nations they fix things far faster.

> Grover Norquist, the well known promoter of the "Taxpayer Protection Pledge" took the counterintuitive view that just making the process easier equated to a new tax, since taxpayers might end up paying taxes already on the books that they might have previously unintentionally evaded.

I just fail to understand the logic exercised by some US residents. Norquist's argument is insane, and if you're not only trying to be kind to it and not call it as such, your stance towards it seems insane to me too.

Welcome to Alternative Rationality, in which an argument is taken to be a sound one if it has the style of one.

Like Alternative Truth, it has probably been around forever, but what seems to be changing is that the users of these techniques are no longer embarrassed by saying the most ridiculous things, and there is effectively no downside for a politician or lobbyist in doing so.

I have heard that the US SAT essay test scoring guidelines progressively reduced emphasis on judging content (to avoid cultural bias) in favor of judging style (to be fair, this may have changed in the 2016 overhaul.) If so, then, as teachers do teach to the test, this could only have harmed critical thinking.

Does embarrassment really have to do anything with it? Whatever motivates somebody to lie is obviously stronger than shame.

I suspect he failed mostly because he tried to get the legislature to adopt it after the initial budget-centered rollback (which was before recent changes to the budget process which made budget impasses of the type exploited to kill it initially unlikely), rather than using the initiative process. While money certainly effects the initiative process, it's usually a much better way to get something whose benefits are simple and easy to understand to the average person and broadly distributed but where there is entrenched narrow institutional opposition passed in California. It's not cheap, but it would be dirt simple to raise the money necessary to get this on the ballot and get a decent campaign for it. (Intuit/Norquist would still fight it, but convincing voters is different than convincing politicians.)

If this system is so popular, why can't it be introduced as a proposition in California? Take the lobbyist and politicians out of the equation and it should win easily.

It was popular among people who got to try the pilot program. That doesn't necessarily mean it would be popular among the general public, especially opponents campaigning heavily against it.

It doesn't necessarily mean that, but it's the strongest evidence I could possibly imagine that it would.

It's strong evidence, yes. And I certainly support the change. I'm just saying I don't think it would be a given just because the pilot program was popular among participants. People vote against their interests all the time when campaigned in the right way.

Edit: Also I noticed my previous comment was missing a word. Should have been, "Especially with opponents campaigning heavily against it."

According to the story it's still available in California as an option for paying your state taxes, it's simply never became the default/only option. If you're in California and want to go find it and use it, it seems you can.

Norquist's tax pledge is very literally the creation of a child. He came up with it as a kid and hasn't felt any need since to revisit the matter. It is the immature and radical thinking of a teenager not tempered by age or experience. That he is still trumpeting it speaks to his character too.

This is a weird critique. It's been phenomenally effective and is consistent with his worldview, so what difference does it make when he thought of it?

That he was a child is immaterial to the immature and radical nature of his idea. It is backstory, colour, to describe the stereotypical nature of the idea. That a child creates an idea doesn't mean that it is bad per se, but should give adults pause before signing up to it themselves. That the young are always more extreme than the old should be common knowledge.

I think that you just disagree with the idea, which is fine, but you might consider attacking it on its merits from the perspective of the people who agree with it, not have a meta-discussion about when it arose in his mind, how "immature" it is, etc.

Norquist, the Republicans who sign the pledge, and the voters who demand it all apparently think that it's a good idea, it's been effective from their perspective, and it's ideologically consistent, so having someone who doesn't like its outcome call it "extreme" and "immature" doesn't really mean anything. It's just another flavor of ad hominem attack.

If people might pay taxes they were unintentionally evading, might they not avoid taxes they were unintentionally paying when they didn't have to? It seems the latter would be more likely, given how arcane the deduction/credit system can be.

Just today I had to convince my girlfriend that no, just because she lives in one state and works in another she doesn't have to pay taxes twice to two states. This requires finding a different credit form for one state to claim a credit for the taxes paid to the other state. It's not exactly intuitive.

I suppose it comes down to who you trust more: your tax preparer to get as many deductions and credits as possible for you, or the government to give them to you.

I'm a resident of Iceland. We have had this for our tax returns for at least a decade. We have had electronic returns for longer than that. All I had to do this tax season was add undeclared income and the expenses they incurred and sign with an electronic "key" password. Very soon they will mandate signing with our recently installed smart-phone enabled identity system (private key on a SIM).

We have the same thing here in Germany. It is good, but it could be much simpler, still.

Jesus fucking christ fuck Intuit and Grover Norquist.

prerty hard to make a living selling tax software if the taxes are easy to do!

Thanks for giving me yet another reason to hate Grover Norquist. Ugh.

>since taxpayers might end up paying taxes already on the books that they might have previously unintentionally evaded.

To take the charitable explanation of this position: studies have shown that prices go up when the payer gets more separated from the actual payment process: credit cards, automated tollbooths, and further open-road tolling have all been shown to significantly (statistically) correlate to higher prices. Automated billing is another great example of this.

As much as I want a simpler tax code and system (while I lived in Amsterdam I could literally calculate my own taxes in a spreadsheet. It was simple... but very expensive), given this data I don't think it unreasonable to think that putting lessening the cognitive burden of the payment process will lead to higher taxes.

On the other hand, simpler taxes would lead to less expensive tax filing process. You don't need to buy an updated software, pay a professional or spend some hours - if not days - of your life doing something like that.

Are you sure people should keep this inconvenience as a reminder of government expenses?

Believe me, I would love a simpler system, if not only for my own life but because the rent-seeking of Intuit et al is infuriating. Though I think almost any tax increase would dwarf the marginal reduction of filing process price (and probably time for many too).

What I wanted to specifically notr is that this is also an effect I think it valid for Norquist to point out, not only that treating unintentional tax evasion reduction as a tax hike, which I think is a silly argument.

How is easy filing for those who only earn income through employment any different from people who pay for tax prep every year? The people who pay for tax prep probably aren't thinking much about it either.

On the other hand, confusing pricing can be used to get people to spend more. My local supermarket sells lots of produce as £X/kg and £Y/item. People buy a bag with three onions in for 65p instead of picking up three onions from the box right next to it at 75p/kg.

The taxes I find most burdensome are those that take from me my time, rather than my money.

Forced bureaucratic form-filling is thus the most burdensome tax of all.

Grover Norquist can go stick his head in a pig... then stick the pig in a hydraulic press.

> When he wanted to convince someone he'd start paging through it and ask the person he was talking to to say "stop", to ensure he wasn't cherry-picking.

Maybe using a standard stage magician's force isn't the best way to convince people that you aren't cherry-picking.

Making government more efficient is not what you want if your goal is to reduce government, and government inefficiency is one of your major arguments.

Actually I think Grover Norquist's position is that making the tax easier to pay would make it less easy to notice it rising and less unpopular. It's a horrible position but not quite so bizarre.

You are correct. But I find his argument to be BS.

1) if it is a simple number, it will be _easier_ to notice it rising.

2) For sure most people using software have no clue what it does. If the software told them they owe 1k more, they would pay it. So when he says that making it simpler would mean people wouldn't notice change to the tax code etc... well, I have a hard time believing they would notice in today's system!

I think he is full of s__t. He should be for a simpler system were the focus is not on detailed expenses and what not but on a simple number. This actually makes it easy to know if they went up. Intuit can then provide a software "why did my taxes go up" if it feels like it :)

Tangential question: If the government sends you a tax form pre-filled, and they missed something to tax you on somehow: what incentive would you have to fix it?

Probably the same incentive you have right now not to omit something: if they do an audit, and find that you never told them about your self-employed second job, or whatever, you'd have to pay up.

Except if your return has no deviations from what the tax authority sent you, why would the computer flag it for an audit? You're essentially going to be in the randomly-selected pile, and the auditor won't see anything at all suspicious.

Besides that, unless you have income above $1M per year or so, it usually costs the government more to audit you than they will get from you as a result of the audit. So unless you're evading so egregiously that it makes sense to prosecute you criminally, pour encourager les autres, it's better to let little cheats slide. Like over-declaring the value of the clothes you dropped off at the thrift shop as charitable deduction. There's no way those jeans are worth $20 now, you cheater. But as long as your total charitable deductions are under $500, no one cares enough to nail you for it.

Most of the people who would sign and return the pre-filled forms probably haven't ever filed a schedule A, anyway, as it would turn out to be less than the standard deduction. Unless you really care about how much you pay in taxes, there is a huge incentive to just sign and return the form the instant you get it, without even looking at it.

It this not usual in the US? :O

That's got to be one of the dumbest arguments I've heard against something. So I wonder if the politicians really "fell for it", or they were just looking for an excuse that sounds good enough that they can use to tell their constituents as the reason they voted that way, and not because they took all that money from the lobbyists.

> taxes already on the books that they might have previously unintentionally evaded.

I agree with Grover Norquist. It might be counter intuitive but I would rather leave it to Turbo-tax to figure out the details than signing the form sent to me by IRS. Let IRS do the extra work of catching me if they think I am filing fraudulent taxes.

Grover Norquist's view might be counter-intuitive but I a agree with him.

That's it, blame TurboTax.

You can refer to TurboTax all you like, but you just basically admitted that you're committing tax fraud and challenging society to catch you.

I think the point is that there are many grey areas, and the IRS is likely to come down the side of more taxes while the third party is likely to try more on your behalf.

Tax fraud is a super gray area. I will be surprised to find any person who has not violated IRS regulation.

Ok, is anything in this proposal preventing you from using Turbo-tax, your accountant, or just doing it yourself by hand?

No one is forcing you to use the IRS pre-filled form. What is the problem? Let the "idiots" pay extra taxes if they want and smart guys like you can spend extra time and money doing your taxes the old way.

Well, the problem with what happens what government has pre-filled on the form differs from my interpretation!

As a matter of principle I am even opposed to tax deductions at source. Each individual must sign a check at the end of the year/month and pay taxes. This makes sure he feels the pinch.

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