Wednesday, January 1, 2014

Progressive taxes with a flat marginal rate

Some of my proposals on this blog are completely serious (like Replace bad taxes with useful taxes); some are purely silly (like Covering the alphabet with states).  This is half way in between.  It would probably be a good idea, but there are lots of complications, and it will probably not be worth the disruption of the transition.  Still, it appeals to me.

Intro

William F. Buckley argued for a flat marginal income tax rate from a fairness position: we get benefits from society proportional to our income, so we should contribute to the maintenance of society proportional to our income.  A flat rate is simpler, and supports other tax simplification.

A flat marginal rate doesn't require everybody pays the same net rate, but the only way to get progressive taxes with a constant marginal rate is to have the government giving individuals money at the bottom rung.  I had this idea long ago, but thought the payments at the bottom would be too radical.  Apparently the "Basic Income" idea is catching on, so it's time to publish!

Example

This is more clear with an example.  I'll chose a marginal rate of 39.6% (the current US top marginal rate), a payment of $11,490 (the US individual poverty line), and no individual exemption (vs the current US $6100).  Individuals earning up to $29,015 get more back than they pay in.  Somebody earning $50,000 would pay $19,800 in taxes and get $11,490 back, for a net payment of $7,310, a bit more than the current $6,986.  Somebody earning $100,000 pays a net $28,110, somewhat more than the current $19,760.

The specific value for the basic subsidy can be set lower or higher depending on how progressive we want the taxes to be; the tax rate should be adjusted to keep be revenue neutral.  My example (starting with the poverty line) allows us to replace basic welfare entirely, but the opposite extreme of no basic income is obviously less progressive than our current system.

Advantage of a fixed rate to tax collecting

Here's another radical idea that's enabled by a flat tax rate: put banks (instead of employers) in charge of collecting income taxes.  We'd have two kinds of accounts: pre-tax and post-tax.  Paychecks go into pre-tax accounts; taxes are withdrawn when the money is transferred to a post-tax account.  Checks (or other debits) drawn against a pre-tax account can be deposited in other pre-tax accounts, e.g. long-term investments; this allows all savings to enjoy tax-free growth, like IRAs and 401Ks do today. Checks from a pre-tax account can be cashed by registered charities and anybody else we want to designate as able to receive tax-free payments.

We could require checks for services to be marked as such, and thus only legally depositable in a pre-tax account.  That doesn't eliminate the underground, untaxed economy, but it requires both parties to participate in the cheating.

The net effect of this, besides further simplification, is to switch taxes from earning to spending, which is also a good thing.


Arguments for Basic Income

Since Basic Income is already a thing, there are already plenty of arguments out there for it.  See for instance the current campaign to pass it in Switzerland.  For me, it comes down to each of us deserving basics of life such has food, shelter, and clothing.  We can give those out directly, e.g. with food stamps and subsidized housing, but it's much more respectful and efficient to give people the resources to get those things themselves.

So, why do we give any money to those who already earn enough for the basics?  From an economic standpoint, it's to give people "on support" incentive to go out and earn whatever they're capable of.  From a moral standpoint, it's because the poor deserve the extra luxuries that their extra income buys them as much as the rich do!

Thursday, January 3, 2013

Replace bad taxes with useful taxes

Most taxes are a regrettable (but often necessary) drain on the economy; some (e.g. cigarette taxes) have a good side in that they discourage activities we don't like.  Here are three that we should add at a national level:
  1. A financial transaction tax (aka Robin Hood tax).  This will discourage computer-controlled arbitrage, making things more fair for the small investor and avoiding runaways and it may just save us from take-over by an evil AI.  Please join the Facebook support group.
  2. A carbon tax.  Since energy is at the base of most economic activity, this will dampen the economy, but not more so than an income tax, and it's by far the most efficient way to deal with global warming (by making energy efficiency and non-carbon-emitting energy alternatives more viable).
  3. Tax income from hedge funds and private equity firms at the normal rate, instead of the (much lower) capital gains rate.

Sunday, December 2, 2012

Combining Cribbage with Sorry or Chutes and Ladders

[This post won't mean much if you don't know the rules of Cribbage and Sorry.]

We enjoy Cribbage in my family, but a while back, Lola and I were without a cribbage board.  We did have her multi-game travel set which included a version of  "Chutes and Ladders", so we just combined the games, using the Cribbage scores to move our pawns along the "Chutes and Ladders" field.  Of course, it's much more fun than the pure-luck Chutes and Ladders, but it also added richness to Cribbage because you weren't always playing for the highest score.

Inspired by that, we tried combining Cribbage with Sorry to even better effect.  We kept the special meaning of numbers, so you need to score 1 or 2 to get out of Start, 7 can be split between pawns, 11 can be used to exchange pawns, 4 always goes back four spaces, and 10 can be used to go back one space.  Since there is no 6 in regular Sorry, we decided that 6 would correspond to a Sorry.

This is much more fun, especially for two people, than plain Sorry, but also more rich than Cribbage, again because you have to think about more than just getting the highest score.  Do you want to keep a hand scoring 4 with good potential for more points on the cut, or leave yourself with 2 in the hand, risking cutting 2 more?  When only small counts will help you (at the end, to get your pawns to Home), it's sometimes a challenge to cut down a good starting hand.

For complete rules, it's important to decide what constitutes a discrete scoring event.  Obviously, counting a hand is one event.  We play that counting the crib and the dealer's hand are separate events.  In pegging, you get all the points scored for playing one card in one event (e.g. if you play a card that makes a run of 3 and 15, then that's 5, not 2 and 3).  What's less clear is what happens when one player plays several cards in a row (at the end, or after a "go").  We've been playing that multiple cards played without any opponent's card being played count as the same event, e.g. if I play an ace on my opponent's ace to make 30 (and a pair), and I get a "go" and play another ace, that's one event for a total of 2 + 6 + 2 = 10 points.  It's also reasonable to make each card played be a separate event, or even to separate out the points for "go" or "31" from the points for combinations.

Monday, October 29, 2012

Why I am enthusiastically supporting Obama's reelection

There are several issues which make me a strong Obama supporter.

  1. The national Republican leadership's decision to avoid cooperating on anything that might look good in Obama's record was despicable, and for moral reasons shouldn't be rewarded, but more importantly for practical reasons.  What if Romney's elected and the national Democrats take the same position because it worked so well for the 'Pubs?  Do you want four more years of spiteful gridlock?
  2. Romney's position on global warming (that there is some warming, but it's not clear that it's human caused) shows either a willingness to say anything to win (it is much more comfortable to hear good news), or an inability to evaluate scientific consensus.  Four years of losing progress against global warming would be disastrous, and Romney's lack of ability to evaluate consensus would hurt his decisions in many other areas, too.  Does he go with what he wants to hear (like Bush II did in Iraq) instead of the sensible conclusion?
  3. On the deficit, Republicans have historically been much worse, and the specifics show Obama much more likely to make some progress.  It's impossible to reduce the deficit significantly without raising taxes and reducing military spending.  The non-military discretionary spending is in total much smaller than the deficit.  Romney won't raise taxes, and wants to increase military spending, despite our already spending more than the next ten countries combined (and many of them our close allies!).  If Obama is elected, there will be a grand deal which reduces domestic spending (including several programs I will be sorry to see go, like scientific research and education support) and military spending, and which increases taxes.  If Romney is elected, there will be gridlock or a deal which helps much less.
  4. On both gay marriage and abortion, Obama is for keeping out of our bedrooms; Romney is for more government control over our private lives.
  5. Romney's jingoistic approach to foreign policy scares me.  I think we are in fact much safer and stronger playing nice with other countries instead of trying to be a bully, besides that being the morally correct position.  And I really don't get this "Israel right or wrong" position of the Republicans -- why are they willing to give up US discretion there?
  6. On taxes, there is absolutely no evidence for the "voodoo economics" of reducing taxes on the rich leading to more government revenue.  I'd much prefer to have fair taxes which give everybody equal opportunity, instead of the current leaning entirely to the rich.  A simpler tax system would be nice, but Romney's plan is actually more complex, with various deductions phasing out at higher income.
Some non-issues for me:

  1. The economy will get better under Obama or Romney.  It goes in cycles.  The down was triggered by stupid policies of Republicans, but it was going to happen anyhow.  The bottom was softened somewhat by the big deficit spending led by Obama and the industry bail outs, but it would have bottomed out anyhow.
  2. Obama's not a secret Muslim, and if  he were an open Muslim that wouldn't bother me in the least.  Romney's being a Mormon is similarly a non-issue.
  3. I dislike Obama's continued push for government power vs individual freedom from surveillance, nor do I like his non-judicial slaying of our enemies with drones.  However, I have no reason to believe Romney will be any better.

Tuesday, July 24, 2012

Kelly's Recommendations for the Washington State 2012 Primary

Every election, my lovely and talented wife takes the time to read the voter manual and research the issues and the candidates for the obscure posts.  Then she tells me how to vote.  Rarely, I'll go a different way for one of the elections more in the news, but almost all the time, her recommendations are too sensible.

If you want a calibration, we're a bit to the right of the Democratic Party's centroid, at least on the libertarian scale; we are probably a bit to the left of that centroid on the militarism centroid.  However, her picks are generally based on which individual will do the best job without regard to party.

In any case, here are her picks (which I also voted):

King County Prop. 1:  Yes.  I'm a soft touch for a levy that appears to be for something pretty basic and necessary.

U.S. Senator:  The only candidates that look very serious to me are Baumgartner and Cantwell.  Either one looks very qualified.  Cantwell has the advantage of experience dealing with the Senate.  Baumgartner has the disadvantage of being associated with the Republican Party, but he seems smart and moderate and competent, so might still be a good choice.

U.S. Representative District 7:  McDermott again, unless you want to go with Goodspaceguy to promote orbiting space colonies.  Rivers, Hughes, Allen, and Bemis have enthusiasm but do not appear to have any legislative experience.  Sutherland appears to know more about green energy than about Congress.  And Bemis and Sutherland identify themselves as Republicans, so they can't be expecting to win in this district.

Governor:  Inslee.  He and McKenna both say they will find more funding for education, but neither is convincing to me.  But Inslee seems less waffley on the issues.

Lieutenant Governor:  Owen.  I actually think he has done a pretty good job.

Secretary of State:  Kastama.  He offers the clearest statement of what he would do in the job, without attaching a further political agenda.  Nickels would certainly be competent but he doesn't convince me that he really wants the job.  Wyman and Drew also appear to be qualified.  Murray wants to institute lots of reforms to the state voting system, some of which I like and some I don't.  Wright may or may not actually want the job.  He seems more intent on promoting his third party because he is fed up with Republicans and Democrats - which is a perfectly reasonable point of view, but I'm not sure it would help him to be Secretary of State.  It's interesting that Anderson refuses to identify with a party out of principle.  He seems to know a lot about the job, although his experience is mostly lobbying and campaigning.  And he has a good point - why is this a partisan office?

Treasurer:  McIntire.

Auditor:  Kelley, based mainly on the endorsement of Brian Sonntag who is retiring from the job and who I think has done a good job.

Attorney General:  Ferguson or Dunn, not Pidgeon.  I'm leaning toward Ferguson, but Dunn also has impressive credentials.  I wish this were not a partisan office.

Lands Commissioner:  Goldmark.  I don't know anything against him, and Didier is a tea party guy.  Sharon seems to be relying more on his environmental feelings than actual administrative experience.

Superintendent of Public Instruction:  Dorn or Hansler.  I think Dorn has been basically okay but uninspiring, so I'm inclined to go with Hansler just for a change.  I think he would try to head in a good direction with testing for example, but I don't know much about his administrative skills - but then Dorn is not so impressive there either.  Bauckman generally wants better education but his proposals seem very vague.  Blair wants to set up a kind of voucher system which might work but I don't trust it.  Higgins does not seem clear about what office he is running for.

Insurance Commissioner:  Kreidler.

District 43 Representative 1:  Pedersen.

District 43 Representative 2:  Chopp.

Supreme Court 2:  Owens.

Supreme Court 8:  Gonzalez.

Supreme Court 9:  I'm going for Hilyer.  McCloud and Ladenburg seem okay too.  Sanders continues to make public statements that make him appear clueless about some basic issues of justice, so I don't recommend him at all.

Appeals Court 4:  Cox.

Appeals Court 7:  Appelwick.

Superior Court 25:  I think I'll go for Schmidt.  Berns and Davidheiser also seem highly qualified, so I could be convinced to change my mind.

Superior Court 29:  O'Donnell

Superior Court 30:  North.

Superior Court 42:  Washington.

Superior Court 46:  I'm going for Ramseyer.  Ernsdorff also seems to have strong credentials, so might be a good choice too.

Seattle Prop. 1, Libraries:  Yes.  Unfortunately this may not be enough, it will also be a good idea to pester the city council to not cut general fund allocations for the library.

Thursday, July 12, 2012

My Take on the Higgs Boson Announcement 2012-7-4

Since I was fielding a lot of questions about the recent discovery of the Higgs Boson, I did some research, and here are the answers to the questions about it that I found interesting. Most should be understandable if you remember your high school physics; there are no equations.  At the end, I have some links to explanations that helped me.

Wednesday, June 20, 2012

Pay-to-Play Tic-Tac-Toe

This is my favorite casual game for two with little equipment. It adds a lot of richness to the tic tac toe game, and eliminates the first-mover advantage.
The rules start with tic tac toe, but you have an account of play points. The first player gets one point; ever subsequent turn a player gets two points. It costs two points to play on an edge square, three to play on a corner, and four to play in the center (i.e. it costs one point per tic-tac-toe that could be made through that square). You can make a play that makes your account go negative, but you need a positive account to play. Even if you have the points to play, you may pass on your turn and keep the points.
Here's an example game:
  1. Alice goes first, gets one point, and plays in the center. That costs four points, so her balance is negative three.
    X
         Bob's points:0
         Alice's points:-3

  2. Bob gets two points and plays on the left side. That costs two points, so his balance goes back to zero.
    OX
         Bob's points:0
         Alice's points:-3

  3. Alice gets two points, bringing her balance to negative one; that's not above zero, so she can't play.
    OX
         Bob's points:0
         Alice's points:-1

  4. Bob plays in the corner, which costs three points, bringing his balance to negative one.
    OX
    O
         Bob's points:-1
         Alice's points:-1

  5. Alice gets two points, bringing her balance to one, so she can play on the corner (cost three) to block Bob.
    X
    OX
    O
         Bob's points:-1
         Alice's points:-2

  6. Bob plays in the corner, which costs three points, bringing his balance to negative two.
    X
    OX
    OO
         Bob's points:-2
         Alice's points:-2

  7. Alice's balance goes to zero, which isn't positive, so she can't play to block Bob.
    X
    OX
    OO
         Bob's points:-2
         Alice's points:0

  8. Lucky for her, Bob also can't play: on his turn, his balance goes to zero.
    X
    OX
    OO
         Bob's points:0
         Alice's points:0

  9. Now Alice gets two and plays on the bottom to block Bob, returning her balance to zero.
    X
    OX
    OXO
         Bob's points:0
         Alice's points:0

  10. Bob plays on the top.
    XO
    OX
    OXO
         Bob's points:0
         Alice's points:0

  11. Alice sees she can't win, so she passes, keeping her two points.
    XO
    OX
    OXO
         Bob's points:0
         Alice's points:2

  12. Bob plays on the right.
    XO
    OXO
    OXO
         Bob's points:0
         Alice's points:2

  13. Alice is forced to play at the top.
    XOX
    OXO
    OXO
         Bob's points:0
         Alice's points:1

  14. That's a cat's game, but with a small differentiator: Alice has a remaining balance of one and Bob has a balance of zero, so Alice wins.