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.  Besides that, a flat rate is simpler, and supports other tax simplification.

That said, 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).  Somebody earning nothing gets $11,490, clearly.  Individuals earning up to $29,015 get more back than they pay in because 39.5% of $29,015 is $11,490.  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 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  Paychecks go into pre-tax accounts; taxes are withdrawn when the money is transferred to a post-tax account.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!

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.

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.

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.

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.

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; every 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.
   

   O	X

   	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.
   

   O	X

   	Bob's points:	0
   	Alice's points:	-1

   
   
4. Bob plays in the corner, which costs three points, bringing his balance to negative one.
   

   O	X
   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
   O	X
   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
   O	X
   O		O

   	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
   O	X
   O		O

   	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
   O	X
   O		O

   	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
   O	X
   O	X	O

   	Bob's points:	0
   	Alice's points:	0

   
   
10. Bob plays on the top.
    

    X	O
    O	X
    O	X	O

    	Bob's points:	0
    	Alice's points:	0

    
    
11. Alice sees she can't win, so she passes, keeping her two points.
    

    X	O
    O	X
    O	X	O

    	Bob's points:	0
    	Alice's points:	2

    
    
12. Bob plays on the right.
    

    X	O
    O	X	O
    O	X	O

    	Bob's points:	0
    	Alice's points:	2

    
    
13. Alice is forced to play at the top.
    

    X	O	X
    O	X	O
    O	X	O

    	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.

Why gay marriage strengthens traditional marriage.

I was asked to sign a petition recently for the repeal of gay marriage in Washington.  I've always been a supporter of gay marriage just based on equal treatment of the good folks I know personally who are gay, but in the ensuing discussion with my coworker, I realized there's a strong reason for supporting gay marriage if you want to strengthen traditional marriage.

First a question: what is the main threat to traditional marriage?  I'd say the biggest threat is the impression that marriage is not necessarily the normal thing to do when you grow up.  If you want marriage to become more the normal thing, then you need to push examples we see around us from the "not-married" column to the "married" column.  To do that, you need to extend marriage to the approximately 10% of the population who can't have a fulfilling heterosexual marriage.  It's as simple as that!