The Trouble with Taxes

“To understand the nature of tax law in America, you have to understand one simple point: its complexity is a feature, not a bug. From the perspective of those closest to crafting the code, complexity offers a host of opportunities that simplicity simply can’t. Some of those opportunities are legitimate: the chance to better target taxing to achieve economic goals. But many are completely illegitimate. And for the illegitimate, when simplicity is pushed, complexity pushes back harder.” – Lawrence Lessig, Republic Lost (2011)

You don’t need a political scientist to tell you that the government services we all love cost money. And you also don’t need a political scientist to tell you that deciding who pays for those services is a highly contested debate.

On the one side are the Republicans, who since the days of Ronald Reagan have equated less government interference with fewer, simpler taxes. But as Lessig’s quote states above, this is easier said than done, because there are many willing to fight for the complex tax system.

Let me give you an example. In 2005, California hosted a little experiment, a taxing system called “ReadyReturn.” The idea behind it is that the IRS knows how much you owe them before you even send in your taxes: They have your wages from employers, and your interests and dividends from your banks. So, much like paying a credit card bill, the “ReadyReturn” system would send you a draft tax form already filled out, and all taxpayers had to do was double check and sign off on it. Of the 11,500 people who participated in the experiment, more than 97% said they would use it again next year. One report stated, “Most of the taxpayers who voluntarily participated in a test run of the state’s Ready Return program said it alleviated anxiety, saved time and was something the government ought to do routinely.” Naturally, California’s taxing authorities decided to expand upon the program in 2006. But then something happened. Intuit Inc., the company that created the tax-preparation software TurboTax, spent more than $1.7 million lobbying against the program. And they were successful…at first. The state legislature allowed it to expire, however the California Franchise Tax Board revived it in 2007. It remains in use today, covering one million Californians. (For more on this story, check out the following link: http://taxprof.typepad.com/taxprof_blog/2009/09/turbotax.html)

Though the ReadyReturn story has a happy ending, it illustrates a major point: that there are some companies, parties, and groups willing to fight for the complexity. And despite ReadyReturn’s success, the program has not expanded beyond the state or even to the federal level, though I am sure many Americans would benefit enormously from it. Furthermore, our tax code continues to be riddled with crazy loopholes and exceptions, such as special rates that apply to, “all corporations incorporated on January 12, 1953, in Plymouth, Massachusetts  with a principal place of business in Plymouth, employing at least 300 employees as of 2006.” I wonder how much money that one corporation spent lobbying congressmen.

On the other side, Democrats could care less about simplicity and instead argue for even more progressive taxes. And there has been some considerable research supporting the possible revenue output of raising tax rates for wealthier Americans (It’s simple economics, according to the fairly liberal New York Times: http://www.nytimes.com/2012/03/28/business/economy/the-case-for-raising-top-tax-rates.html?pagewanted=all). However, some of my Republican friends brought up several good points against this argument, namely that raising taxes too much on the rich could actually decrease revenue. The logic behind it is that wealthier Americans would respond to tax hikes by increasing their efforts to store money abroad (i.e., in Swiss banks), hire top notch tax lawyers, and take advantage of every loophole, exception, and premium possible. To me, this argument makes perfect sense, though I haven’t really been able to find any studies to back up this assertion (Think about it, who would agree to participate in that kind of study and admit to cheating the system?). I did, however, find a blog article titled “Increase Taxes, Decrease Revenue – What the Left Must Learn from Great Britain” (http://thebrennerbrief.com/2012/11/28/increase-taxes-decrease-revenue-what-the-left-must-learn-from-great-britain/). According to the article:

“Today, Great Britain’s The Telegraph published an article showing the detrimental results caused by Britain‘s passing a 50 percent tax on their rich. Since passing the tax, over two-thirds of Britain’s most wealthy have left the country, leaving only 6,000 “wealthy” people — down from an original 16,000.

As a result, country’s treasury revenues have fallen an estimated 7 billion pounds ($11.2 billion).”

$11.2 billion! For a country such as the United States, which houses the majority of the people who make regular appearances in the Forbes wealthiest people lists, losing our millionaires and billionaires might prove significantly more damaging. Again, this is largely speculative, since the government has consistently been lowering taxes for upper and middle-class Americans over the past couple of decades. So we have no modern American historical examples of the possible results of such a policy.

So what tax policies would best benefit Americans? And what policies would actually pass through Congress?

Personally, I have always been a supporter of the flat tax. To me, it seems the most logical answer. If we tax all Americans at say 11% of their income, then  not only is it easier for Americans to pay their taxes, but the lack of loopholes require wealthier Americans to shell out more money, despite the appearance of a lower rate. And because everyone would be paying the same percentage (though, of course, this means that people who make more still pay more), the option would appear considerably more equal.

Of course, I understand that this option will never be passed by our Congress. The complexity of the tax system gives the government a way to appease constituents and potential campaign financiers through the prospect of tax cut treats. Furthermore, some of these exceptions serve as cheaper stipends for certain beneficial actions, such as tax cuts for people who power their homes with solar energy.

One thing we can be sure about, however, is that this debate will continue to rage so long as  the government has bills to pay. Ben Franklin put it best:

 

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The Right to…Morality?

(Disclaimer: When it comes to politics, all articles have bias. Even ones by confused or passionate moderates. As such, I will be perfectly honest with my readers: I am pro-choice, for stem cell research, and for capital punishment.)

Morals are a personal thing. They have different definitions for different people, based on personal experiences, education, and individual thoughts. In democracies, we expect our governments to be moral. They are comprised of our country’s leaders, our representatives whose job it is to make the best decisions for the people. So naturally, governments require a moral compass, to an extent, in passing ethical laws, and benefiting the citizenry.

Now while this is fairly easy to do when it comes to something like human cannibalism, for other issues, especially such controversial topics as abortion, stem cell research, and even capital punishment, things become a bit murky.

When it comes to abortion, some people frame the topic as “the right to life,” while the Supreme Court frames it as “the right to privacy,” as denoted in Roe v. Wade (e.g., abortion is a woman’s right to make choices about her body). As far as the government is involved, I have begun to see this increasingly as a “right to morality” issue. Which puts things in a considerably different perspective.

Think about it: with abortion and stem cell research, it all boils down to a person’s belief of when a child is considered “human,” whether from fertilization, or from birth. Therefore, the question of allowing abortions is directly connected to the “morality” of killing a fetus, and whether this equates to killing a human. So does the government have the right to impose on its citizens a certain form of morality?

The same thought process can be applied to capital punishment. Research conducted to find correlations between the incidence of capital punishment and the likelihood of severe crimes is often contradictory (see the following link for more information: http://www.deathpenaltyinfo.org/facts-about-deterrence-and-death-penalty). And while there are obviously multiple other factors involved in capital punishment (i.e., the cost to the state, the big controversy over racism in court sentences, etc.), in theory, this issue still boils down to the government’s right to intervene and punish wrong acts in a particular way. In other words, should the government determine for society what actions constitute losing the right to live?

When we choose a stance on these controversial topics, we often turn to our own moral beliefs for answers. Because these are very difficult issues to decide on, and even public opinion is split. For abortion, we keep going back and forth. Check out the graph in this link: http://www.gallup.com/poll/154838/pro-choice-americans-record-low.aspx. Despite the article title and content (it’s Gallup: they need to spice up their polls somehow), the graph shows that public opinion has been wavering back and fourth and split down with pretty much half in favor of abortions and half opposed. For stem cell research, public opinion is more overwhelmingly in favor (http://www.gallup.com/poll/21676/stem-cell-research.aspx), but for capital punishment, we are also going back and forth (http://www.gallup.com/poll/1606/death-penalty.aspx). But when we decide which policy to favor, which to support, and even which to advocate, we need to consider the bigger picture. Because in such a diverse nation, with so many contrasting views, the opinion you hold may be drastically different from so many others.

So I ask you to consider the following questions:

Should the federal government impose a certain moral compass with blanket laws for such issues?

Should we allow state governments to do that?

Or should we ensure that people have the right to make their own moral decisions?

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Two Is Not Enough

Obama won.

This is not a victory post, just a statement. And with the exception of a few Obama-philes, the American people are not too happy about this.

I am not talking about Romney supporters, but rather the millions of dissatisfied voters who want more variety. Many felt they could only choose between two people for their future president and two giant parties to form their Congress. And many would have liked to have a third and fourth party put forth their candidates as well, candidates with a real chance of winning (sorry Gary Johnson fans, he really didn’t stand a chance). Because at the heart of it all, many Americans are fed up with the two-party system. I created this blog from the root of that discontent. And, though it may seem counterproductive, the purpose of this post will be to explain why we will never have more variety (unless there is major constitutional reform), why we will always be stuck with a two-party system…and why that might be a good thing.

Looking back on George Washington’d farewell address, our noble first president urged us to avoid the creation of two gigantic parties. But the Constitution that was drafted during his lifetime left us with no other choice.It all comes down to how we elect our candidates. We have what political scientists call a Single-Member District Plurality (SMDP); this simply means that each electoral district can only put forth one candidate from one party via an elector (from the Electoral College). This applies to all public offices: presidency, Congress, state offices, etc. As far as Congress is concerned, a party needs a majority in order to pass a bill in either chamber, including a supermajority in the Senate (60 or more members) to counter the filibuster. In the case of the presidency, again, a majority of elector votes (270 or more) are needed in order to gain office.

So what does all of this mean? Well since the purpose of a political party is to put forth candidates for office, parties in the SMDP system need to have a wide base of support in order to gain the majority needed to elect candidates. As such, large parties naturally form with vague, moderate platforms that put forth candidates who appeal to the largest possible majority of people. The result is today’s Republicans and Democrats. I mentioned this in an earlier post, but I believe it is worth reiterating: though we complain about a “divided country” split by polar opposite ideologies, the fact of the matter is that an average Democrat and an average Republican have more in common than an average Democrat and a true liberal (i.e. a Green Party supporter). And the same goes for the middle right (average Republican) vs. the far right (i.e. an authoritarian fascist or a libertarian).

Look how close Dems and Reps are in comparison to other parties in other countries. And look how close they are to the middle! (Powell, Dalton, and Strom 2012:87)

Many people blame the electoral college for this, and I will go more in detail about my views on that in another post, but let’s first consider the hypothetical situation that the electoral college is abolished. Perhaps we would see more Independent, Green, or Libertarian Senators and Representatives. But neither of these small parties will gain enough support in either chamber to pass legislation. And similarly, neither would gain enough popular votes to become president. Our form of government does not allow for third and fourth parties. This is not necessarily a bad thing; though people complain about it, this system allows for more moderate laws to be passed, laws that the majority of the country will agree with and follow. It creates a stable country, and prevents radicalism from taking over.

Maybe this system is outdated. Maybe having two large parties is more damaging than productive. But regardless of what you think, this is our system, and the only way we can change it is through drafting an entirely different constitution.

As for the Centrist Party, I guess my (dare I say it?) purpose in creating this blog was the need for people to be more informed about politics on a policy basis. Because if everyone makes their political decisions based on policies, not party affiliation or people, then they will have truly exercised their civic duty and spoken through their votes.

 

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Affirmative Action and the Role of the Supreme Court

(For more information on Fisher v. University of Texas, check out this link: http://www.nytimes.com/2012/10/11/us/a-changed-court-revisits-affirmative-action-in-college-admissions.html?pagewanted=all)

“Fisher v. University of Texas is a case currently before the United States Supreme Court concerning the affirmative action admissions policy of the University of Texas at Austin. The case, brought by undergraduate Abigail Fisher in 2008, asks that the court either declare the admissions policy of the University inconsistent with, or entirely overrule Grutter v. Bollinger, a 2003 case in which the Supreme Court ruled that race could play a limited role in the admissions policies of universities. An overruling of Grutter could end affirmative action policies in admissions at U.S. public universities.” -Wikipedia

Unfortunately this is the Supreme Court we’re talking about, so it’s going to take a while for the ruling and, more importantly, the chief justice’s ruling speech to be recorded and released to the public. However, this case provides the perfect condition for me to address two public policy issues that are central to American democracy.

The Role of the Supreme Court

Liberal and conservative have very different meanings when you’re talking about chief justices. Sure those terms may also define them in the traditional political sense, but just as liberal and conservative politicians argue about the role of government, so do justices argue about the role of the Supreme Court.

Conservatives in this case are constitutionalists, people who believe that the Supreme Court was designed solely to make sure that laws adhere to the constitution. Verbatim. Liberals adhere to a looser interpretation of the constitution, and see the Supreme Court as an instrument of change. They believe that rulings should not only reflect changing social values, but should alter the nature of the laws passed down the street in the Capitol.

Personally, I support the latter definition. Our founding fathers and constitutional authors understand that it is a living, breathing document, subject to change by a population so vastly different from the one of the eighteenth century. I believe that the Supreme Court will ultimately be the one responsible for setting precedents on controversial issues such as gay marriage, abortion, and obviously, affirmative action (I know that in some cases it already has, but am referring to decisive, end-all rulings such as “It is the government’s job to represent a child in the earliest stages of development, therefore all abortions are unconstitutional and illegal.”) The biggest question is when.

Affirmative Action

Affirmative action was a landmark policy born out of the Civil Rights movement with the intentions of finally integrating African Americans into a segregated and prejudiced society. But it had an expiration date attached to it, one estimated 50 years after its implementation through John F. Kennedy’s executive order. And that expiration date falls within this decade, which begs the question of the continuing legitimacy of affirmative action.

Today, universities and businesses justify affirmative action with the need for diversity. A diverse environment is much more conducive to showing employees and students what things are actually like “in the real world.” It can help them open up their perspectives and understand things in ways they normally never would.

But any time you admit a competitor into a program, university, or job on the basis of extraneous background details, you are producing an unfair system. This is particularly pertinent for schools, where the primary goal is to educate. In this case, gender, race, background, etc. should not even be considered when making an admissions decision. Because if the tipping point between Applicant A and Applicant B is the mere circumstance of their birth and whether their ancestors were historically subjugated or not, then the university will not have made an incredibly unfair decision.

I would argue for blind admissions to public universities (since private ones can make up their own rules, though they usually follow in suit). In other words, applicants receive numbers that become their “identity” for the process. And admissions officials will read essays, look at transcripts, and decide between Applicant 4567 and Applicant 4568, not knowing which one is a lower-class Latino and which is an upper-class African American. Officials will still have to take into account the location and quality of the schools applicants attended and how well they did there, but otherwise, complete anonymity will eliminate bias and ensure that the top applicants truly are admitted.

When it comes to equal opportunity, I understand that I have a very staunch view on it. But I have always argued for nurture over nature, and I believe that a person should only be judged on the basis of their actions, their accomplishments, their thoughts, and their work. So while I support affirmative action as an effort to desegregate, I believe we have reached the point where this policy is no longer necessary, and is in fact a cause of harm.

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