poli-sci@ucbvax.ARPA (06/21/85)
From: JoSH <JoSH@RUTGERS.ARPA>
Poli-Sci Digest Fri 21 Jun 85 Volume 5 Number 27
Contents: Space
Taxes
----------------------------------------------------------------------
Date: Thu 20 Jun 85 13:22:17-PDT
From: Terry C. Savage <TCS@USC-ECL.ARPA>
Subject: Re: Poli-Sci Digest V5 #26
In response to a couple of Josh's comments:
1) The problem with the American west analogy is that the amount
of capital required, in constant dollars, was several orders of
magnitude less (probably less than $10-20K in 1984 dollars). Also, you
didn't need to bring your air and temperature control (frequently) with
you. It was quite possible to survive for several days, perhaps weeks
or indefinitely, from "living off the land" . This is not even vaguely
an option in space.
2) The evidence is still limited, but what little there is
iondicates that artificial gravity is a luxury only if you want to go to
space for less than 6 months to a year. The old bod starts to
degenerate after that length of time, even with significant exercise.
One scenario we have considered several times is a central habitat that
provides the rotation and "overhead" of living in space, with modules
that are docked to it for extended periods of time, which do indeed
have limited (say, 3-6 months max) independent survival, although
not comfortably. Once there were several colonies,
which I suspect is 60-70 years away, people will have a fair degree
of freedom to move around.
Another question: Let's assume people enter into a rental/lease
agreement to dock their detachable modules. If there are no other
colonies yet (effectively, no option to leave), is there any
functional difference between the restrictions of the lessor and those
of a government that you voluntarily enter?
TCS
[The question of capital cost does not impact the question of the
size of groups which can colonize unless there are some economies
of scale in areas that are not amenable to market specialization.
For example, suppose a ground-to-orbit vehicle is too expensive
for a small group. One way around this is to have a large group
own the vehicle and administer its use in a political way. A
prefectly viable alternative is to have the vehicle owned by
an entrepeneur who hauls you up for a fee. If I wanted to move
to California, I would wait a long time if I must organize my
neighbors into a Moving Society and all chip in and buy a moving
van. Instead I just hire one for the occasion.
It would be bad all around if gravity were necessary to long-term
human health. Artificial gravity is quite expensive for several
reasons: First, it necessitates rigid mass-balanced structures.
A twenty-pound kevlar-fabric balloon just wouldn't do. High mass
requirements boost the cost by orders of magnitude. Secondly,
it limits geometry and makes getting in and out a pain. Third,
it severely limits the ad hoc evolutionary addition of structures to
each other--your community can't grow.
If I understand it right, the observed effects of extended 0-G
are variations in chemical balances (eg, calcium). I hope that
such effects turn out to be (a) benign and/or (b) correctable
by dietary supplements, which will probably be necessary anyway.
Have you looked into the properties of various kinds of algae
and food/air cycles?
--JoSH]
------------------------------
Date: Mon, 17 Jun 85 21:13:30 cdt
From: Laurence Leff <leff%smu.csnet@csnet-relay.arpa>
A Simplified Tax Package
There is much talk in the land of simplifying the tax system.
Proposed here is a three part tax system:
1. Excess Consumption Tax (taking the place of the income tax)
2. Organizational Inefficiency Tax (taking the place of the
corporate profits tax)
3. Failure to Hire an American Tax (taking the place of both
input duties and making immigration and the hiring of non-Americans
more rational).
The goals are great simplicity, encouragement of investment
and productivity, and an attack on conspicuous consumption.
EXCESS CONSUMPTION TAX:
Each person shall pay a tax on the following quantity:
Q=total income for the year - any amount invested in a new designated
investment vehicle + any amount received from selling or
cashing in a designated investment vehicle.
This rate shall be based as follows:
0% on any amount less than the 33 percentile of income in the U. S.
30% on any amount between the 33 percentile and 66 percentile
70% on any amount after the 66 percentile.
Let us say 1/3 of the incomes of U. S. citizens are below the value A and
2/3 below the value B
Thus the tax would be computed as follows:
if Q < A then tax=0
if A<= Q and Q < B then tax = .3 * Q-A
if Q >= B then tax = .3 * (A-B) + .7*(Q-B)
Income is any amount received for use by the person from wages, interest,
capital gains, tip, payments for consulting, etc. It would include
any kind of government benefit but not interest from state and local
bonds which are constitutionally tax exempt.
A designated investment vehicle is any equity or debt offering (stock or
bond) where the proceeds will go towards actions whose basic purpose is to
reduce imports or increase exports or federal government bonds. Examples of
investment activities would be investing in new plant, R & D for making such
things as cars, consumer electronics, steel, semiconductors or investments
into things that we are exporting such as chemicals, farms, etc.
Investments in such things as real estate which are essentially consumed
locally would not count. Also money going to such things as overhead,
selling expenses (in the U. S.) would not qualify for treatment as a
designated investment. Only money to actually make or design such goods
would count. At the time the investment was offered, the IRS would
determine whether it was a designated investment or not.
Note that one only gets the deduction if one buys a new bond. That is when
the people who buy from the corporation or the U. S. government when it
makes the initial offering will get to take the deduction from income.
Those who buy it second hand do not get a deduction.
To compare how much people would pay under our current system with the
new one, lets look at single people making various incomes. Under our
current income structure A (the 33 percentile number) is approximately
$13,000/year and B is approximately $33,000/year.
yearly income old tax new tax
7,000 614 0
13,000 1606 0
20,000 3212 2300
30,000 6122 5100
40,000 9759 11500
50,000 13879 18000
There are many advantages of this system over the current one:
1) It directly and simply encourages investment.
2) It does not discourage people from earning more money. They can
avoid any taxes they want to by making investments in America or by
lending the government money. There is no incentive to participate
in wasteful tax shelters.
3) Under most investment encouraging schemes, a lot of the money is
wasted as people will take IRA money and use it to buy old bonds or
stocks (making the original holders richer but not increasing the
total amount of investment). Since this program only gives a deduction
for bonds or stocks just issued, all money that now would go into IRA
schemes etc. are directly invested.
4) This system eliminates the rules regarding pension investment,
IRA, 401C, deferred compensation and income averageing. If people want
to defer taxes, they simply put money into a designated investment and
then take it out when they want to spend it (and pay taxes on it).
5) This system is very politically acceptable. The average taxpayer
will pay much less taxes. 1/3 of all income earners by definition will
pay zero taxes. Even the rich who would be taxed more could avoid
any taxes by investing the money. Thus only those rich who like to
buy Mercedes Benzes, fancy vacations, etc. would complain.
6) Since a large number of people will avoid taxes by investing in
government bonds, the government would end up paying very low interest
rates. Since 1/3 of our federal expenditures is interest on the national
debt, this would reduce government expenditures. Also large amounts of
the treasury bonds are held by foreigners. Since Americans would have
an incentive to buy treasury bills, this would lower the amount of
interest payments going abroad.
ORGANIZATIONAL INEFFICIENCY TAX:
Each corporation or other business organization shall pay a tax of 30% on
all expenditures that are not a factor of production for a good or service
that it is selling. Each non-profit organization shall pay a tax of 30% on
all expenditures that are not for the charitable purpose(s) of that
organization.
Any interest paid shall be divided on the basis of how the loan was used.
Expenses to market goods in foreign countries are deductable.
Thus we are taxing overhead, company cars, personnel departments, business
lunches, the fancy offices that management has, money to pay lawyers to
perform mergers, advertising. Profits are not taxed! Note that
expenses that an American company may have in marketing and selling
products in foreign countries are deductable so that American products
are not a competitive disadvantage.
This system has many advantages
1) We eliminate the disincentive to invest created by the current laws
on depreciation. Let us say a corporation buys a new plant worth a
million dollars. Its sales are 100,000 dollars/year. Thus in the first
year it has a negative cash flow of 900,000 year. However if the plant
is judged to have a lifetime of twenty years, they must still pay tax.
This forces the corporation to take out a bigger loan than it has to
and discourages them from making the investment in the first place.
Our current tax laws create an incentive to lease rather than
purchase. This is due to the rules regarding depreciation as well
as R&D credits.
2) If companies can make more profit for a given investment (by not
having to pay taxes) more investments become cost effective.
3) Corporations will pay more tax than they currently are now. This shift
of the burden to corporations from people will make this tax politically
popular. Furthermore by publicizing that waste in corporate beaurocracy and
outright conspicuous consumption which is currently deductable from
corporate expenses, people would love the idea of taxing that.
4) Discouraging things such as mergers, corporate jets, etc. the economy
will be more efficient and it will force corporate management to concentrate
attention and money on real problems.
5) This system provides a way to discourage wasteful expenditures on
the part of charities, e. g. charities who spend 9 dollars out of
every 10 in raising more money.
FAILURE TO HIRE AN AMERICAN TAX
All imports shall pay a tax equal to one half the median hourly wage for
each hour of foreign labor that goes into their production. Any company
hiring an undocumented worker (a non citizen or permanent resident who under
the current laws would be considered an illegal alien) shall pay this tax
for each hour the non-citizen works. Non-citizen labor or imported
materials or equipment used for the production of exported goods are not
subject to this tax.
Advantages:
1) This provides a uniform system for dealing with foreign imports.
We now have a patchwork quilt of various categories. Most of the
foreign duty can be avoided by bring in parts and doing the final assembly
in the U. S. Here we have a gradual system; as more and more of the
work is done in the U. S., less and less of the duty gets applied.
We also provide an incentive to foreign companies to purchase
American goods. If a Japanese memory maker uses an American
wafer stepper as opposed to a Japanese one, they will get a discount
proportional to the number of labor hours needed by Japan to make a
wafer stepper.
2) Our tarriffs are now a mess due to political pressures created
by some labor unions and various countries. This system provides
a fair and uniform protection for all American workers.
3) Hiring illegal aliens does no less harm than sending work
abroad to foreign factories. This system treats them uniformly.
Also by turning over the policing job over to the IRS which can
easily check employee wage reports (W-2 forms), we will have
much better control over the illegal alien problem than we have currently.
ADMINISTRATION:
The above rules will be put in a one or two page law. Now of course,
there will be various ambiguities (what is income? what exactly
is the labor composing a foreign product? etc.) The I. R. S.
will be empowered to pass regulations to clarify the above law
and to make interpretations in individual cases.
They may also pass regulations requiring people to file certain
information returns (such as the current W-2 or 1099).
The IRS shall receive 0.5% of all revenues collected. (The IRS
budget is currently 1/2 per cent of the federal budget).
In the event there is a disagreement between the IRS and a taxpayer as to
the amount due, the amount in dispute shall go to a TAX JURY. A tax jury is
twelve people randomly selected from the total citizenship of the U. S.
Each member of the tax jury shall be given a copy of the one page law and
shall swear to an oath to interpret that law and the facts to the best of
their ability.
The tax jury shall choose one of their members by majority motion
to chair the hearing. However, at any time they can
overrule a decision of the chair or have him replaced.
Both sides would present their case. The tax jury (at the request
of either side or on their own initiative) may suppoena people,
records or expert witnesses. The tax jury can ignore any or all of
the IRS regulations if they appear to be too complicated or simply
inappropriate interpretations of the tax law.
After the hearing is completed, they shall attempt to reach a unanimous
decision as to how much tax (if any) the taxpayer actually has to pay.
At any time, 2/3 of the tax jury can call the question at which time
all members can vote for any amount to be paid from zero up to the
amount in dispute and the average of all members votes shall count.
The tax jury may by unanimous vote assess additional penalties against the
taxpayer for refusing to comply with reasonable requests for information,
for making a frivolous appeal to the tax jury system or for fraud. They may
also (by unanimous vote) assess penalties against members of the IRS staff
involved with the case (not to exceed one years salary) and may also suspend
or fire any IRS staff. These penalties would be for cases where the IRS
was clearly being unreasonable.
[I don't see that this system has any significant advantages over the
present one, except those that any new tax law would have, namely
getting rid of a bunch of historical junk in the present law.
It does suffer heavily from a problem that is also endemic in
current law, namely the attempt to combine social engineering
with revenue raising. Another problem it shares with current
law is the vast invasion of privacy engendered by the IRS.
I personally would support collecting federal revenue, if collected
it must be, by an out and out sales tax. This would at least
avoid the two problems above. --JoSH]
------------------------------
End of POLI-SCI Digest
- 30 -
-------