In my last post, I discussed why tax deductions are inherently unfair in that a deduction of a certain dollar amount is worth more to someone paying a higher marginal tax rate than to someone paying a lower marginal tax rate. In this post, I will discuss tax credits, another mechanism used by the tax code to subsidize certain economic activities and behaviors. Tax credits have several advantages over tax deductions, but are less-widely used.Read More »Tax Credits Can Provide Progressive Subsidies
Tax deductions for individuals are an important part of federal income taxes and most states’ income taxes.
In a previous post, I outlined four desiderata for a reformed tax system: responsive, fair, simple and transparent, and enforceable. In this post, I aim to convince you that tax deductions for individuals are neither fair nor simple and transparent. (Important: tax deductions for businesses are different and not discussed in this post.)Read More »Tax Deductions for Individuals are Unfair and Complex
The word desiderata describes perfectly what I want to discuss in this post on real tax reform. I first encountered it taking Professor Fred Brooks’s computer architecture course in grad school in 1977. In his 2010 book, The Design of Design, Brooks defines desiderata as the secondary objectives of a design. Using design of his beach house as an example, the primary goal is to build a beach house. The desiderata are things like being able to survive hurricanes, showcasing the stunning views, and being able to seat and sleep 14 people.
I previously discussed three goals for a tax system, the most important being to raise funds for public services. Let’s agree for now not to debate what public services are appropriate nor how much money should be spent to provide those services. Whatever the amount, the money must be raised. That’s the goal.
What are the desiderata for a reformed tax system?Read More »Real Tax Reform: Desiderata
The technology section of today’s New York Times has a feature-length article titled The Follower Factory. It details the black market for fake users and fake followers on Facebook and Twitter. People who make money by having lots of followers (wanna be celebrities, brands, authors) can buy fake followers from companies that create fake users of varying quality and will have those fake users follow the buyer’s page or feeds.
So, if I wanted to make this blog seem popular and influential, I’d simply buy a few tens of thousands of fake followers, for a penny or two each.
Why should we care? Beyond the obvious fraud perpetrated on businesses like advertising that pay based on numbers of followers, there are two reasons:
- Fake users are impacting our political discourse: It turns out that people give more credibility to posts and tweets from people and organizations with many followers. But, of course, there’s no easy way to know whether those followers are real or purchased fake followers.
- Fake users can affect real people’s reputations: So-called high-quality fake users mimic real users, copying key aspects of their profiles like name, location, school, age, gender, etc. When fake users promote, for example, pornographic web sites, the reputations of the corresponding real users are affected. I have a (real-life) friend who has been plagued by fake users on Facebook that mimic him and then try to befriend his Facebook friends.
Not Tax Reform
The misleadingly-named Tax Cuts and Jobs Act of 2017 is law, but it is not tax reform. Whatever it means for various taxpayers and corporations remains to be worked out. As one writer put it:
Ultimately, the new tax rules are actually complex enough that it will likely take months or even years for all of the new tax strategies to emerge … On the “plus” side, though, at least ongoing tax complexity means there will continue to be value for tax planning advice?
What it means for the US economy is equally murky.Read More »Real Tax Reform