Randy Cassingham's Blog

Posted by rewinn, Mercer Island on April 5, 2009:

There are two issues here:

(1) whether our messy American income tax system could be improved with a Flat Tax, and
(2) whether taxes are causally related to shootings.

1. To answer #1, consider how you calculate your income tax:
Step A. Add up income
Step B. Subtract stuff from A (e.g. $X per child under 18)
Step C. Calculate Tax from B by looking it up on a table
Step D. Subtract stuff from C (e.g. $Y for each pack of GOOHF cards made from domestically-produced hemp)
Step E: You're done!

The problem with the Flat Tax is that the complicated part is not "C"; it's A, B and D. Looking things up in a table not not noticeably slower than multiplying by X%.

Step A is easy for most wage earners: a couple of 1040 forms, some bank interest statements, and we're done. The Flat Tax doesn't matter here.

Step A *is* complicated for businesspeople, and potentially the source of problems. What is income? If I give Randy $1 for a GOOHF card, that's income, but if I buy him a beer in appreciation for having read ThisIsTrue for years, it's not. Or maybe it is; you can vary the facts, come up with all sorts of scenarios and the rules have to cover them. And it *doesn't matter* at this point of the analysis whether the tax is flat or not.

Step B can be annoyingly complicated, but the big pain is to business people who complain (quite reasonably) that they should be taxed on net, not on gross. Surely the cost of printing GOOHF cards is a business expense that should be subtracted from income. What counts as an expense gets complicated: Randy may NEED lunch to generate This Is True, but does an ordinary wage worker? And of course TRACKING expenses can be a pain. Surely life would be simpler if the government trusted us all to be as honest as Bernie Madoff.

Steps B and D have more complications because we, as a nation, choose to do a lot of things (e.g. encourage having kids or owning homes) NOT by overtly appropriating resources, but through tax expenditures, e.g. the mortgage interest rate deduction. Mathwise, the result is the same whether you give Randy $1000 to help with his house payment, or simply let him knock $1000 off his tax bill, but for some reason, we do the latter. Taxes would be a lot simpler if we abandoned using the tax code for such things and simply spent the money openly; if THAT is what one means by a "flat tax" ... eliminating steps B and D ... then I'm for it.

It's not gonna happen; every church, charity, mortgage holder and parent will demand THEIR piece of pie. The leaders of the Flat Tax movement, and its fellow scam the National Sales Tax a.k.a. Fair Tax, know this. If they'd come right out and say so, we could have a good conversation and start experimenting with "flattening" the worst parts.

We could start by making the Payroll Tax (FICA) a flat tax; at the moment, it's just about the most regressive tax ever, due to its income cap. We could knock off some of the sillier instances of tax expenditures, such as the oil depletion allowance (wouldn't YOU like to cut your taxes by the percentage of you that's been used up?)

Evolutionary change in basic matters is always better than revolutionary change, and a step-by-step simplification of our tax code would be a good idea. But replacing the table look-up in Step C with a simple multiplication does not address the real problem of our tax code being too complicated.

(2) As to April 15 being related to shootings, the evidence so far is not compelling to me. The human mind is a pattern-seeking machine so there's nothing wrong with seeing a pattern in three massacres in the same calendar, but it's not statistically significant. Also, the causal mechanism is a bit convoluted: parents are stressed, therefore kids start shooting.

In contrast, the mind-altering medication hypothesis has a pretty straightforward mechanistic explanation.

I must congratulate Randy for a most thought-provoking post. The offer of a beer stands, if you assume the risk of tax consequences ;-)

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Sounds good. I prefer a nice microbrew ale to mass-produced stuff, if that's OK. -rc

Posted by robert, newark valley, NY on April 5, 2009:

The fellow was upset that foreigners are taking jobs away from US citizens.

Posted by Susan, Andersonville, TN on April 5, 2009:

My boyfriend is convinced that allergies can trigger all sorts of bad behavior. And spring (April & March) is when loads of grasses, trees, and flowering plants are releasing pollen.

Posted by Annette, Eustis, FL on April 5, 2009:

Yes it IS the IRS when we get taxed to death without any say-so. Our government is kiting "checks" for every whim they can think of and adding more expenses to what they've already got in motion. Time to close it all down and see if we can make do without such an expensive government.

Posted by Lynne Portland Oregon on April 5, 2009:

I have participated daily in a depression chat group for the past six months. I'm subject to my own thoughts of rage and armed retaliation at our species, and have monitored my personal ups and downs as well as those of others during these past few months. I have never seen taxes mentioned as a stressor -- Randy, with all due respect, I think exercising the human love for patterns has led you to try to link aggression and taxes. I do see a correlation between the coming of spring, mental health and an increase in activity. People begin feeling better as the weather improves and are more easily able to make plans to get stuff done. Sometimes those plans include actualizing the massacre about which one has spent the winter ruminating. But I truly don't think shooting rampages are connected to tax season -- people who go on rampages are not thinking about getting back at the IRS, and people who are responsible enough to wade through their taxes aren't going on shooting rampages!

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While my comments are quite obviously tongue in cheek, I do think that taxes are a significant stressor, which peak late March through mid-April. I do worry that "feeling better" could possibly translate to "actualizing the massacre" one has been fantasizing about, though. -rc

Posted by brian, ohio on April 5, 2009:

A frightening parallel can unfortunately be drawn between the "Information Age", i.e, the multimedia barrage of every piece of information, every news item, almost as it happens, with the "New Age of Terror" that is being bred and cultivated even as we speak. With the click of the remote, or a computer mouse, we can all be witness to some of the most horrific images and news stories in history. And without a doubt there are people, politicians among them, capitalizing on this phenomena. It started with the end of our innocence, IMHO, in Dallas in 1963, profligated during the Viet Nam Era, and is flourishing now. Randy is right: it IS amazing that with all the purvasive feelings of anger and fear surrounding us that there aren't more incidents like the most recent occurence in Binghampton, and Pittsburg, and Oakland...on a daily basis.

Posted by Ben of Houston on April 5, 2009:

While our funny news columnist's comments are made to be just that, he does bring up a good point.

The tax code is insane. Thousands of pages of loopholes, exclusions, and deductions. When my grandmother when to take her certified agent from the IRS, the teacher told her with all seriousness that there was no perfect tax submission, and that if an auditor did not find anything in an audit, he would be inspected for bribery.

If Obama really wanted to change the status quo, he would trash the entire tax code and replace it with a one-page form. Taxes are not supposed to be used to influence our decisions. They shouldn't be used to promote marriage, buy houses, give to charity, rush on office supplies on December 30th, or exaggerate your medical bills to be above 7.5% of your net income. Due to the perversity of the system, they do all of that. Standard deduction for everyone, and a simple split between investment and normal income for taxing capital gains at a different rate. Anything that can't be taught in the Freshman economics should be removed.

Every year that H&R Block and its competition stays in business, is a travesty against humanity and common sense.

Posted by Carol, Pitman, PA on April 5, 2009:

It seems that you may be right in your reasoning. These shooters are mad at the injustice they see whether real or imagined, and the income tax is just one other injustice, perhaps the proverbial straw?

I also have a question. When I was younger (granted a long, long time ago) if you were despondent (a word not used then), and wished to kill yourself, you killed yourself. You didn't arm yourself with enough to take out an army and shoot strangers, or even family members! It may have been "they'll see -- they'll be sorry for how they treated me" but, they didn't. The first mass shooting I remember was when that guy shoot up the McDonald's and everyone was horrified and spoke about it for months. Now it seems that there are so many, we shake our heads and thank God it wasn't us.

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There's more stress now, I guess. And more unfair taxes, too (not higher, just more unfair, which is a big difference). -rc

Posted by Bruce, SC on April 5, 2009:

Gosh, she had to bring up first ones we remember...

University of Texas bell tower gunman, 1966.

Posted by Steve in Waukesha Wisconsin on April 5, 2009:

As much as I'd like to see the tax laws simplified, you have to think about all the accountants that would be put out of work. Think about the people dressed up as the statue of liberty who would be out of a rewarding career. Or all the television stations that would face massive cut backs from the loss of revenue from H&R Block. Certainly TurboTax employees out of work would further strain the welfare system. What about the pencil and eraser manufacturers? Who speaks for those employees? How about the loss of jobs for temporary workers who are employed because of full time workers waiting in line at the Federal Building trying to get the same answer twice from half a dozen IRS workers?

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My tax guy is the biggest promoter I know of the flat tax. He says it will indeed put him out of business -- but that's OK, since it would be so much better for the country, and he'd rather do "productive" work. If he's OK with taking the risk, so am I. -rc