The FairTax

There have been some great discussions over at Jabley. Anyone who is interested in the taxing system should read through that area.

There have been many good points raised about The FairTax. I am quickly becoming a proponent. However, I am still bothered by two implications of one big idea. The idea is that any given item is taxed once and only once, at the point where a consumer buys it from a business. Not before, not after.

Not before:
Companies are not taxed on their purchases. The stated reason was not the one I gave in the above paragraph. The stated reason is that business profits eventually end up in the hands of an actual person, which must eventually spend it, and thus pay tax on it. And that any money that remains in the business is by definition investment, and therefore worthy of tax-free status. It’s the second rationale that bothers me. Not all purchases a business makes are investments, and plenty of investments that citizens make are.

I got a good comment from Micah Martello. Among other points, he says that “People already do this very same thing under the current system. Instead of paying the income tax, payroll tax, social security tax, medicare tax and compliance costs when you give yourself a salary to but that car you just pay yourself less and have the company buy the car. It’s still tax evasion under either system.”

I disagree. The difference is that under the current system, when the company bought the car, it paid sales taxes. Under The FairTax, it does not. Under the current system, when the company got the money to buy the car, it paid income tax on that. Under The FairTax it does not.

Not after: Under The FairTax, once an item has been taxed, it is never taxed again. Buying a used item is therefore tax free. I have troubles with this too. I see three related issues.
1) As I posted over at Jabley, it creates a perverse incentive if the value of a new item is more than 23% over the value of that same item used. Jabley dubbed this “Taxitrage”.
2) Who is checking? I don’t see any way to enforce this except to actually have an enormous data warehouse checking the status of every item in the USA. It’s absurd. Businesses have a huge incentive to commit fraud. “Sir, we have a special sale on ‘used’ computers, wink wink”
3) As a consumer, I’d be crazy to buy anything new. Why would I buy a new home, and pay an extra 23% on that price? Why would I buy a wireless router new, or a book, or just about anything. If I can get it used, I will. What does this do to the manufacturer? It amounts to a 23% hurdle that must be overcome in order to get the consumer to buy your product. In fact, it is very much like a tarriff that a foreign country must overcome to sell their goods in the USA, and high tarriffs are generally considered bad economics.

(Point 3 also leads to a 23% incentive to recycle consumer goods, and additionally gives the poorer people a way to purchase goods tax-free. Maybe that’s the point, though I don’t recall seeing that anywhere.)

Paying at the grocery

I’ve been awfully political lately, here’s some lighthearted stuff to break the mood.

OK, you know those things that you use to pay with a credit/debit card at the grocery? This is one of the worst machines I’ve ever seen. I’ve used it well over one hundred times, and I still have to stop and read every button every time. Have you ever seen someone try to use it for the first time? You might as well be in line behind some who wants to pay by trading leftover kleenex — it’s gonna be a while.

The sad part is that 95% of patrons are using it to do the exact same thing — pay with a card. How hard is that? The price comes up, you swipe your card, you push yes. How many buttons do you need? Two? They have over 20. A standard numeric keypad. 3 keys that change their function depending what point you are in the process. Another 3 or 6 with various payment options. It’s insane. Think about this device the next time you use it. Then tell me I’m wrong.

Sadly, I feel just as strongly about this as I do the political material. There will be more posts on bad user interfaces in normal life. It drives me crazy. I actually spend time nodding my head while I read sites like this.

Update: Here is a pic of the interface so you can see how ridiculous it is.

Bush and the Media

Earlier, I said that the media let the Bushies get away with their lies. They have, so the Bushies lie more. If you can make up quotes about Gore, make up stories about Gore, and no one calls you on it, then why would you stop? Until the Bushies are shown some negative reinforcement, they have every reason to grow more secretive, more autocratic, more arrogant, more insular, and more deceptive. Yglesias says it better:

I used to get mad at the administration for trying to manipulate people all the time. I don’t anymore. You can hardly blame them. Everyone would act this way if the media were so casual about letting them get away with it. But now we’re well beyond letting them get away and deep into aiding-and-abetting territoriy.

The only difference between us is that I am still mad.

2004 Election Analysis

GWB is president because he lied and got away with it. Too many people believed the lies.

Consider Iraq. Either you believe it was connected to 9/11 in some way or you don’t. If you do believe that Iraq has a connection to 9/11, then the invasion makes sense. And whatever bad things happen there are unfortunate, but neccessary to effectively take on the bad guys. On the other hand, if you think they are unrelated, then you think it was a gigantic mistake on ever level.
Fact: Iraq has nothing to do with 9/11. There is no reputable independent source that will say otherwise.
Fact: The Bush administration knew this, and decided to go to Iraq anyways, spreading lies to the American public.
What did the exit polls show? 55% of the voters believed that Iraq was part of the war on terrorism, and the voted 81%-18% for Bush.

Consider the WMDs. If you believed that Iraq had WMDs, and you believe that Sadaam was a nutjob who was unpredictable, then you might reasonably feel we had to do something about it. If you thought there were never WMDs and we had defanged Saddam back in Gulf War I, then you didn’t see what the all the fuss was about.

Fact: Iraq did not have WMDs. They had close to zero offensive capability. We were more threatened by Australia then we were by Iraq.
Fact: The Bush administration knew this, and decided to go to Iraq anyways, spreading lies to the American public.
What does/did the public believe about this? In November 2003 (the closest date I can find), polls showed that about half the country overall believed there were WMDs in Iraq, while 80% of Republicans did. (According to Gallup, over half the country now believes they were lied to about WMDs.)

And Iraq and related issues were the #1 issue for voters, not “moral issues”. Of the 46% who bought into the fantasy that the Iraq War made the US more secure, 90% voted for Bush.

How about the economy?
Fact: The Bush taxcuts were bad economic policy, roundly denounced by hordes of economists. They were not designed to help the economy. Yet, 41% of the populace believed that they were even after 4 years of job losses and poor economic news, and they broke 92%-7% for Bush.

So what do have here? We have a country were roughly half the people believe in fairy tales they’ve been told. In fact, as the article nicely demonstrates (and has been shown elsewhere), the majority of Bush supporters simply don’t know what the hell they’re talking about.

72% of Bush supporters continue to believe that Iraq had actual WMD (47%) or a major program for developing them (25%). Fifty-six percent assume that most experts believe Iraq had actual WMD and 57% also assume, incorrectly, that Duelfer concluded Iraq had at least a major WMD program. ..
Similarly, 75% of Bush supporters continue to believe that Iraq was providing substantial support to al Qaeda, and 63% believe that clear evidence of this support has been found. Sixty percent of Bush supporters assume that this is also the conclusion of most experts, and 55% assume, incorrectly, that this was the conclusion of the 9/11 Commission. Here again, large majorities of Kerry supporters have exactly opposite perceptions….
only 31% of Bush supporters recognize that the majority of people in the world oppose the US having gone to war with Iraq.

So are people idiots? Well, there’s never a shortage of idiots. But for the most part, that isn’t the answer, and it ain’t their fault. Citizens shouldn’t have to spend their time investigating to see if their leaders are telling the truth. I spend a lot of time diving through news sources, going to primary sources, reading informed commentary. Most people don’t. Most people shouldn’t. In a well-functioning democracy, there is no need to. Your leaders normally aren’t presumed to be liars, and a properly-functioning media will let you know when they are. We do not have a properly-functioning media. I will simply point you to 6 years of cites at The Daily Howler.

Yep, GWB lied. He wasn’t called on it. Enough people believed. He won. He continues to lie. The US, and the world, is the worse for it.

(“Lies” is a term that carries a lot of meaning behind it. If it makes you feel better, substitute in “a careful program of misstatements, misrepresentations, and disinformation designed in such a way that they could always be defended on some tortuous hair-splitting fine point, but were designed purely to decieve” To me, that’s a lie.)

(Any uncited poll data comes from here or here.)

Sports: The Funnel Theory

In my last post, I explained why some sports are better than others. There is an semi-empirical test (a thought experiment really) to evaluate the relative merits of sports too. That last post had gone on way too long though, I had to separate it out.

(The funnel theory was developed in collaboration with Mr. Kid. In keeping with the psedononymous nature of this site, I will only use his real name if he requests.)

The funnel theory was born in 1997 or so, when I got a new roommate. I was then in my volleyball and basketball years, playing 5 or 6 times a week. He also claimed to be a sportsman. What sport did he play? Underwater Hockey. I’m not kidding, underwater hockey. Here’s the best link I could find. Needless to say, I didn’t think much of this. I grew more contemptuous when he claimed to be one of the top 20 players in the world. Big deal! I could be in the top 500 just by jumping in the pool. If I can avoid drowning, I’d make it to the top 100. Anyone who plays professional basketball, football, baseball, soccer, tennis — if they chose to play underwater hockey instead, they would be the best player in the world. But instead, they chose to play a real sport instead. This insight birthed the funnel theory.

Imagine all the people in the world at the top of the funnel. At the top are sports anyone can play. Hopscotch, Hide and Seek, etc. As you move downwards, the sports get more difficult, and it grows harder to keep moving down. At the bottom of the funnel are sports that you have to be something truly special to excel in. The sports at the bottom of the funnel are “better” in some real, empirical sense.

What distinguishes the levels? Let’s say curling is above hockey (as it is). I claim that means that if you took all the hockey players, and pretended they had spent their life training in curling instead, and did the same with the curlers (brought them up to be hockey players), more of the ex-hockey players would be great at curling than the ex-curlers would be great at hockey. Another example, if you took all the skiiers of the world, and had them start their life over playing underwater hockey, they would dominate the sport. But the underwater hockey players would not dominate skiing, they’d be terrible.

This is all statistical. It’s not to say that Shaquille O’Neal could beat Tiger Woods at golf. But more basketball players would be world class golfers than golfers could be world class basketball players.

Note that very few people could become worldclass boxers, basketball or football players who aren’t already. These are the sports at the bottom of my funnel, and the top of my list of great sports.

Some folks may be muttering “Michael Jordan and baseball!” under their breath. The best basketball player in the world, and he was an average baseball in the minor leagues. True, but remember, he was good enough to be in the minors. And the thought experiment is to imagine if Michael Jordan had spent the time and effort in baseball that he did in basketball. There is no doubt in my mind that more basketball players could succeed at baseball than the reverse. None at all.

(Not sure how Bo Jackson, Deion Sanders and Jim Thorpe fit into this theory, suggestions are welcome.)