Taxes

Twice yesterday I received an email that is being forwarded around that lists all of the taxes that we pay now, claims (erroneously) that 100 years ago none of these existed, etc. and basically makes the point that taxes are simply too high.

I think that this claim is meaningless at best and whining at worst. It's like making the claim that "boxes are too big." Ummm...ok, boxes are too big...for what? Which boxes? A matchbox is too big too hold a crumb, too small to hold a dishwasher.

The claim "taxes are too high" only has meaning in relation to what we get for those taxes. If the government's budget is $1, then our tax rate is clearly too high; if the government's budget is $10 Trillion, our tax rate is clearly too low.

So I think that any productive claim about tax levels can only be had in relation to:

• How much is government spending, and whether it is too much or too little (and, of course, whether it can be done more efficiently)
• How much financing we are willing to bear to support that level of spend (some national debt is a good thing, too much is a drag on the economy in the same way that too-high taxes are also a drag)
• How the tax burden that remains is distributed among taxpayers.

Only in this context can any statement about whether taxes are too high or low have any meaning whatsoever. Thus I tend to be quite dismissive about claims that our taxes are too high (never mind that for much of the past hundred years they've been a lot higher) when they come without corresponding suggestions of significant spending to cut.
There are additional arguments for lower taxes. One is the trickle-down argument, whereby lower taxes lead to greater economic activity, which leads to higher overall receipts. I'm not an economist so I can't evaluate the merits of this although it does seem like a reasonable theory. But it doesn't change the fact that it is still arguing for alignment of tax revenue with spending. The other argument is "starve the beast" whereby reducing revenues will lead to lower spending. Again, this still tries to reconcile spending and receipts, so it is a rational discussion to have. (Of course, even with my earlier disclaimer, I believe that we have ample evidence that the beast keeps spending even when starved, leading to huge deficits. Exhibit A here is the Reagan years.)

I am particularly amused by the anti-tax missives that whine about how the tax system punishing entrepreneurs and other successful people. They, after all, do pay the highest incremental tax rates. This is, of course, a direct result of having a progressive taxation system. There is only one way to avoid this consequence: eliminate the progressive rate structure and go to a flat (or a declining-rate) tax. I've actually pointed this fact out to some of the anti-tax people, who have surprisingly disagreed with this conclusion. (If anybody can tell me how I am wrong, though, I'd love to hear it, but I think the mathematics is pretty clear).

I'm not opposed to a flat tax or declining-rate tax per-se, but here's another fact about them: for a given level of government spend, switching from a progressive to a non-progressive tax scheme must necessarily shift more of the burden to the poorer segments of society. At some level, this is a good thing: I'm a huge believer that we want broad participation, that we want as many people as possible to be a paying customers of government services, even if it's paying just a little. Of course, the downside is that the poorest segments of the population are by definition not a great source of revenue, so if you went flat you'd have to give them a fairly substantial rate hike to generate enough revenue to compensate for the substantial cut that going flat would give to the wealthiest. And a rate hike on the poorest segment would be a far greater hardship for a far greater number of people than the current progressive system imposes on the wealthiest. I'm going to go out on a limb and suggest that this is perhaps the reason we decided to adopt progressive taxes.

There's another thing about the tax "debate" (I use that word generously) that irks me, and that is all of the class-warfare terminology that gets thrown around. Particularly, the Democrats love to complain about "tax cuts for the rich." Of course tax cuts benefit the wealthy more than the poor - the wealthy pay vastly more in taxes! (And our progressive tax system amplifies this. If you don't believe me, just do the math.) So if you cut taxes, the people that pay the most will get the most benefit. There's really only one way to avoid this artifact: only cut the taxes for the lowest end of the spectrum, the people that are barely paying taxes at all., and keep the taxes the same for everyone above that level. While such a policy would be good for those poor people, it's a bad idea for several reasons: (a) we're simply not talking about much money, so why bother; and (b) you would inevitably end up making many people pay essentially no taxes, which is a very bad idea from both a fairness point of view, but also from the participation point of view mentioned above; and (c) it's not a fair way to distribute a tax cut if most people - particularly those who pay the most - get none of the benefit of the cut.

Cut taxes or don't cut taxes, I don't really care beyond how the resulting revenues compare to the level of spending and debt (both of which I do care a lot about). But if taxes are cut, don't complain about the fact that it affects different groups differently.

Folks, don't we have real problems to solve?

Apparently now South Carolina is trying to ban profanity. Joy. Never mind that this is patently unconstitutional - at least it used to be.

On the downside, distracting governments with random acts of...acts keeps them from doing useful work. On the bright side, it keeps them from...doing anything. Hmmm...maybe this isn't such a bad thing for them to work on (provided, of course, that it never actually takes force)?

Gotta love the Confederate states for periodically reminding us why the rest of the country has all of those negative stereotypes about them. (Ooh, that was below the belt.)

Waxing philosophical

For Christmas, Luann bought me a few books that explore philosophical issues, and that got me to over-thinking a few things.

Religion and philosophy often intersect, and I had an insight about the statement "I believe in God." I realized that this is actually a dual statement. First, it is a statement about the speaker's beliefs, and as such is pretty much irrefutably true - if they say "I believe in God," then unless you have reason to believe they are lying, you can pretty much assume that yes, they do in fact believe in God.

But it is also necessarily a definitional statement. To play a bit of linguistic algebra, "I believe in God" is equal in meaning to the statement "I believe in the God that I believe in." (Obviously, since "I believe in the God that I don't believe in" is nonsensical.) In other words, this second meaning implies that there exists a particular meaning to the (inherently ambiguous) word "God". This second meaning is, of course, neither true nor false - it is a statement of definition. And it has to be - after all, if everyone agreed on what "God" means, then we wouldn't have so many religions nor so many conflicts based on religion.

I don't know if there's a meaningful point to this, it's just an insight that I had. So I will move on to a second, unrelated overthinking insight.

Science is not truth, we should not confuse the two. Science is a model of truth. The better that this model can mimic reality or predict it, the better the science is, but it is not itself "truth." Newton's theories of motion do a great job of modeling the world around us and even let us get 747s to fly, but alas, they have already been shown to be poor models at the edges. Evolution is a great model - it has its flaws, but it works better than any other model; it will likely be replaced by a better model at some point. But none of these theories are "true," they are merely "good models."

I thought about this the other day, when we brought our new puppy to obedience class. The instructor told us all sorts of things about why we should do this or that, expressing it in terms of how the dog thinks, how the pack works. A lot of this is about establishing who is dominant. And it occurred to me that here is a great example of confusing science with truth. It is very easy to think "here is what the dog is thinking" and act based on that. While this works very effectively for training the dog, it is ridiculous to assume that this is in fact what's going on inside the dog's head. Rather, the "correct" way to think about this is that it is a predictive model for whatever the dog is thinking. Perhaps they are thinking in terms of dominance/pack, but especially given that they don't have the level of abstract thinking that these words require, it is almost certainly some doggie equivalent of these notions, and we really have no idea whether it really is dominance/pack or something else that just exhibits similar behavioral tendencies.

Am I splitting hairs and being a bit retentive on this point of science and truth not being the same? Absolutely, but I think it is a useful point to make. When one thinks of science as a model, then debate leads to refinement and improvement of the model, which is non-controversial. When one thinks of science as truth, then debate often leads to a somewhat more emotional and visceral reaction. After all, "truth" is binary - something is or is not true. But models are not. They are either bad, good, or better.

More security charades

The TSA is proposing a new set of security regulations for "large" aircraft, defined (rather arbitrarily) as anything over 12,500lbs. Among the proposed requirements are criminal background checks for any crew members, matching of passengers to no-fly lists, prohibiting weapons or dangerous materials, and audits - at the operator's expense.

At one level, this proposal may seem reasonable. After all, all of these are currently required of the airlines; airplanes in the 12,500lb category and up include small jets like Citations which are often used for charter operations, so this may seem like it is simply closing a loophole in current aviation security.

But there are two fatal problems with this point of view. The first is that commercial and private aviation are fundamentally different. The former is scheduled prior to being sold, and any individual consumer of the transportation has a reasonable expectation of being provided security from the strangers around them; in the private aviation world, this is not the case: one does not fly with strangers, and there is no up-front schedule.

The second problem with the "closing a loophole" point of view is that this "loophole" has no limit. Fundamentally, if the goal is to close off transportation options for terrorists, surely an 11,000lb aircraft would work just as well as 12,500lb aircraft but would avoid the additional layers of security. And if an 11,000lb aircraft works, then perhaps the regulations should cover anything larger than 6,000lbs. In which case I suspect that any terrorist with half a brain would find a way to get a 5,000lb aircraft to work. And so on until all private aviation in the country is subjected to TSA-level security every time they want to dust their crops or fly their friends to the next county for a hamburger. And at that point, a smart terrorist would follow Timothy McVeigh's example and pack a pile of explosives into a rented U-Haul (which, incidentally, can pack a lot more punch than a small jet). Which would argue in favor of similar restrictions on U-Hauls. Perhaps you see where I am going with this, and where I believe this sort of security creep ultimately leads.

Fundamentally, what is so dangerous about this proposal is that it is crossing a line from public and commercial transportation into private and charter transportation. This may seem like a semantic distinction, but it is precisely the boundary between where they have a legitimate role to play and where they have no business. If this proposal is put into effect, then it will be a precedent to allow the TSA to declare jurisdiction over any random thing they want, and it will only be their good intentions and discretion that limits abuse.

There are, of course, other reasons to strongly dislike this proposal. There is the fact that there is no problem which is being solved. General aviation simply has not been a security problem.

And even if we were to take on faith that there really is a problem here to solve, these sorts of security measures don't increase actual security, and in fact likely make security worse. My evidence for this is the flying restrictions that were placed around the Washington DC area immediately after Sept. 11. In the years since, a large number of pilots have violated this airspace, after which they are typically intercepted by military fighter jets, detained by the FBI for a period of time, lose their license and undergo considerable expense and hassle. Now I have little tolerance for pilots who should know the rules and follow them (despite the rules being hard to follow, but that's a separate rant), but consider that fully 100% of these airspace violations turned out to be inadvertant and by pilots who posed no security threat whatsoever. Think of the cost of the fighter jet intercepts and the opportunity cost of having the FBI grilling pilots who simply made a mistake, and you realize that we're spending a lot of time and energy on people who are not security threats. What the TSA is proposing only expands this ludicrous approach to security.

We Americans take it on principle that we should have freedom of movement in this country without having to justify anything. We accept that we may lose such freedom after appropriate process (e.g., losing a license after a proper DUI conviction), but we do not accept having the burden of proof that we are entitled to do something. As a means of transportation, general aviation differs from privately owned and operated automobiles or taxis/limousines in really only two respects: speed to destination, and cost. And Timothy McVeigh proved rather conclusively that they don't differ much from a security point of view either. So this regulation, if passed, provides

The TSA should rescind this power-grab and focus on things that actually provide security and simultaneously protect our freedom, rather than trampling it.