What is the UST?
The concept of the UST is simple. The federal government will collect taxes only through a universal sales tax. It is being pushed as an alternative to the progressive tax system currently in place.
How is it different then what exists now?
Currently taxes are collected through a progressive payroll tax system (there are other taxes, but let’s ignore them for now). The more a person makes, the higher their taxes will be. A person making $25,000 may only pay 8% taxes, whereas a person making $1,000,000 may pay 30% in taxes. An important note is that income is broken into brackets and that when any individual is paying a tax rate for income up to a brackets amount. In other words, if you make $1,000,000, the first $25,000 is taxed at 8%, the next $100,000 is taxed at 10%, the next $250,000 is taxed at 15%, and so on until you get to the top bracket (say $750,000), at which point any income above that is taxed at, say, 37%. In other words, if an individual is taxed for income in a tax bracket at the same rate as everyone else in that bracket for income in that bracket. If you make $750,001, that one dollar would be charged at 37% and everything up to $750,000 would be charged at different rates.
It’s complicated, but it’s the system that is in place. It’s also a system that many people don’t seem to like, so they propose alternatives, like the UST.
What are the problems with a UST?
The concept of a UST is appealing for it’s simplicity. The consumer decides whether to pay taxes based on what they purchase. During good times, people spend more money and as a result, more taxes are generated. During bad time, less taxes are generated. The Government’s funds are reflected by the state of the economy. So what are some of the problems with a UST system?
Perhaps the biggest issue with the UST system is that it is a regressive tax system. Whereas in a progressive system, the more you make, the higher your tax rate is, a regressive system increases the percentage of income taxed the less you make. Take someone who makes one million dollars a year, but only spends 15% of their income ($150,000) and is taxed 10% ($15,000) of that, meaning they are taxed less then 2% of their total income. On the other hand, someone who makes $40,000 a year and has to spend all that to make ends meet winds up being taxed on 100% of their income. Their purchasing power goes from $40,000 to $36,000, whereas the millionaires purchasing power is relatively unaffected. As a result, those that make less are burdened with a higher tax rate then those who make more. The system rewards you the richer you are.
Identifying taxable items
One of the proposal put forth to combat the regressive nature of the UST is the concept of exceptions on necessities. Food, clothing, and other “necessities” would be given an exemption to the tax. On the surface this seems like a good balancing measure, but looking closer problems start to crop up.
First, what defines a necessity? Traditionally needs have been listed as food, water, shelter, and clothing. Give a person food to eat, water to drink, a place to sleep, and clothing to keep them warm and their basic needs are met. But againde what fines a necessity. Food is a broad topic. Is a Subway sandwich considered food? What about McDonald’s McRib? Looking at the Colorado QuestCard (food stamps) program, they define the following allowances for foods:
>You CAN buy foods such as: breads, cereals, fruits, vegetables, meat, fish, poultry, dairy products, seeds and plants which produce food for the household to eat.
>You CANNOT buy any nonfood items such as: beer, wine, liquor, cigarettes, tobacco, pet foods, soaps, paper products, household supplies, toothpaste, cosmetics, vitamins, medicines, foods that can be eaten in the store and hot foods.
From Colorado’s perspective, basic foods are allowable, whereas processed foods (bread and ceral excepted) are not. If you cook with it, it’s allowed, but if you buy it in a prepared form, it’s not. What about hot dogs or frozen meals? And this is just food. What about clothing and shelter? Does the government give a person an exception for certain types of clothing? Are generic brand clothes exempt, but not name brand? Will the government start providing government issued blue jeans to cover the basic clothing need? And then there is shelter? Is the $500/month rental unit exempt along with the $10,000,000 mansion? Maybe the government will set limits, say a $750/month excemption limit. Then there’s the problem of housing costs based on where you live. Housing costs in San Francisco and New York are higher then Des Moines or Denver, along with food and other items.
Then we back to “necessities”. Heat is a necessity in many places. Are utilies such as water, natural gas, and others automatically excempt even if they are used to charge consumer devices like TVs or iPods? Or does the government monitor what the electricity is being used for. Based on electrical signatures, it would be easy enough to know how much electricity is being used for the TV vs. how much is being used for heating. The UK regularly monitors it’s citizens to determine if they are using TV without paying the BBC tax, so what’s to prevent the US government to drive around and monitor usage.
Then there’s the process of identifying which items are taxable. From a technical point of view, this is easy to do, a simple switch in a database, but the process of identifying the items still needs to be done. Someone has to determine what is exempt and what isn’t. Most people would say that tulips are floral decorations, but in fact they can be eaten from the flower to the bulb. Does that fall under exempt or not?
Of course there’s the burden now put on the stores to track this accurately. Computer databases make this easier, but databases need to be continually updated and standardized. If every store has a different database or uses an outdated database, items might be taxed when they shouldn’t or vice versa. Maybe the solution is to move the database to a central location that is updated regularly and then require stores to interface with that database, tracking what is being sold. But what about mistakes? Do we go back and issue tax recalls? If so how? Maybe that central database includes the names of people who bought the items as well. Maybe the government could issue tax cards that track all our purchases. Perhaps tax exempt items can only be determined if payed for with the government card. Cash would always be taxed to be on the safe side.
And it goes on and on. A simple idea becomes a massive bureaucracy with government defined allowances, invasive tracking of spending, discouragement of cash transactions, government sponsored clothing, and a multitude of other big government initiatives. Not exactly a system of lesser government.
Barter System/Black Market
If you go to some parts of major cities, you can find entire districts dedicated to the black and grey market. These are areas where you can pick up the latest movie release for a couple bucks. Recently a major electronics company found its latest, and unreleased, wireless card available on eBay, made availabe via a black market. These examples are part of an underground effort to subvert the system in place to provide people with cheaper alternatives to traditional routes. Some, like locally produced wines, can be bartered in a grey market for other goods and servies. Others are flat out stolen from the screen or the factory and form an underbelly of crime that part of the black market. During prohibition, alcohol was available to anyone looking, providing criminals money needed to expand into other illegal activities. The War on Drugs has resulted in massive violence as cartels fight amongst themselves for control of the unregulated market. Imagine that same scenario being played out as people work to avoid paying taxes.
In a UST system, there will most likely be a rise in “tax-free” items of questionable quality. Right now I can go to my local Rite-Aid and purchase medication (not allowed under Colorado’s ClearQuest system) with the assurance that it’s most likely safe. Can the same be said for a black market seller? When I lived in Colorado, there was a van that would park on the side of one road that had a sign that said “Fresh Shrimp For Sale”. It was Colorado. It was about as far away from the ocean as you can get. I couldn’t trust the quality or safety of the food because it was a van. I had no assurance that what I was buying had passed at least some level of quality and safety assurance. With the black and grey market the same thing happens.
This isn’t a criticism of one friend giving a twelve pack of home brewed beer to another in exchange for some plumbing work, this is a criticism of the mass production of tax-free items with no government oversight. That tax free $15 bottle of wine from the back of a van might seem like a good idea at the time until you find out the wine was stolen from a truck. By doing so, you engage in the funding of criminal activities. Much like counterfeit Prada can be tracked back to funding terrorist activities, you have no assurance the $15 bottle of wine doesn’t do the same.
Doesn’t Solve the Deficit Problem
And a UST doesn’t solve the deficit. The deficit is a result of spending, not income. Until a system can be put into place to control spending, you are still stuck with an inherently unbalanced system in which tax cuts are promised while maintaing the status quo for spending. It can’t work that way. It’s like living off off of your children’s credit cards. Someone eventually has to foot the bill. This is tax system independent.
Are there any benefits to the UST system?
Any system has it’s benefits. UST advocates suggest using a monthly prebate system for necessities, giving a each family a monthly check to cover necessities. The elimination of standard payroll taxes means more money in peoples pockets up front. There would be a wider tax base, including previously untaxable individuals like illegal immigrants. Everyone is charged the same tax rate “at the register”, lending towards a sense of fairness.
Is a progressive tax system punishing the “producers”?
One of the arguments for a UST tax and against a progressive tax is that it punishes the “producers”. By taxing those who make more, you are disincentivizing people to produce more. Why make $1,000,000 when you’re going to be taxed 37% on any amount over $750,000? Financially speaking, you’re still making $157,000, more then most people make in the U.S. and that doesn’t count the money you made up to $750,000. So while you tax the rich more, the impact to their lives is minimal, whereas there are benefits to society such as reduced deficits and better safety nets.
I hope that this post has shed some light on the problems with the universal sales tax system. It’s not a bad idea, but there are a multitude of problems that proponents gloss over. The current progressive system isn’t perfect, but to paraphrase Winston Churchill, a progressive tax system is the worst form of taxation, except for all the others.
Denver’s Bruce Randolph school got a bit of attention during the SOTU, lauded as an example of a school system that works. It’s also being held up as an example by the right as an example of anti-Obama policies. In his address, President Obama said the following:
Take a school like Bruce Randolph in Denver. Three years ago, it was rated one of the worst schools in Colorado; located on turf between two rival gangs. But last May, 97% of the seniors received their diploma. Most will be the first in their family to go to college. And after the first year of the school’s transformation, the principal who made it possible wiped away tears when a student said “Thank you, Mrs. Waters, for showing… that we are smart and we can make it.”
97% is an impressive statistic, but not very telling. If there are 100 people in the senior class, that means 97 graduated, but that’s only part of the story. How many juniors went on to graduate, or freshmen. If the school started out with 150 freshmen and only 97 went on to graduate, that’s only 65%, not as impressive a number. So by saying 97% of the seniors graduate, the number alone is almost meaningless.
On the right, Bruce Randolph is being used to attack big government. In 2008, Bruce Randolph has given dispensation to “start over”. Every teacher was required to submit their resume and be potentially re-hired. Depending on what you read, the total hired back was either 6 or 6% of those that re-applied. Free from the unions and tenure contracts, the principal was able to get rid of the bad teachers and bring in new teachers. The right’s mantra of big government and unions are bad for education seemed to be re-enforced by Bruce Randolph, and therefor this example is an embarrassment to Obama not an achievement. But is it? Right before calling out Bruce Randolph in his speech, President Obama proposed the “Race to the Top” program where “If you show us the most innovative plans to improve teacher quality and student achievement, we’ll show you the money”. He then goes on to say:
[W]e know what’s possible for our children when reform isn’t just a top-down mandate, but the work of local teachers and principals; school boards and communities.
In other words, the bureaucratic, big government view of education is not what the President is proposing. In fact, he’s proposing the opposite. Move the responsibility to educate our children from the federal government back to the state and local level. Show the the federal government the programs that work and it will fund them.
As for Bruce Randolph and it’s restructuring, the fact that 6 or 6% were re-hired doesn’t mean much as Obama has come out repeatedly as against, going so far as to say:
If a school continues to fail its students year after year after year, if it doesn’t show signs of improvement, then there’s got to be a sense of accountability
He’s come out in support for the students not the unions. So the right’s argument doesn’t apply to the President.
Currently you can add 12 applications to Folder. Why only 12, I can only assume it was to…well, I have no idea why. It’s not to match the Folder icon, which only shows 9 icons in it’s mini-view. Maybe it’s to display the text of the folder, but that’s to small to prevent it from keeping an additional 4 apps. Maybe it was just a way of showing off animation. Apple moves in mysterious ways.
Next, any given Folder icon shows just a subset of the apps within, 9 to be exact. And they are small. The icon is a nice grid, but it’s pretty much useless to those with anything but 20/20 vision. Anyone looking to glance at a folder for it’s contents will be sorely disappointed. Proper naming of folders is a must. Instead of displaying a 3×3 grid, Apple should have provided a set of icons that people could use.
Opening a folder makes an interesting experience. If the Folder is not in the Dock, the folder icon moves moves up to the top row and reveals it’s contents down, splitting the screen in a slightly disconcerting animation. But, if it’s in the Dock, the Folder stays put and pushes everything almost up off the screen. Almost being the key word. The bottom row of the non-Dock icons stays on the screen, faded and inaccessible. It’s a waste of space.
A better solution for opening a Folder would be to always drop down to the doc when opening a Folder and then follow the Dock animation. And instead of displaying the faded, useless icons of the bottom row, use the extra row to allow for more icons to be added to the folder, bringing the total to 16.
Folders could have been so much better. Many people like it and it does fill a gap in the iOS interface, but as it stands right now, Apple failed to live up to it’s potential.
Normally Apple does a good job with it’s dialog boxes, but this is just a bad one:
Instead of saying “Keep local” or “Replace with server bookmarks”, it uses “Ok” and “Fix it later” and is only understandable if you read the entire dialog box. The problem is that MobleMe is used by both my MacBook Pro, my iPad, and iPhone. All three could sync to MobileMe and use the latest, but Apple instead prompts with this bizarre dialog box that doesn’t make much sense.
Okay, this is a problem I didn’t think about till now. I have USA Today, the NY Times, and a couple of other free mags on my iPad and they are taking up space. The same goes for ereaders (iBooks, Kindle, goodReader). Each of these take up space on my iPad. Ideally I’d like one, maybe two pages of apps and the rest hidden inside folders. On my jail broken iPhone I have a nice little app called categories. It allows you to group apps together. So I have a games category, an apps, an online, as well as others. Everything is neatly grouped together without having to swipe through five different pages. With more magazines coming out on the iPad, having a lot of single purpose apps is going to get annoying to navigate.
Here’s hoping iPad OS has folders.
Finally a touch screen computer with a keyboard that works with my large hands. People complain about how the portrait mode keyboard is difficult to type on, but for my big hands it’s a perfect way of typing with my thumbs. I can reach any key with a combination of my two thumbs quite comfortably.
In the late 90′s Microsoft released a series of public directory servers for their Net Meeting client. It was an interesting process for people to log in and make themselves available for a calls and chats. The chaos and randomness of it all was strangely alluring, but ultimately untenable as most people didn’t want random strangers calling them especially women who would suddenly get a call from some naked guy.
So it when I heard of chatroulette.com I had to see what the hype was about. For me, it’s about rejection and feeling a little bit dirtier then when you started. It’s fun, to an extent. Randomly seeing these faces from all over the place for a split second only to have them disconnect, I feel like I’ve been shot down based solely on the video of me sitting on my couch (not a pretty site, but not repelling). And the things I saw were intereting to say the least, some making me feel a bit dirty. Most of the connections were to men alone, followed by groups of people presumably checking the site out. About 10% were to by themselves women. And then there were the strange ones, where they would be doing anything from playing music and telling you to cheer up to videos of guys that made me quickly change the feed. I had one interesting connection where the other side had rigged it to send my video back with a derogitory comment at the bottom, then switch to a room full of guys laughing. I had to give them a thumbs up for creativity. But mostly it’s individual men looking to find that one woman out there willing to chat with them (though I’m sure some were drawn in by the hype like myself). It was so much like the Net Meeting directories it was scary.
My prediction is that this is just another meme. It will die off once the media loses interest and the “normals” go back to to IM/Facebook scene. Then you’ll be left with what you had in the late 90′s NetMeeting direcotiers, a bunch of desparet men (and occasional woman) looking for a connection of some sort.
It’s a brilliant idea and I give kudos to the 17 y/o Russian kid who came up with it. He could make a small fortune off of the site by putting ads up, but that doesn’t seem to be his plan. Instead he just seems to want to let the site run. And isn’t that part of the fun of the Internet: anyone can build anything to see how it works.
Here’s an example of how the filibuster is broken. Sen. Richard Shelby, R-Ala., has placed a hold on all executive nominations until until certain, ahem, concessions are made to his state. He doesn’t have to to anything other than file the paperwork and the entire system has to stop until a cloture vote is done. And it’s not just one cloture vote that’s needed, it’s one for each nomination.
Bring back the pre-1975 rules. Let Senator Shelby stand on the floor and speak for hours on end. Make him work for his filibuster if he really cares about the people of Alabama. Instead, he’s filed some paperwork and retired back to the comfort of his offices to let the Senate bypass his filibuster.
It’s a waste of Senate time and energy. If none of the Republicans step up against this type of action, then I can’t understand how anyone can support them as “for the people” because clearly they are more concerned with their party than their government and country.
Filibuster: the use of extreme dilatory tactics in an attempt to delay or prevent action especially in a legislative assembly
I believe, at my heart, that the concept of the Senate filibuster, as it stands now, is an process that subverts democracy and incites partisanship.
It subverts the democratic process by allowing a “tyranny of the minority”. Those who are of the minority opinion have the ability to block any legislation that they disagree with. It would be as if the losing side of an election prevented the candidates seating by talking ad infinitum.
I also believe that it fuels the partisanship that is currently splitting the U.S. by forcing the minority party to band together to prevent legistlation they feel is wrong which, in turn, forces the majority party to band together to fight the minority. These groups then become an “all-or-nothing” approach to politics. You are either with the party or against it. There is no middle ground.
So what is the solution? I believe there are two possible ways to help fix the divide. Either eliminate the filibuster option altogether or return it to it’s pre-1975 levels.
By eliminating the filibuster, we eliminate the tyranny of the minority. No longer will a group be able to block legislation from passing by talking it to death (which doesn’t happen anymore, it’s now just a procedural filibuster). Instead legislation will be presented, debated, then voted. Simple democracy at it’s best, but obviously a massive change in the Senate balance of power. The minority will lose it’s ability to block what they perceive to be harmful legislation. Obviously this has to be proposed by the minority, otherwise it will be viewed as an attempt by the majority to grab power. But the benefits may out-weigh the risks. First, it allows legislation to be passed quickly and without needing to gather together a super majority. Secondly, there will no longer be unified blocks and provides incentive for Senators to vote for what they feel is best for their constituents and the country instead of towing the party line. Theoretically. Of course, built into this revocation of the filibuster would be a new law that says that to re-enable to filibuster would require some 2/3 majority vote or some other such language.
Alternately we can return to the pre-1975 filibuster rules. Prior to 1975 if you wanted to filibuster, you had to actually engage in the filibuster. Someone had to “read the from the phone book”, holding up the legislation, passing to the next filibusterer when exhausted. Now all you have to do is file paperwork to say you are filibustering (rule 22). As a result senators can just hide away in a group, file the paperwork, and not have to do anything else. The majority then puts the legislation aside until it has gathered the requisite 60 votes. And with today’s climate, 60 votes isn’t that hard. But in the pre-1975 days you needed 67 votes, a much harder number to reach. By going back to the pre-1975 filibuster rules you force the senators to engage in bi-partisanship, and failing that you force the minority to engage in actual work to keep their filibuster in play. Both of which are better than the current “here’s the paperwork, see you when you got 60″ concept. This would again shift power, but this time towards the minority, which means that the majority would have to propose it.
As it stands now, the filibuster is a broken concept that forces people to choose black or white from an otherwise gray world. That’s not the American way.