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Can Computers Be Used To Optimize the US Tax Code?

Soulskill posted more than 2 years ago | from the improvement-through-iteration dept.

Government 730

FatLittleMonkey writes "Science fiction author David Brin wonders whether the US tax code, described by President Obama as a '10,000-page monstrosity,' could be dramatically simplified. His idea is about using computers to shuffle the existing system: 'I know a simple way the sheer bulk of the tax code could be trimmed by perhaps 70% or more, without much political pain or obstructionism! ... it should be easy to create a program that will take the tax code and experiment with zeroing-out dozens, hundreds of provisions while sliding others upward and then showing how these simplifications would affect, say, one-hundred representative types of taxpayers... Let the program find the simplest version of a refined tax code that leaves all 100 taxpayer clades unhurt. If one group loses a favorite tax dodge, the system would seek a rebalancing of others to compensate. No mere human being could accomplish this, but I have been assured that a computer could do this in a snap.' With all the talk about Open Government, perhaps the computer code currently used in tax modelling could be released to the wider community, leading eventually to a Folding@Home type project."

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Short Answer (1)

muffen (321442) | more than 2 years ago | (#36150816)


why pay tax? thats your real question (1)

cheekyboy (598084) | more than 2 years ago | (#36151348)

The income tax was introduced in 1913 at levels of like about 2% , for only the super rich.

90% of people didnt have to pay so didnt complain.

Govts got greedy, kept increasing the taxes, and lowering the thresholds.

Welcome to 2011, 110% of you taxes and more goes directly to banks, and none of it gets spent on 'society'

Re:Short Answer (3, Insightful)

locofungus (179280) | more than 2 years ago | (#36151404)

It won't work for the very simple reason that the rich are much more able to optimize their tax paying to take advantage of what is in the tax code.

For example, in the UK the rich pay 50% tax on income (42.5% tax on dividends) but only 28% tax on capital gains (might even be 18% if they can get their taxable income low enough - I'm not absolutely sure what happens at this extreme)

So it currently makes sense for the rich to buy shares that tend to generate capital gains in favour of shares that tend to generate income - especially if there intention would have been to reinvest the dividends anyway.

Change that around and the rich will shift their investment strategies around to get the best deal they can. The poor (and in this case I mean almost everybody) will typically only have a single source of income (their job) and no opportunity to optimize their tax rates because they'll be "trapped" in a single taxation regime.

So if you try and optimize it so that nobody ends up better or worse off, what will actually happen is that the rich will then optimize their tax rates and end up paying less. The only way to recover the missing tax will be to put up rates so that, for at least some people, they will end up worse off.


Obviously an NP-Complete Problem... (0)

Anonymous Coward | more than 2 years ago | (#36150822)

nuff said.

Re:Obviously an NP-Complete Problem... (1)

Haedrian (1676506) | more than 2 years ago | (#36150864)

Which is why you'd use something like a Genetic Algorithm to get a close enough approximation.

Re:Obviously an NP-Complete Problem... (1)

oliverthered (187439) | more than 2 years ago | (#36150926)

It's like this guy has never heard of Game theory of all the computers that run market and election predictions etc.....

perhaps the computer code currently used in tax modelling could be released to the wider community, leading eventually to a Folding@Home type project

ahh he has....

Maybe the tax system has an alternative motive or motives... keeping people brushed up on math and budgeting and letting the better ones work out some crafty solutions.

Simple solution (3, Interesting)

Runaway1956 (1322357) | more than 2 years ago | (#36151184)

The IRS and it's system certainly has ulterior motives. As do the congress critters who actually pass laws regarding taxes.

I can simplify the tax code without a computer. Just strike all the existing income tax laws, and in their place, pass a law that your gross income times .1 belongs to the government. No deduction, no shelters, no credits, nothing. The same tax rate applies for married, single, youth, elderly, businesses large and small, no matter who you are.

However, the tax system isn't about revenue for the government, so much as it's about politics, so my system would never be adopted. Politicians use the tax system to make a zillion little groups of people feel "special", and to redistribute wealth according to whichever special group has the most political clout.

Re:Simple solution (1, Insightful)

AuMatar (183847) | more than 2 years ago | (#36151234)

And such a system is grossly unfair to the low wage earners, would make poverty line people struggle to feed themselves while being a windfall for the wealthy, and would shatter the economy as 75% of homewoners, who depend on the mortgage deduction, would go bankrupt.

A lot of deductions can definitely go away, and probably should. But the idea of "moving to a flat tax solves all problems" is so naive that to even suggest it you have to be a fucking idiot or have major external motivations.

Re:Simple solution (1)

PeterKraus (1244558) | more than 2 years ago | (#36151330)

We had a flat tax introduced back at home (Slovakia - 19%). It didn't really last long - very soon there was a reduced VAT rate added (6% I think), and I'm pretty sure the corporation tax was different as well.

It helped get some businesses into the country, cause the system was and is very simple. But long-term sustainability of something like this is doubtful...

Re:Simple solution (1)

WhirlwindMonk (1975382) | more than 2 years ago | (#36151338)

Does your mortgage deduction really bring you below a 10% tax rate? I'm skeptical, but truly curious. I'm looking into buying my first house, and looking at mortgage info compared to what I've paid in taxes previous years, I can't imagine that deduction bringing my taxes that low unless my mortgage was WELL beyond what I should be able to afford (which, granted, I was offered. Here I was wondering if I could really afford a $120k mortgage, and the mortgage company offers me $175k).

I do find your definition of "grossly unfair" a bit interesting, as I would consider a flat tax applied to everyone regardless of status or class of any type to be the fairest such a tax possibly could be. That said, in the interest of kindness (which is different from "fairness"), I probably wouldn't object to a tax break for people whom taxes would bring below a "living wage" or something like that.

Re:Simple solution (1)

josecanuc (91) | more than 2 years ago | (#36151410)

How much does the mortgage interest deduction really save people? Using one of the various mortgage calculators out there, I stuck in a $200,000 loan at 5% for 30 years. In the first year, the interest is about $10,000. So you would get to deduct that from your gross income, and do the other things to get your taxable income. If your tax rate is 25% (Seems reasonable for a $200k home), you save $2,500.

Does $2,500 "more" taxes in a year bankrupt so many people? And that's the most that a person with a $200,000 home would change. Each year after that, less interest is paid.

If I'm going to go bankrupt over $210/month, I bet I can cancel cable TV and go with a pre-pay phone, etc. to avoid going bankrupt. If that won't save me, then it wasn't the mortgage interest deduction that was the savior.

Re:Obviously an NP-Complete Problem... (1)

ConfusedVorlon (657247) | more than 2 years ago | (#36151176)

the article misses the point.

The tax code isn't about the result, it is about the story.

Politicians don't care that group 87 pays 32.4%
Politicians do care that they have been _seen_ to support 'single mothers with jobs' or 'offshore oil workers' or special interest group Z.

you can create a set of rules with the same output, but if the effect is to just set income tax at X and remove the special provision inserted umpteen years ago by senator Ping and supported by campaign donators P, then it will never fly.

Re:Obviously an NP-Complete Problem... (1)

91degrees (207121) | more than 2 years ago | (#36150882)

Doesn't matter. We don't need a perfect solution. Just an improved solution. Optimal code optimisation is NP complete but optimisers still exist. The shortest path algorithm is NP complete but satellite navigation systems manage to do a decent enough job.

For something like the travelling salesman problem, a fairly simple nearest neighbour approach will typically get a path just 25% longer than optimal.

Re:Obviously an NP-Complete Problem... (0)

Anonymous Coward | more than 2 years ago | (#36150904)

The shortest path problem solved by sat nav systems, is not NP complete (unless P=NP), it can be be solved by e.g. dijkstras algorithm in O(n log n), where n is the size of the road network graph.

Re:Obviously an NP-Complete Problem... (1)

Bwian_of_Nazareth (827437) | more than 2 years ago | (#36150986)

Even if it is NP-Complete, it does not imply that achieving meaningful improvements is impossible. There is a lot of NP-problems which can be approximated or where perfect solution can be found with a certail probability. An NP-complete problem is not uncomputable.

Sure. (5, Insightful)

drolli (522659) | more than 2 years ago | (#36150826)

That procedure would lead to the same results. Maybe some redundancy would be removed, but obviously he doe not understand why the Tax system is complicated. Its the politics, stupid. Many of these 10000 pages are just small little promises somebody has given to *his* voters at some point. And nobody wants to cut such things, because one time this starts, it could be soon the promises to *your* voters. So no matter how absurd something is, it will stay there forever.

Re:Sure. (0)

Anonymous Coward | more than 2 years ago | (#36151030)

BUT .... most politicians break promises anyways. How about starting with promises made by politicians who're no longer in office?

Re:Sure. (1)

Yvanhoe (564877) | more than 2 years ago | (#36151284)

That can be computed as well. Make the heuristics "change as few things as possible for most bottom lines, and always in a favorable way". You could have a very good reform with very little pain.

Re:Sure. (1)

demonlapin (527802) | more than 2 years ago | (#36151300)

"change as few things as possible for most bottom lines, and always in a favorable way"

Even if that were possible, there is the small problem that we're already spending much more than we're collecting in taxes.

Re:Sure. (0)

Anonymous Coward | more than 2 years ago | (#36151344)

I would argue that the reason the tax code is so complicated is so that politicians and people who support them use loopholes to avoid paying taxes all together.

Re:Sure. (1, Insightful)

thijsh (910751) | more than 2 years ago | (#36151428)

The outcome of a good algorithm can be predicted already: a flat tax that is the same for everyone (that is after enough iterations of reduced redundancy). The algorithm won't care for the promises to voters, only about a fair optimum where the people pay as little tax as possible and the taxation costs the state as little as possible netting the highest 'bang for your buck'. The problem is for every 1000 people that will need to pay less and have less paperwork there is always one specific example of some person that does not profit from this optimization. And one of these people will find the spotlight and become a 'representative' (a la Joe the plumber) of a specific group of voters... and the game of adding layers of complexity starts all over again. At the very least this group of disadvantaged will include all the unneeded accountants and IRS personnel, so the tax code needs to stay complex for their job security!

Would work at face value (4, Insightful)

Haedrian (1676506) | more than 2 years ago | (#36150834)

Would work at face value. Genetic algorithms can easily be used to solve something like that.

However I think taxes have more of an effect than just bringing in money, if the system decides to highly tax something, it might cause an economic downturn on that item, which could have ramnifications. In fact, the more popular the item is, the more cash you'd get if you raise the taxes on it.

Re:Would work at face value (4, Funny)

clickety6 (141178) | more than 2 years ago | (#36151022)

In fact, the more popular the item is, the more cash you'd get if you raise the taxes on it.

Tomorrow's Headline: Computer Suggests Tax on Sex

Re:Would work at face value (4, Funny)

Haedrian (1676506) | more than 2 years ago | (#36151054)

In fact, the more popular the item is, the more cash you'd get if you raise the taxes on it.

Tomorrow's Headline: Computer Suggests Tax on Sex

Slashdot crowd mostly unaffected.

Why? (0, Troll)

buddilla (2050248) | more than 2 years ago | (#36150844)

Why, isn't the tax code unconstitutional in the first place? Hello. Am I the only one that has done research on the tax code(s). Any honest judge would agree.

Re:Why? (1)

oliverthered (187439) | more than 2 years ago | (#36150960)

that would be one possible reason for a complicated tax system.... are you feeling stressed? [wikipedia.org]

Have you also looked into the bushisms....

Such as the objectification of google 'The google', then done some backtracking on why? (e.g. OED, Walkman etc..)

Or the "Terrorists never stop thinking of ways to harm our country and nor do we?"... could that have ever been another way? are you trying to harm the country, is my neighbor, is my congressman are they terrorists?

What about ponzi schemes? that's not a pyramid I see on the dollar is it?

What about the new world order... surly that's a mistake... it says the new order of ages, and we all know that there where 7 ages of creation not 7 days don't we?

So... looks like those 'conspiracies' have a fair share of syntax error... Makes you think, doesn't it?

Re:Why? (5, Insightful)

Dachannien (617929) | more than 2 years ago | (#36150964)

Yes, you're the only person who has done research on this topic. Out of the hundreds of millions of people affected by the tax code, nobody has ever thought to sue the federal government over income taxes or to use this as an affirmative defense against charges of tax evasion. You could be the hero who leads us all into a tax-free future by finding that honest judge of which you speak.

Get to work on that. Good luck, and let us know how it turns out.

Re:Why? (4, Informative)

Kjella (173770) | more than 2 years ago | (#36150966)

In what way? The power to tax is in the constitution itself and "general Welfare of the United States" is pretty much "whatever you think is good".

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

Also they added this amendment which is very, very broad:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

So do tell... what is unconstitutional?

Re:Why? (2)

jcr (53032) | more than 2 years ago | (#36151210)

"general Welfare of the United States" is pretty much "whatever you think is good".

No. "General Welfare" is a term from contract law, and in the constitution it's a limit on the taxing power: it requires all appropriations to be made for the benefit of the people as a whole, not favoring any region or group at the expense of another.


End result: (3, Insightful)

leuk_he (194174) | more than 2 years ago | (#36150868)

The system will still not be understandable, but this time computers will be blamed.

Re:End result: (2)

dargaud (518470) | more than 2 years ago | (#36150996)

The system will still not be understandable, but this time computers will be blamed.

You are correct. You will end up with a big transform matrix while you currently have a binary tree. In other words you'll replace a series of questions such as 'Are you married?', 'Do you have children?', 'Do you have a job?', etc that can be negosciated in sequence by a matrix where thousands of parameters need to be input in one big formula at once.

It's the same reason why we don't replace the income brackets [20k-30k$/year], [30k-50k$/year], etc by an exponential formula. It would be more correct mathematically, more just when you go from 29999$ to 30001$ but people are too dumb to understand it.

I'm not saying it's undoable or that it shouldn't be done. It's just that, like with runoff voting, it will take quite a while before acceptance builds up.

Re:End result: (5, Informative)

Wandering Idiot (563842) | more than 2 years ago | (#36151080)

It's the same reason why we don't replace the income brackets [20k-30k$/year], [30k-50k$/year], etc by an exponential formula. It would be more correct mathematically, more just when you go from 29999$ to 30001$ but people are too dumb to understand it.

Going from 29999$ to $30001 means you would only be taxed the higher rate on $1 of income, not the whole amount. If it wasn't your intent to imply otherwise I apologize, but I see people making that mistake all the time for some reason.

Re:End result: (1)

AuMatar (183847) | more than 2 years ago | (#36151248)

Thank you for pointing this out before I had to. The bracket tables are only there to make the math easier, because we don't trust people to correctly calculate 15% of the first 20K+ 20% of everything between 20-30K +25% of eveything above (numbers completely made up). The tables simplify that for people and reduce mistakes.

Well no (-1)

Anonymous Coward | more than 2 years ago | (#36150884)

Because inevitably such an optimization process would reduce the tax bill of some rich person, some corporation, or some other entity that White People don't like [stuffwhitepeoplelike.com].

"More tax breaks for the rich!!!!" they would say. "I thought things were supposed to be different now. I thought there was supposed to be Change."

This is why the tax system can never be reformed. (1) You can't simplify it without reducing the tax bills of someone the White People don't like, and (2) you can't give tax breaks to the poor without also giving them to the rich.

It's not a computing problem. It's a politics problem.

Re:Well no (1)

The Master Control P (655590) | more than 2 years ago | (#36150956)

You know how I know you DNRTFA?

So how would my suggestion get past this? A key innovation would be to program in boundary conditions to the experiment. The paramount condition would be “no losers.” Let the program find the simplest version of a refined tax code that leaves all 100 taxpayer clades unhurt. If one group loses a favorite tax dodge, the system would seek a rebalancing of others to compensate. No mere human being could accomplish this, but I have been assured by experts that a computer could do this in a snap.

Basic literacy: It helps you not look dumb in front of others!

Re:Well no (1)

91degrees (207121) | more than 2 years ago | (#36151096)

Uhm... My reading of the GP was that any benefit to the winners would likely cause resentment.

You can't benefit the rich without causing resentment. You can't benefit the poor without benefiting the rich.

Save yourself the trouble.... (1)

Stumbles (602007) | more than 2 years ago | (#36150888)

and just go with a flat 10% across the board. Then those that make the most will finally pull their own weight. And spare me the non-sense of the rich or corporations creating jobs because its bull shit.

Well then, who does create jobs? (2, Insightful)

Shivetya (243324) | more than 2 years ago | (#36151008)

It certainly has to be someone who has the resources to do so. No offense, but your statement leaves only the poor and I doubt they create jobs. Usually those who create jobs do so because they have exhausted their personal abilities and need an extension of themselves, hence employees. Corporations are merely that process grown over a longer period of time.

Your flat tax rate is a bit low to sustain the government we have now.

The real problem with the tax system is not in its complexity, its just how high our taxes truly are. Adding the embedded taxes; this is the taxes rolled into every product and service you buy; to your income taxes, medicare, medicaid, social security, sales taxes, fuel taxes, and associated fees and such, and you would probably have open rebellion if people knew just how much it really takes from them.

Simply put, the Federal Government has grown too large from over promising everyone something. There is not enough taxable income in the United States to sustain the promises made on the local, state, and federal levels of government.

The reason Obama and Washington love to talk about reforming the tax system is not to reduce our tax burden but to increase government revenues. If they were truly serious about fixing the system they would be talking primarily about how to fix entitlement programs. Then top that off with a system where either we have a flat tax rate for all combined taxes at the Federal level with no corporate tax to hide even more or go to a consumption tax.

A flat tax will work but it must be honest. To be honest it means we cannot tax corporations. Every dollar a corporation pays in taxes comes from its customers, that means we pay those dollars. Whether or not you buy a particular company's product or service someone you do buy from may. This is the problem Washington faces, showing Americans their true tax load scares them. They don't want to admit the size of the beast. Also, everyone must have some skin in the game as the old saying goes. This means there must be a rate, I would not go below 10%, applied to all incomes. This must not be offset with give backs and entitlement programs. Everyone needs to know they are paying for it all.

An alternative to a flat tax would be a consumption tax. Even the rich would have no method other than not spending money to avoid this one. Using ideas brought forward with the Fair Tax we would rebate the cost of living to every family using the IRS. It is a simple process that far too many claim is impossible. After all, if they can track the current system they surely can trace a prebate system. The shock here again is that people will see their real tax costs. This is why Washington routinely has their sycophants in the media and academia falsely portray this plan. When they shoot this down it is fun to watch them march over to the flat tax and start over there too.

Ask yourself, why does he want to fix the tax system. If he uses the word "fair" in the conversation you can be assured of one thing, he does not intend to reduce the burden on the American people he merely wishes to increase the revenues to the Federal Government hiding behind common class warfare tactics

Re:Well then, who does create jobs? (5, Informative)

AuMatar (183847) | more than 2 years ago | (#36151276)

The real problem with the tax system is not in its complexity, its just how high our taxes truly are.

We're the lowest taxed generation since WWII. The highest rate now is 35%, and few pay it. The highest tax bracket in the 90s was 39.6. The highest tax bracket under most of Regan was 50%. Under Nixon was 70%. Kenedy was 91%. Eisenhower was also 91%. The rate coming out of WWII was 94%.

Try doing actual research before spitting out far right talking points.

Re:Well then, who does create jobs? (3, Insightful)

fnj (64210) | more than 2 years ago | (#36151362)

Horse shit. Add payroll tax to that - both halves - state income tax, state sales tax, local income tax, local sales tax, property tax, and taxes masquerading as fees such as water, sewer, automobile registration, automobile insurance surcharges funneled straight into state coffers, and so on ad nauseum. I'm not much concerned with how high the top federal income tax bracket is. I'm more concerned with the total tax burden on the middle class.

Finally there's the unfairest tax of all - inflation. That's the one you get when the federal gangsters print money to cover their unrealistic runaway budget.

Re:Well then, who does create jobs? (3, Insightful)

berashith (222128) | more than 2 years ago | (#36151412)

This. I always laugh when people talk about how high European tax rates are compared to the US. If we count all of our taxes, and not just the federal rate, and we cat get competitive on high rates quickly.

Re:Well then, who does create jobs? (4, Insightful)

muffen (321442) | more than 2 years ago | (#36151318)

Interesting, we really have different views on tax. I don't enjoy paying them, being in the highest income-tax bracket in my country (not hard to accomplish, trust me, not making millions) I sometimes think about how much better it'd be if I paid less taxes.

However, I survive on the amount I have left after I pay my taxes. I may not be in the category of richest people but I feel that health care, infrastructure, police, ambulance and so on, are services worth paying for. Why should I pay more (in %) then someone who makes less, well, because the money is needed, and where will it come from otherwise? There certainly are things I want, like a better car and a bigger house, but really, what I have now is not bad.

I believe in two basic things, freedom and helping those that cannot provide for themselves.
I do not believe that everyone has the same opportunities in life, even if my country provides free education (including uni) to all it's citizens.

I pay taxes because I think that free education should be the foundation of any country, I pay them because I think health care should be free for everyone. You shouldn't have to die of a disease because you cannot afford the healthcare, and I believe in helping those who come from countries that require help (I seem to be a minority in Europe having this opinion these days).

I fear that compassion is become rare, it seems to be gone from politics, and especially when talking about taxes. The debate now is often focused on cost, how much immigration costs, how much does free health care cost... rarely do I read debates asking how many lives were saved because we have free health care or because we let people from countries that are at war stay in ours.

Re:Save yourself the trouble.... (1)

WindBourne (631190) | more than 2 years ago | (#36151340)

You should run the numbers. You would find out that 10% would break the gov. Instead, it would need to be around 20%, and then once we have paid off reagan's/bush/W's, and now Obama's debt, THEN we can bring it down to 15%.

Leech (0)

Anonymous Coward | more than 2 years ago | (#36150902)

It would make all the people working in Tax departments unemployed. So it won't happen. Simplifications of bureaucracy always cost jobs.

Re:Leech (1)

The Master Control P (655590) | more than 2 years ago | (#36150946)

Cool, then they can go do something that creates cultural value or wealth, rather than fiddling around with its transfer.

Re:Leech (1)

c0lo (1497653) | more than 2 years ago | (#36150992)

Cool, then they can go do something that creates cultural value or wealth, rather than fiddling around with its transfer.

Too late. Go where? No country accepts now refugees on economic basis (as for the skilled migration... spare me, will ye?)

Better solution (5, Insightful)

bryan1945 (301828) | more than 2 years ago | (#36150906)

Scrap the whole thing and start over. All the cruft is from decades of putting in and taking out different provisions for thousands of groups of people. Start with whatever rates you want. Then stop. What's the point of taxing someone 30%, then giving them a mortgage deduction, education deduction, horse rodeo operator deduction, etc.? Same with corporations; if you're going to give them all tax breaks on their water coolers, just drop the rates. The IRS will be pissed, thousands (millions?) of accountants will be pissed, and everyone else get 4 hours of their lives back from stupid paperwork each year.

Re:Better solution (0)

Anonymous Coward | more than 2 years ago | (#36151282)

I'm not convinced accountants would be upset. My mother is a CPA and she's argued for a similar system a number of times.

Part of her support comes because it can easily be Feburary or even early March before they get the IRS interrpertations of new tax code which really puts them in a crunch come tax season (January - April). Partly she feels that way as there's plenty of other accounting work they could be doing so I don't think she feels it threatens her job and she honestly feels its the right thing to do.

Re:Better solution (0)

Anonymous Coward | more than 2 years ago | (#36151296)

What's the point of taxing someone 30%, then giving them a mortgage deduction, education deduction, horse rodeo operator deduction, etc.?

The point is that the tax system is being used to manipulate the population. Act this way and you get a break, act another way and you don't. One could argue that our tax system violates the Constitutional mandate for uniformity by playing favorites.

How many people here realize that almost half of the population pays no income tax at all and nearly a third actually make money off the tax system via various credits? It has become the stealth method of income redistribution.

Re:Better solution (1)

DarkOx (621550) | more than 2 years ago | (#36151304)

What's the point of taxing someone 30%, then giving them a mortgage deduction, education deduction, horse rodeo operator deduction, etc.?

There are two reasons, first many of those things are giveaways to certain interest groups to buy votes, that is probably the big one. The second reason is the tax code is abused to distort the market place and encourage behaviors the government likes and discourage those it does not like. The will then whine about how free market capitalism does not work and forget that they are the ones who broke it in the first place.

Do think that mortgage deduction was done in the first place to create market for more borrowers so that the FED and their banking cartel buddies could steal the savings of nation? I do.

Mr. Obama, Sir... can I help? (0)

Anonymous Coward | more than 2 years ago | (#36150908)

Why don't you trust me to rewrite the entire tax code? My program will tell you everything's just as it was. I promise it'll be entirely coincidental that company's sister company is 100x richer within 5 years.

less short answer: no because (2)

e70838 (976799) | more than 2 years ago | (#36150916)

a tax system is like an ecosystem. If you change it brutally, people will find holes and adapt their behaviour in order to pay less taxes while remaining in total legality.
If you change it too often (like in France), you will penalise business (business likes fixed rules).
Computer models can help in modifying the system, but you can not improve it without a very deep understanding of the current system. You can not just say it is crap, even if it is true.

Re:less short answer: no because (0)

Anonymous Coward | more than 2 years ago | (#36151044)

This is the best answer. The only way you could optimise the tax code with a genetic algorithm would be if you model the society as a whole using a genetic algorithm first, and then the two must effectively compete until you reach a stalemate situation. It must also be extremely well tweaked to avoid results like e.g. "ok, if that is the tax code, then everyone in the country becomes a hairdresser, now let's see what the tax code does". Basically a model of the entire economy.

If someone could model the entire economy reliably then they would have done it already and it would have been accurate.

Re:less short answer: no because (1)

GWRedDragon (1340961) | more than 2 years ago | (#36151324)

If you change it brutally, people will find holes and adapt their behaviour in order to pay less taxes while remaining in total legality.

This. In order for such an optimization to work, it must take into account potential changes in human behavior as a result of the changes in the law. Such shifts are large and will easily dwarf any small efficiency gains. The requirement to accurately predict human response given a nearly immeasurable number of variables makes this about as hard a problem as a Turing test. Good luck with that.

Simple US tax code (0)

Anonymous Coward | more than 2 years ago | (#36150920)

if (PersonIsRich) then
  TaxToPay = 0;
  TaxToPay = 101 * income / 100;

assured by who? (1)

gl4ss (559668) | more than 2 years ago | (#36150940)

because there's PLENTY of human factors in there.

the computer wouldn't know how to value how a tax affects favoring of different types of crops, for example. the "computer" wouldn't know if they should favor diesel, logs or coal. the computer wouldn't know what are "normal" amounts to spend on medical bills(which is necessary and which is just excess).

of course, you should have read your asimov. you need a full grown caring AI to run a tax system - and then you're better off not telling people that it's a computer choosing which state gets farm benefits. but a beefed up excel, sure, yeah, it would help, but there's already that in use. a large part of modern information processing technology was invented for precisely that.

now what the computer possibly could do would be to help people understand how the tax code is currently set up, so they could plan their businesses better, and so that changing the taxing wouldn't be so impossibly slow(because of redundancies and complexities). and to rewrite it in more understandable wording, that's what a computer could do, help in simplifying, but if you start letting it do politics you're doing the politics of the guy who set up the magic computer which assuredly could do this.

Been there, done that (0)

Anonymous Coward | more than 2 years ago | (#36150942)

We have such a program in France. Its based on anonymous Tax data from the French IRS and allows one to play with the different tax types. It's neat and you can design a much simpler and "better" system but the problem is that it's the easy first step. Passing changes to the tax code is a nightmare because there's no way to make pareto improvements. Some lobby will always bitch that your minuscule change will destroy XXX jobs somewhere and throw hardworking citizens out of their homes or something. For politicians, the status quo is the best option because otherwise you're pissing some voters off.

My version (2)

muckracer (1204794) | more than 2 years ago | (#36151000)

Sales Tax:

5% to the local community
3% to the local State
2% to the FedGov.

= 10% tax on everything sold. Easy to calculate and pretty fair (spend more, pay more).

Get rid of everything else...

Re:My version (4, Interesting)

ledow (319597) | more than 2 years ago | (#36151068)

Most EU countries have VAT which amounts to a (different in every country but currently in the UK:) 20% tax on all sales except essentials (baby milks, children's clothing, most foods - but not "luxury" foods with chocolate in them, etc. - and, strangely, printed books).

Yet we still have high tax rates too, and it's not because we're being "stung" any more than other countries.

Hell, some EU countries just charge you 50% of whatever you earn which actually works out quite a good deal when you take into account all the tiny taxes and administrative costs of them over a lifetime. It makes taxes SO much simpler and you can actually spend time chasing those who cheat the system rather than having to need a degree in law and mathematics to understand taxation enough to tell whether something is right or not.

The UK has a tax mess too - and we really should go the blanket 50% way (although if we were to do it properly, it would be nearer the 60-something % that we're currently paying) - we have fuel tax, road tax, "tv licensing", income tax, VAT, land tax, house-buying tax, cigarette tax, alcohol tax, corporation tax, national insurance contributions, gambling tax, air passenger tax, insurance premium tax, inheritance tax, council tax, and a million others, all on sliding scales and requiring all sorts of legal basis and challenges (McVities were sued by HM Customs and Excise for classing a Jaffa Cake as a cake - untaxable - and not a luxury biscuit - taxable. The lawsuit cost millions.)

Whereas if you just said "any money or goods you earn or are given as a gift/inheritance, we want 50%", it's very easy to work out. Hell, most of the time it's almost impossible to work out what you need to pay. Self-employed people fill out a tax return and if they *don't* want to calculate their own tax, they have to send it in 6 months before those who do with the relevant data so someone else can work it out for you. And that's AFTER you've made sure to legally declare everything and put it in the right boxes and ask for the right forms.

Re:My version (2)

LordNacho (1909280) | more than 2 years ago | (#36151278)

Most EU countries have VAT which amounts to a (different in every country but currently in the UK:) 20% tax on all sales except essentials (baby milks, children's clothing, most foods - but not "luxury" foods with chocolate in them, etc. - and, strangely, printed books).

This is where the strangeness begins. Is sushi an essential? Well, it's not cooked, so there's no VAT on it. (A friend of mine owns a sushi place). All these little rules and loopholes are insane. For instance, someone wrote a rule exempting certain creative businesses (film, books, music). So what happens next? Someone goes around proposing a tax structure in which the beneficiaries "publish" their own poetry, and through various vehicles get their tax break. The other major issue with having a load of little rules and loopholes is that is completely destroys the moral legitimacy of the system. You're meant to be paying for the upkeep of society, but due to variations in various group memberships, two people on the same income can pay different rates. Someone on a higher income can pay less than someone on a lower income. By less, I actually mean the GBP figure, not the percentage, which I will explain later...

As for a flat 50%, I think that's insane. One of the reasons I left the UK was this whole "go after the rich" thing, which will only be self-defeating. The UK and the other welfare states need to have a serious think about entitlements. The average pensioner receives more than they've put in (Google it yourself). There's a whole lot of waste in various government agencies, and it costs the taxpayer a fortune to have a load of paper pushers. There's also a large proportion of people living on welfare. They need to re-establish the link between getting stuff and working for it. As it is, you get to vote even if you haven't net contributed. And if you're a foreign net contributor, you don't get to vote for Westminster. With this kind of system a politician would promise stuff to the non-workers, paid for by everyone else.

As for tax systems, a flat tax with a maximum figure seems reasonable. Why do I say that? Well, there is some legitimacy in forcing people to pay tax for things that everyone uses and benefits from. And flat tax is definitely simple. But why the maximum? Well, some people's labor is far more sought after than other's. They get paid more, by orders of magnitude. If such a person pays the flat tax, they will essentially be paying for the upkeep of dozens, or even hundred or thousands of other people. While I can appreciate there's going to be some degree of redistribution, it just seems wrong to have one guy paying for loads of strangers. And keep in mind that no matter how much money you have, you won't have a life thats orders of magnitude better than if you were average.

I am aware that a 10-20% flat tax figure would not be nearly enough for the current expenditure. But it shouldn't have gone this far.

Re:My version (5, Insightful)

SwedishPenguin (1035756) | more than 2 years ago | (#36151298)

We do have "slightly" more government services to compensate though, or at least we do in Sweden. Our "marginal" tax rate is about 55%, though of course no one actually pays that much, the tax bracket up to about 380,000 SEK is about 30%, then 50% up to about 540,000 SEK, after which it's about 55%. When I take into account the things Americans have to pay huge sums of money for out of pocket (health care, education, daycare, parental leave, sick leave, etc) I'd say we got the better end of the stick.

Re:My version (1)

locofungus (179280) | more than 2 years ago | (#36151122)

Does my employer buy my services and pay 10% sales tax on my wages?

If I buy Treasuries do I pay 10%?

What about equities? Or buying and selling gold?

Or I sell my house and buy another one somewhere else in the country. Do I lose 10%?


But if we do this... (1)

RL78 (1968236) | more than 2 years ago | (#36151026)

What will we do with all the computers we used to run the algorithms that intentionally complicated the tax code. Someone's not going to like this!

tax enjoyment (1)

Hazel Bergeron (2015538) | more than 2 years ago | (#36151034)

Rather than taxing productivity, how about we tax enjoyment?

(1) Scrap all taxes;

(2) Scrap the notion of limited companies, so a businessman becomes responsible for his own affairs and doesn't get to personify a non-person with all of the rights and none of the responsibilities;

(3) Introduce a personal consumption tax, which slides like income tax so the first $x is tax-free, up to say 90% consumption tax for people who spend more than $y/year on their own enjoyment. So someone who is just getting by on modest food and housing pays no consumption tax, while someone with a large house and a yacht for himself pays out a huge amount;

(4) Introduce a hoarding tax, again sliding, being a proportion taken from assets which are not being put to work.

(5) Finally, ensure that all work in foreign countries is taxed as if the work was done in this country. IOW, if you pay a Chinese company X to build Y, you are charged an amount equal to the tax X would pay if it were in your own country, plus any fines for not complying with worker regulations which would exist in your own country.

The goals are:
(i) to ensure that people gain fully from only productivity;
(ii) to prevent tax avoidance.

Simpler: Inheritance tax 100% (0)

Anonymous Coward | more than 2 years ago | (#36151398)

Everybody dies. But the rich hoard money so that their children have power without ability to use it. Then they hoard more and pass on to their children. Who then hoard more...

So have a VAT on retail purchases and 100% inheritance tax. Why hoard it if it's only going to go to the government? If it's not being hoarded, it's being used to create jobs.

Not that easy (0)

Anonymous Coward | more than 2 years ago | (#36151064)

This is a complex multi-objective optimization problem, which can be solved a nonlinear optimizer. Maybe genetic algorithms or genetic programming is applicable. These methods need a good model to simulate the effects of the changes in the parameters. But.. without any knowledge of the US tax system, I doubt there is such a thing as an accurate mathematical model for it. Maybe there are some models available in the big consultancies but these would apply only to the taxing of their clients, and not to the 99% of the other taxpayers.

And maybe there is another way to solve problem. Since the tax code needs to be reflected in the databases of the authorities (IRS, correct?) it should be possible to attribute amounts of money to the paragraphs of the code . This would be something like a mathematical model, however it would be difficult to use it for simulation. And it would real data. Paragraph 2342 => 100.000 USD from peacock breeders => remove. Paragraph 4223 => 100 Mio USD from the car industry => keep.

Constrained numerical optimization (1)

gatzke (2977) | more than 2 years ago | (#36151074)

It has been done for years. I have seen lots of talks at conferences where they discuss formulating and solving numerical optimization problems to maximize profits subject to constraints.

The first problem is getting all the tax rules formulated as constraints. Crazy tax rules can be difficult to formulate.

The next problem are the 0-1 binary variables for yes/no questions, so you can end up with mixed-integer nonlinear programming problems, which can be difficult to solve deterministically at large scale. But a lot of times, you don't need the global solution, just a good solution so methods like genetic algorithms or simulated annealing work adequately well.

It is impossible (1)

gatkinso (15975) | more than 2 years ago | (#36151090)

If the numbers didn't have a $ in front of them it would be simple.

However that $ makes the amounts have an affinity for the right side of the equation (but only when that behavior is beneficial to the one doing the calculation).

This property if $ has thus far defied all rational endeavour to normalize monetary calculations.

Too Easy (1)

Wingsy (761354) | more than 2 years ago | (#36151094)

I have a better idea.

Did you make less than $24,000? If yes then you owe no tax. Otherwise,
Pay to the IRS 10% of the amount you made over $24,000.

Re:Too Easy (1)

LordNacho (1909280) | more than 2 years ago | (#36151316)

Flat is simple, true. But why 24K? Is that some sort of cost of living in the US?

Also, what about an upper limit? Without one, people who earn a lot end up paying quite a few times more than they receive in services.

In a snap (1)

YeeHaW_Jelte (451855) | more than 2 years ago | (#36151110)

"No mere human being could accomplish this, but I have been assured that a computer could do this in a snap."

Sounds like my manager who seems to have in common with this science fiction writer that they don't understand the first thing about programming.

Creating a program to run through a set of rules described by a '10,000-page monstrosity' is no small feat. Running the program afterwards, yes, that's the easy part.

Wat? (1)

SeaFox (739806) | more than 2 years ago | (#36151124)

If one group loses a favorite tax dodge, the system would seek a rebalancing of others to compensate.

There's should be "tax dodges" to start with. Either a tax is justified or not. The point of the system isn't that people should have little tricks to avoid paying their fair share.

Only 100? (1)

BovineSpirit (247170) | more than 2 years ago | (#36151128)

Everyone is different and has different circumstances and needs. The UK has seen 2 attempts to implement a simple catchall tax and both have resulted in violent protests and government U-turns. Taxation ends up being complicated because it has to be seen to be fair. Every new tax has to have exceptions and get-outs and that makes it complicated.
    There are 300 million separate cases in the US to take into account, not 100.

Sure, why not? (Apart from the obvious...) (1)

ThunderBird89 (1293256) | more than 2 years ago | (#36151138)

The spirit of laws lends themselves rather well to an if-then programming interpretation. Therefore, the current legislation could be rewritten into a programmatic form as a series of if-thens of case switches, where each evaluates a certain aspect of the applicant, changes a variable, and uses these variables to calculate the final tax value by multiplication and subtraction (for tax breaks and tax-deductible donations). The final code could then be stored in a subversion repository to enable easy versioning.

How about simplifying it? (1)

alanshot (541117) | more than 2 years ago | (#36151170)

Why work to simplify a problem system when there is a better, simpler, more fair way to do so?

Just abolish the IRS, let us all have our full paychecks, and implement the FairTax!
http://www.fairtax.org/site/PageServer?pagename=about_faq [fairtax.org]
http://www.fairtax.org/ [fairtax.org]

Re:How about simplifying it? (1)

WindBourne (631190) | more than 2 years ago | (#36151272)

fairtax will not work. Ask any small brick/morters how it is working against the net. The fact is, the ONLY way that fair tax would work is if every nation on this planet agreed to tax the net. Otherwise, companies will simply flow to the net and avoid brick/mortor. Just look at Amazon.

Tried and failed (1)

Lou57 (78812) | more than 2 years ago | (#36151226)

What David Brinn misunderstood is that it has been attempted ... with miserable results.

Here is a C/Net Article [cnet.com] from 2007 documenting just how horrible trying replace the current IRS computer system has historically been. I remembered when it totally failed in the 1990's, and I was reminded of the axiom, "if it cannot be done on paper, it cannot be done on a computer", a reference to computer efficiency rather than the uninformed perception that computers can work miracles.

Because a miracle is exactly what it would take to model the IRS code in a computer. As soon as one would get into the process, Congress would add another 1000 pages, and modify 500 others! This would be an annual issue, and as such, the model would never be finished.

Taxing should be simple and fair and the easiest way to do that is to tax income on people and tax sales on businesses, at a flat rate [wikipedia.org]. That would cut the 10,000 pages down to one or two and STOP CONGRESS from messing with it every year.

Well, maybe it would slow them down.

Another.... (1)

solune (803114) | more than 2 years ago | (#36151236)

...stereo type smashed to bits, in this case "Science Fiction authors must be incredibly smart."

An old adage once went.. (0)

Anonymous Coward | more than 2 years ago | (#36151252)

Throw the lawyers out and let the engineers have at refactoring the laws...the same would be true of tax code.

Could that really be modeled? (1)

jejones (115979) | more than 2 years ago | (#36151266)

People change their behavior in response to changes in tax law; how can that be predicted and taken into account?

Never Happen (1)

Randyj70999 (322677) | more than 2 years ago | (#36151270)

When I worked for H&R Block on the early Rapid Refund project during the start of the IRS Electronic Tax Filing project, I was made aware of the Millions of Dollars spent Lobbying to make the Tax Forms MORE complicated, and tax law more unreadable.

So there is little hope of ever making it a simple thing to do. In fact the top 1% have no intention of educating the (99%) rest of us to the tax breaks (loopholes) that they receive.


Subset of true problem (1)

NeoMorphy (576507) | more than 2 years ago | (#36151286)

While we are fantasizing, why not simplify all laws?

There are countless numbers of useless and stupid laws in the books that should be removed. But you know it will never happen.

The jerks who caused the problem like it this way, keeps them in business. Imagine what it would be like if software companies could make their products unnecessarily complicated and add even add useless code and functionality and bugs that would require constant updates. They would be printing money...crud, I think this might have happened already?!

Clades are scamming the tax code (1)

digitaldc (879047) | more than 2 years ago | (#36151380)

"If one group loses a favorite tax dodge, the system would seek a rebalancing of others to compensate."

How about we make EVERYONE pay taxes and stop allowing tax-dodging in the first place?
Maybe THEN we could balance the budget and get back to fiscal sanity.

Or do as the Norwegians do (1)

WegianWarrior (649800) | more than 2 years ago | (#36151392)

All income, assets and debts are reported to the Norwegian Tax Administration [skatteetaten.no] by your employer, your bank and so on and so forth. The Tax Agency compiles it, automatically fills in your forms, makes sure that all the usual and reported deductions are taken care of and send it out for you to verify and/or change as needed*. If you have no changes, you just nod, smile and put the document away. If you have changes you fill them in (on paper or on the internet) and send back to them. If you owe taxes they will inform you when sending out the documents - if they owe you money back, you'll get it after a month or two. Works pretty well - and off course it will never fly in the US.

But it does show that you can combine a complicated tax code with a system that is easy to use for the majority of people. Off course things gets a little more complicated if you're running a business, but not horrible much so.

*) If for instance you have unreported income, assets, debt or deductions.

How bout a good run through flex/bison? (0)

Anonymous Coward | more than 2 years ago | (#36151414)

I typed that originally, of course, purely in jest... but now I actually wonder if something like that would actually be beneficial.

The author doesn't understand the problem (1)

MikeRT (947531) | more than 2 years ago | (#36151426)

Hence, one could put the entire US tax code into a spare computer somewhere, try a myriad inputs, outputs... and tweak every parameter to see how outputs change. There are agencies who already do this, daily, in response to congressional queries. Alterations of the model must be tested under a wide range of boundary conditions (sample taxpayers.) But if you are thorough, the results of the model will be the results of the system.

The author doesn't get the fact that the IRS itself actually doesn't understand the system. You can't model a system that is so complex that the people in charge of enforcing it literally don't fully understand it.

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