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pnrjulius comments on Free to Optimize - Less Wrong

25 Post author: Eliezer_Yudkowsky 02 January 2009 01:41AM

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Comment author: pnrjulius 06 June 2012 08:25:24PM 6 points [-]

In fact, I think that our laws are made precisely by people who don't want us to go around optimizing our behavior to conform to the laws. Why? Because that prevents them from inserting hidden advantages for the people they like (or more specifically the people who pay them campaign contributions).

There's simply no way to look at, say, the US tax code, or Dodd-Frank, and think, "These are laws designed to be sensible and consistently followed." It's much more obvious from trudging through their verbal muck that these are laws designed to be incomprehensible and strategically broken.

Comment author: pnrjulius 06 June 2012 08:32:01PM *  1 point [-]

I mean, think about it; what's the best possible tax code? It takes about a page:

  • A list of tax-brackets, linked to the GDP deflator, and their (progressive) rates; e.g. "Under $5k: no tax; $5k-$1k: 10%; $10k-$20k: 15%; $20k-$40k: 20%; $40k-$80k: 25%; $80k-$160k: 30%; $160k-$320k: 35%; over $320k: 40%"

  • A list of important deductions, such as charitable donation and capital loss

And... that's about it frankly. This would raise revenue in a simple and fair way, and effectively eliminate the tax-filing and tax-compliance industry. And we could do it tomorrow by an act of Congress. But we won't.

Comment author: TheOtherDave 07 June 2012 12:28:49AM 0 points [-]

I'd be interested in an example of what you think the specification of a deduction looks like.

Comment author: pnrjulius 07 June 2012 02:20:06AM 0 points [-]

I guess it might take a few more pages to precisely describe what constitutes a "charitable organization" or something... it wouldn't take our whole tax code, that's for sure.

Part of the problem is that we have so many stupid deductions. You get to deduct mortgage interest, and children you have, and student loans... we're shifting incentives all over the place without any awareness of what we're doing.

Comment author: VAuroch 02 December 2013 01:45:15AM 0 points [-]

You underestimate the intentionality of the deduction scheme. The things which are incentivized by the tax code are purposeful. They have knock-on effects that aren't anticipated, but that's true of every policy.

Also, you significantly underestimate how difficult it is to specify all the important aspects of the tax code rigorously enough to be enforceable.

Comment author: gattsuru 02 December 2013 07:51:33AM *  0 points [-]

A list of important deductions, such as charitable donation and capital loss

I expect (> 0.99) that any politically achievable set of important deductions will exceed a page, and predict (> 0.8) that any set of tax structures that you'd actually like to live within will greatly exceed several dozen pages. The Earned Income Tax Credit, for one simple and exceptionally popular example, is several pages on its own.

More fundamentally, how do you define income? Do you allow corporations to exist at all -- not every country does -- and if you do allow them, do you tax them -- not every country does -- and if you tax them, when and to what degree?

Part of this is legal formalism. In the same way that you have to write a whole lot to handle general circumstances with programming code, even for relatively simple programs, any just legal system will need to describe as much of the situation as possible. ((If you don't do it in the statute, it just falls into the court and regulatory system: arguably, the worst complexity in the US system already does this!)). Most victims of the IRS don't need to think about whether the gift boat counts as income, just as most viewers on this web site don't need to think about whether they handle decimal commas or sanitizes input, but if it's not in the statute or code, respectively, things end poorly.

There's a lot of cruft that could be removed even under that, true. Many of these statutes are the legal equivalent of code projects that have accumulated, rather than being designed-as-a-whole. The problem is that the beneficiaries of any particular deduction care very strongly about their particular deduction, while tax-simplifiers care very strongly about a random deduction,

Comment author: PetjaY 08 November 2015 09:22:37AM 0 points [-]

I hope you mean taxing additional income that much, otherwise earning 40k$ instead of 1$ less would make you pay 40k$(25%-20%)=2000$ more in taxes, which means people would have to start checking how much they´ve earned when closing to yearend, and sometimes working less (or asking for less pay) to not go to the next bracket. Why not just use a function? Like, tax rate=lesser of: 0.25earnings,40% or something like that. My personal favourite is basic income+flat tax rate though.

Comment author: Good_Burning_Plastic 08 November 2015 10:16:27AM 0 points [-]

I hope you mean taxing additional income that much

That's what tax brackets mean.

Comment author: Vaniver 09 November 2015 03:06:27PM *  2 points [-]
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