LibertyPen
3 HN recommenders · recommended in 11 months, 2013–2022
14:29 · 241K views · Jun 29, 2012
Milton Friedman explains why the US tax code is enormously complex and why meaningful reform is unlikely. He argues that politicians profit from the complexity, since tax breaks are products they sell and the code works as a tool of reward and punishment. The clip is about 14 minutes from his lecture series.
HN commenters cite it whenever a thread touches on tax complexity, loopholes, or why companies like Intuit benefit from a convoluted tax system.
12 comments from Hacker News
Somewhat relevant talk by Milton Friedman that I found enlightening when thinking about these tax matters (economics of tax shelters, tax cuts being the "product" politicians "sell", etc.): this video (I strongly recommend watching all of it, but around 5:50 in he talks about why the tax system will remain complicated if you have an internet attention span).
There is a good Milton Friedman video wherein he explains why tax reform won't happen in the United States. The key is that the ideal goals of a tax system (e.g. generate lots of revenue with little inefficiency and little impact on taxpayers' personal financial situation and few unequally distributed loopholes like corporate tax avoidance) are not the goals of lawmakers who define the tax system. In the video, he focuses on a theoretical tax system just like our current progressive income tax, but with all brackets >25% limited to 25%, and argues that it would be an improvement (according to ideal goals). But I think the argument could be extended to basic income or negative income tax, the latter of which Friedman also advocated. this video
Perhaps if taxes were less punitive and confiscatory people would be less likely to be creative in their avoidance. Lowering and simplifying taxes would increase revenues (per the Laffer Curve,) however that would result in politicians not being as powerful. Milton Friedman explains this brilliantly: this video
Why not ask the question why taxes are so complicated? Ted Cruz advocated for post card tax filing but everyone hated it because it would have eliminated the winners-and-losers picking that the tax code gives politicians. According to Ted Cruz, 9 billion hours is spent on tax compliance each year. Milton Friedman has a lot to say on the intentional complication of the tax code: this video Tax rates should be low, deductions minimal, and compliance easy. The Laffer Curve demonstrates this value to government revenues. But the economic literacy of most people is so lacking that it always revolves into some kind of class-warfare debate. Tangential, but related would be the UBI debate vs. welfare program. Whatever side of the aisle you’re in when it comes to spending priorities, one thing that should be obvious is that simplification is a win for everyone except those with robust lobbying resources to fight for carve-outs. We could spend more money with simpler, lower taxes that are applied evenly. Have a high standard deduction to protect the very poor and for every dollar over that, the government gets 10%. Simple. But the compliance industry would lose their minds. This “progressive” tax system we have is ridiculous because it isn’t progressive at all — those making money from capital gains pay less than wage-earners. Everyone should pay the same percentage regardless of the origin of funds.
1. Google does not "dodge" taxes. They follow the incredibly complex web of rules the system specifically designed for this sort of use (or abuse). Its absurd to expect any corporation or person to go out of their way to pay more than they need to. (Milton Friedman Why Tax Reform is Impossible: this video ) 2. Muni does not need more money. SF does not need more money. SF's budget is twice that of Idaho's, and we have far fewer people and far less space than Idaho ( [LINK] ). Look no further than the ridiculous extension of muni from China town to downtown to see a clear indication of how funds are being completely misused. No one wants to fix the budget problems in SF and its so much easier to just blame whoever happens to be successful at the moment. 3. I'm not sure I disagree with your third point at all but also don't understand how its a negative thing. You are describing normal competition between companies. I can at least provide one piece of information: I used to work in the South Bay and hated the commute and would do everything in my power not to ever do it again, bus or not. So there's plenty of incentive to stay and work in a small company here, I assure you. Do you see lots of small companies running buses (honest question, I'm simply not familiar)? I seem to just see the flipside happening: more small companies simply being in SF.