Jeffrey Yasskin’s blog

As I announced a few weeks ago, I was asked to give the student speech at my graduation. Here’s what I wound up saying. You’ll notice that the punctuation and capitalization isn’t always correct. That’s because I used the grammar to give me cues on how to say it. Thank you to everyone who helped me write it, even or especially if I seemed to resist your ideas. It wouldn’t have been nearly this good without you.

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I’ve been thinking about taxes recently and reading Andrew Sullivan’s opinions on them, and I’m mostly convinced that a flat tax with a significant standard deduction/personal exemption is at least a reasonable idea. I haven’t yet convinced myself to support it, but I can’t think of any arguments against it. The Rockridge Institute has a good argument that rich people should be expected to pay more in taxes than poor people: they get more in return from the government. But that doesn’t easily extend to an argument that they should pay a higher percentage of their income. If you have a good argument against a flat tax, please comment.

If we assume that no tax should interfere with your ability to feed and house your family and that taxes should treat everyone equally otherwise, then we get the following system. First, add up all of your income. That includes both money you worked for and interest and capital gains. Subtract the poverty line for your household. Multiply that by the tax rate, which is the same for everyone. Pay that amount to the government. Oh, and payroll taxes are evil and should be rolled into the standard income tax.

tax        = net_income * tax_rate
net_income = income - poverty_line(your_household)
income     = earned_income + capital_gains
             + interest + forgotten_stuff?

Variations are possible on this theme. We’d probably want to keep some deductions, like for green vehicles, mortgage payments, and charitable donations. These can be subtracted from the net_income. Given deductions, we might want an alternative minimum tax, which could be simply (income - poverty_line) * lower_tax_rate, and then your tax is the larger of the two. Finally, we might want some tax credits. I suspect that these are a bad idea, and that the government should directly subsidize anything it is tempted to give a tax credit for, but they easily fit in as a decrease in the total tax.

In Tim Bray’s second post of opposition to Google AutoLink, he mentions that they owe it to their shareholders to do one of two evil things. Now, neither of Bray’s suggestions may actually be in Google’s long-term interest, but they certainly are in its short-term interest.

The basic question is, does our culture really believe that a corporation’s highest obligation is to its shareholders? That is, are corporations out there solely to make money? If a corporation obviously sacrifices sort-term or even long-term profits in order to, say, make the internet a better place for everyone, does it open itself up to shareholder lawsuits, as Cryptonomicon suggests? Corporations and their shareholders receive from society significant advantages simply because they are incorporated. They should be expected to give up some profits in order to give something back.