Merry Christmas Happy New Year

2003-12-25 Thread Tigger
I sincerely hope you all have a wonderful holiday season.

Tom Grey

Tax Loans

2003-10-19 Thread Tigger
I would like comments on the following proposal to replace welfare with
gov't loans.

Thanks, Tom  (a 3 page post rather than an attachment)
(Bryan, please confirm it goes to the list? Thanks)

The Tax Loan program- replacing the welfare state

A Tax Loan is given by the gov't to a specific person, and is repaid by that
person's taxes.

1) Tax Loans can replace gov't grants with loans.

2) Taxes repay the loan.

3) A small loan repayment surcharge (loan tax) also repays the loan.

4) In a Tax Loan program an explicit, honest social contract replaces the
current imprecise and uncertain tax-benefit mixed contract.

(Legal persons, like corporations, could be eligible for such loans as


Most voters want benefits, from the gov't, using Other People's Money.  This
desire is part of the social contract espoused by Rousseau, the vagueness of
which makes it both unenforceable and essentially dishonest.

If this entitlement benefit was instead a gov't Tax Loan, and repaid by the
recipient, it would be using the taxpayer's own money, and be an honest,
explicit social contract.

A large portion of the immorality of taxes and entitlements is the fact that
you are forced to pay taxes to benefit others.  If your taxes go mostly to
benefit yourself, the immorality goes down.  Also, naturally, the desire for
a new gov't entitlement will also be reduced.

An explicit purpose of a tax loan program is to reduce the desire for
entitlements, especially from the rich and middle classes.  Including a
repayment surcharge enhances this effect.

A Tax Loan program can, in principle, answer the anti-freedom question: What
about the poor?  The answer becomes, offer the poor a tax loan.  With
explicit conditions, and a real tracking of individual agreements; and
certainly increasing the known facts about each poor person who is unable,
or more likely unwilling, to pay back the tax loan.  (Unwilling in the sense
that they are unwilling to adjust their lifestyles to be able to become

The interest rate on the loan (if any), and the level of taxes which go
towards repayment will be good gov't discussion issues, as will be the
levels and forms of the repayment surtax.  This is important because
democratic governments must be actively doing something to be reelected.
Similarly, once enacted for people, such tax loans can also be used to
reduce corporate welfare for big, questionably run corporations looking for,
and now receiving, gov't handouts.

An obvious starting program would be a large Tax Loan for education (eg in

Example program: an automatic $20 000/ year education Tax Loan.  After 4
years, the graduate borrowing the maximum would owe $80 000.  Half of his
income tax (50%) goes to reduce this, yearly, and the Tax Loan balance is
recorded just like a real loan.  PLUS, if he makes more than the average
($30 k?), he pays some surtax, say 10%, on that amount, which also goes to
reduce the tax loan.

Such a Tax Loan program would operate in some specific economic environment,
for example:

The income tax rate is a flat 20% (for illustrative purposes; a little
wishful thinking).  Average income is $30 k/ year, which continues (instead
of realistically increasing).  A surtax of 10% on the amount over average is
also levied.  While the surtax would prolly be pre-tax, for the following
examples this is ignored; similarly while there would be some interest rate
(eg the avg. prior year's Fed rate), the examples ignore this.

Individual Example (med success): one graduates and makes $40 k/ which
increases by $5 k/ year.

The grad pays an income tax of ($ 000) 8, 9, 10, 11, 12 over the next 5
years, half of which goes to pay off the tax loan.  He also pays 1, 1.5, 2,
2.5, and 3 ($ 000) in surtaxes.  Thus his loan repayment the first year is
4+1=5 ($ 000); with the following years: 6, 7, 8, 9.  So his Tax Loan
balances starts year 0 at 80 ($ 000) and follows: 75, 69, 62, 54, 43.
Almost half way repaid after 5 years.

Individual example 2 (avg): a graduate makes only $30 000/year, no
increases.  No surtaxes.  A flat $6 000/ year paid in income tax; $3 000
goes to pay off Tax Loan.  After 5 years, $15 000 is repaid, he owes $65

Micro considerations

The point is to keep track of the gov't benefits, and put them in tax loan
accounts, so that more middle class folk honestly pay for their own
benefits.  While using only 50% of the taxes paid may be needed to avoid
initial strong gov't opposition to such a program, increasing that portion
towards 100% will be an increasing desire of voters who are paying a surtax.
The surtax, which increases gov't revenues through voluntary means, is why
the pols in gov't will support the a Tax Loan program.

Yet that surtax will go a long way towards reducing the DEMAND for gov't
benefits/ gov't power.  Which is why freedom lovers should support such a

Other future Tax Loan programs:

An Unemployment Tax Loan / 

Re: Unequal Pay Makes Monkeys go Ape

2003-09-22 Thread Tigger
Paul Krugman, as debated about on Brad DeLong's Weblog (and Calpundit -
Kevin Drum;
and Daniel Drezner), is often focusing on how detrimental increased income
inequality is.
I have great feelings of sympathy for that, but rationally reject much of

It's always been clear to me that destructive envy is an irrational
emotion -- but now I'll
start calling it primitive and animalistic, as well.

Tom Grey

Answer to question: egalitarianism, of course; the law of the jungle!

PS.  I wonder if others have the new problem that a simple MS Outlook
Express Reply
does not go to the Armchair address (so I had to copy  paste)?

- Original Message -
From: Michael Giesbrecht [EMAIL PROTECTED]
Sent: Monday, September 22, 2003 9:02 PM
Subject: Unequal Pay Makes Monkeys go Ape

 So, can anybody tell me economic school of thought monkeys adhere to? ;-)

 Unequal pay makes monkeys go ape
 Thursday, 18 September 2003

 Monkeys, like humans, are acutely aware of injustice, which suggests that
a sense of equality is an ancestral trait among primates, a study says.

Re: Absolute vs. relative income level

2003-07-23 Thread Tigger

  i think there is a at least partial contradiction between the hypothesis
  of diminishing marginal return of income and the hypothesis that people
  care about consuming more than their neighbors or about earning more
  their neighbors (Frank: Luxury Fever). If the latter is true than the
  first hypothesis is weak. What do you think about this?

 If the latter is true, it too can be subject to diminishing marginal
 returns.  So where is the contradiction?
 Fred Foldvasry

I think Steffen is onto something very important, and Fred ( Alpius) are
dense.  After food, clothing, etc., diminishing marginal return says the
next dollar
of income has a lower (or perhaps often only equal?) marginal return.

A desire to earn more than the neighbors seems to say that at a level equal
to the neighbor,
the next dollar has a (much?) greater return than the prior few
dollars--obviously contradicting the
diminishing.  (Prolly non-linearly; but so what if reality is difficult to

And I think this very important, under studied issue is behind the rat
race, as well as
America's high consumption  high productivity.

I often talk, here in Slovakia, about the Russian and American dreams:
An American farmer lives next door to another farmer with a prize cow.
A Russian farmer's nearest neighbor has a prize cow.
The American farmer dreams that he has a better cow than his neighbor.
The Russian farmer dreams that his neighbor's cow, dies.

American Admiration Envy violates the assumption of diminishing marginal
(I often often think of these envy differences, but hadn't related them to
marginal returns.)

I'm not so sure about Russian Destructive Envy -- but I AM sure that this is
the envy which
is sinful, and terrible.

Tom Grey

P.S.  If, as in both Slovak and Russian privatization, only the very corrupt
were greatly benefiting, the admirable desire for punishing justice is
indistinguishable from destructive envy.