Are companies such as Amazon, Apple, and Google morally bankrupt because of their attempts to minimize their income tax?

Absolutely not. 
 

There is a deep underlying problem here. And that problem is called ‘The Income Tax’. Taxing income is the worst sort of tax that there is. First, it is impossible to define ‘income’ consistently because it is typically considered to be 'gross income minus expenses'. But what is an expense? In the United States a Realtor can subtract the cost of car travel from his income. But someone who drives to work and back home cannot. What’s fair

It’s so difficult to determine what’s fair that the income tax code in the US is more than 2,000,000 words long. There’s not a single person in the world who understands it. 

The worst thing about it is that it gives almost everyone the idea that just because a person or company earns lots of money, they owe you, me, the country, or the world, money. And why is that? There is no moral reason that they should be taxed just because they earned money. 

One could more easily argue the opposite: those individuals and companies that earn money do so because they are providing a product or service that people want. 

Rather than tax them on their profits, we should be thankful for such companies, because of the jobs and services that they provide. But an income tax punishes them.

Rather than be envious (a sin) that an honest person or company is prosperous, we should be happy that they were rewarded for their efforts to provide us with their service. And then we might be motivated to work harder, earn more money, and enjoy the fruits of our labor. 

I'm glad Apple has a presence in Ireland to try to minimize their income tax. When the income tax rate is 0% for all, I’ll be happy.

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You might ask, “But we need taxes, so what’s a good alternative?” We do need taxes, but they need to be moral taxes. 

And what taxes are moral? Taxes are moral if they are essentially ‘user fees’ for the use of some government provided service. 

For example, a road tax, that charges per mile traveled per weight of a vehicle, is a fair tax. It is a tax that pays for the amount of road used up by a vehicle.

A land tax charged for the private use of land is also a fair tax. Because the owner of land did not create the land, it is appropriate to charge a monthly or yearly land tax, so that the land owner compensates the rest of us for the fact that the owner is given control over that land. 

One last example is a natural resource tax on those companies that extract scarce natural resources from the ground. For example, a company might gain the right to extract bauxite, an ore of aluminum, so that they can refine it and sell the aluminum. This is good because aluminum is a metal we need. And it is appropriate to charge a tax per ton of aluminum extracted, because the company did not create the aluminum. So again, the tax compensates the rest of us for the right to extract a natural resource.

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Let's get rid of the immoral and unworkable income tax, and replace it with taxes that are moral, and that do not discourage the creation of a product or service.

Tim Farage is a Senior Lecturer in the Computer Science Department at The University of Texas at Dallas, and a former Professor of Mathematics. The views expressed herein are those of the author. Some of his main interests are in online education, and the reconciliation between science and spirituality. You are welcome to comment upon this blog entry and/or to contact him at tfarage@hotmail.com.

What the next President of the United States ought to do

Introduction
 
As I write this in March, 2016, this is the most "interesting" presidential race that I've witnessed. I'm not going to get into the candidates, or the political parties, mostly because both of the major political parties are corrupt, and because they tend to polarize our country. So this post will deal with the issues and not politics, thank God. 

No matter how you feel about the particular candidates, there is a hopeful sign during this election season. And that sign is that people are tired of politics as usual. Amen to that. Go USA.

That said, what would I like to see our next President focus on, in order to keep our country as the best country in the world? And further, what should the next President do to improve our country so that we can be a good model for all other countries? 

1) Allowing all parents to choose their children's school
 
This is really a state issue, but it's so important that I'm including it here. Certainly, the President can lead the charge to encourage the states to adopt school choice.
 
Currently, if you are well-to-do, you can send your child to whatever school you wish, public, private or parochial, if that school is willing to enroll your child. 

If you are not well off, you must send your child to the local public school, or possibly a public charter school. We've been trying for decades to improve public education, and everyone knows how that has gone. If you don't know, go see the documentary, Waiting for Superman.
 
The documentary shows the plight of the poor and how desperate they are to get into good schools. The writer suggests having more charter schools, which is fine. But the only sustainable answer is to have school choice for all parents, rich or poor. There is no doubt that it will eventually happen, so why not start doing it now? If we are going to subsidize education, then allow the parents the freedom to decide how their children are to be educated.
 
It's simple to do. Each state should take whatever it now spends on K-12 education. (In Texas it's about $10,000 per student per year). Then put this amount into an Educational Benefit Account for each child. The child's parents can then use this money to send their child to whatever public, private or parochial school that they feel will best suit their child. And they can change schools whenever they wish.
 
School's will crop up all over the place. Some will be bad and some will be good. But the bad ones will eventually go out of business, since parents will stop sending their children there. And that's what will lead to educational improvement in our country. Why? Because every system improves when people have a choice.

2) Pass a balanced-budget amendment
 
Year after year of budget deficits tells us that Congress cannot balance a budget. As of March, 2016, the national debt is $19 trillion. This is the same as $19 million million. This comes out to over $152,000 of national debt per family. Did you know that you had that debt on top of whatever personal debts you have? And you're paying the interest on it. 

It's time for a balanced-budget amendment that requires Congress to pass only balanced budgets. The amendment should have an exception that allows for Congress to vote to deficit spend for a given year is 2/3rds of both houses of Congress vote to do so. (This might be needed in times of war, or a large natural disaster). The amendment should allow 10 years for Congress to balance the budget.

3) Real health care reform
 
Medicare, Medicaid, and Veterans' health care are underfunded by over $60 trillion. And they don't provide health care for everyone, they don't remove the pre-existing condition problem that everyone hates, and they still tie much of health care with employment. Yet we spend about 16% of our Gross Domestic Product (GDP) on health care, more than most developed countries.
 
Here's a simple solution that provides health care to all Americans, would be completely funded, would eliminate the pre-existing condition problem, and would de-couple health care with employment. 

The solution is for the federal government to take 10% of Gross Domestic Product (GDP), about $1.8 trillion, and put an equal amount of this into a Health Care Account (HCA) for each American adult. This would be about $7300 per year per adult. About half of this would be used to buy a high-deductible health insurance policy, and the other half to pay for medical expenses incurred before the deductible kicks in (and in most years, it wouldn't).
 
Insurance companies that grant policies under this plan must agree to cover any children the adult might have.

This plan would also replace all other health care subsidies.

This amount would be pretty good coverage and would include, medical, dental, and vision care. The most expensive procedures, such as a heart transplant, wouldn't be covered because there must a limit to keep coverage affordable.
 
Everyone would be covered, everyone could still choose whatever doctor or hospital they wished, and we'd save money all at the same time.
 
4) Bring our troops home
 
It's hard to believe but we have more than 350,000 troops deployed overseas in over 150 countries. I want the US to always have the best military in the world, yet I see no reason to have troops deployed overseas unless we are at war. Iraq didn't attack us, and Afghanistan didn't attack us. Osama bin Laden and Al Qaeda did. And ISIS is attempting to do so. So the only troops we should have overseas right now would be those who go after those who are planning to attack us. And most of this can be done with our Special Forces and our intelligence apparatus, which have been especially effective since 9/11 in thwarting attacks against us.
 
What is currently going on in the Middle East is a terrible tragedy. But there are more than 400 million people in Arab League countries. They can get rid of ISIS and other terrorist groups if they truly desire to.
 
If we minded our own business, and stopped being policemen of the world, we'd need fewer troops, we'd have less hostility directed at us, and we could use some of the troops brought home to protect our borders and ports. I think we would actually have fewer attacks directed against us without troops stationed overseas.
 
And the US Navy still dominates the oceans. We can defend the US from attacks from just about anywhere in the world.
 
5) Transform Social Security into a sustainable retirement plan
 
Social Security was started by FDR in 1935 and the tax rate was 2%. It was meant to be a supplement to one's retirement income. Now the Social Security tax rate is 12.4%, and it is still only a supplement to one's income. And it's underfunded. Anyone saving 12.4% of their income should be able to retire on that alone. Instead, to retire gracefully, we need to have another retirement plan and save 10% in that. This is an incredible waste.
 
Transition to a system in which individuals are required to save 15% for their retirement. No more under-funding. And if I told you that most people would be millionaires when they retired, you wouldn't believe me, but it's true.  The transition might take decades, but the sooner we start, the better off we'll be.
 
Every month each of us would have much more money to spend because we wouldn't have to put money into both Social Security and another retirement plan.
 
6) Replace the income tax with a Natural Resource and Pollution tax
 
We currently waste between $200 - $600 billion per year just because there's an income tax. This is money spent on tax attorneys, tax accountants, tax software, etc., just to pay income taxes. Furthermore, there is no rational basis for a tax on income. If a person earns X amount of money, then that money is theirs and belongs to no one else.
 
On the other hand the natural resources of a country weren't created by anyone, so they can only be considered to belong to all of us. The best way to handle the natural resources is to allow individuals or companies who own them to pay a monthly tax on those resources that are not used up (mostly land) or to pay a one-time tax on resources that are used up, such as oil, gas, aluminum, and minerals.
 
This would eliminate the IRS and all the problems created by having an income tax, and replace it with a tax that would have many beneficial side effects, such as encouraging conservation in order to minimize taxes.
 
7) Start building nuclear reactors now
 
We need inexpensive, reliable energy to be prosperous. Inexpensive energy is one of the single most important items that help the poor get out of poverty, because inexpensive energy reduces the cost of everything. Currently, there is only one source of non-polluting, reliable energy that can provide a steady base load of energy for our country. And that is energy generated from nuclear power. President Obama is providing loan guarantees to investors who provide money to build nuclear reactors. The Nuclear Regulatory Commission has already approved two very good and very safe nuclear reactor designs. Congress just needs to remove any other remaining barriers to building them now.
 
In a decade or so, we'll have better battery-powered cars, and these can be charged with electricity generated by nuclear-powered plants. We'll then have most of of our energy be clean and safe. They also give off no CO2, and will make us independent of foreign oil.
 
If you're worried about radiation from them, don't be. In over 50 years, there has not been even a single death due to radiation in the United States as a result of commercial nuclear power plants.

If France can get, inexpensively, 75% of its electricity from nuclear power, so can we. And we'll be able to get the rest from solar, wind, and other non-polluting sources. 

Conclusion 

If our next President would do the above items, our country would once again be leading the way to making a better world for all.
 
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Tim Farage is a Senior Lecturer in the Computer Science Department at The University of Texas at Dallas. The views expressed here are his own. You are welcome to comment upon this blog entry and/or to contact him at tfarage@hotmail.com.
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Government based upon Natural Law - (Part 4) - The Advantages of a Natural Resource Tax

Introduction 

In a previous post, "Government based upon Natural Law - (Part 3) - The Income Tax is Bad", the many and various disadvantages to having an income tax were discussed.  In this post, fair, just, and efficient alternatives to the income tax are given. 

What kinds of taxes are just?

What kinds of taxes are fair and just? Fair and just taxes are those that pay for the use of a government-provided service; these are frequently called "user fees".

Actually, many of our current taxes are just.  The gasoline tax is a good example.  The government (federal, state or local) builds and maintains the majority of the roads.  It is fair and just that those who use the roads the most should pay the most for them.   A semi-truck that travels 100,000 miles a year should clearly pay more for the roads than Aunt Pearl who drives to church on Sunday in her Ford Taurus.  Since the amount of gasoline a vehicle uses is proportional to the weight of that vehicle and the distance it travels, gasoline taxes are a relatively fairer way to pay for the roads, (although a road tax based upon the weight of the vehicle and the miles driven would even be better).

The FAA (Federal Aviation Administration) provides another good example of a just tax.  The FAA exists mainly to monitor air traffic and ensure the safety of aircraft. Clearly, the people who fly are the ones who should pay for this.  And this is currently the case, because each airline ticket has attached a small federal tax on it to pay for the FAA.

How about taxing human-caused pollution? By definition, human-caused pollution consists of substances that harm either people or plants or animals. Thus, it would be fair and just to tax a polluter in proportion to the harm caused by the pollutant for which they are responsible. This also results in the beneficial side effect of encouraging less pollution, since creating less pollution means paying less pollution tax. And it so happens that those who are rich usually pollute more for the simple reason that they own more cars, homes, boats, jets, etc. Thus a pollution tax would naturally cost more for those who can most afford to pay it.

(As an aside, the EPA has recently defined carbon dioxide as a pollutant so that they can regulate its emissions.  This was a mistake, since carbon dioxide is essential to life, and is not harmful to humans, plants, or animals.  On the contrary, plants breathe in carbon dioxide, and would die without it, and we would shortly follow suit.  Many think that it is a major contributor to global warming, but that is not a reason to label it  pollutant. Having a CO2 tax will do nothing to prevent global warming, but it will harm the poor here and abroad, because it will increase the price of gasoline and electricity. (But this is the subject for a another post).

Each of the taxes mentioned above, I believe, would fit the definition of fairness of any five-year-old. 

Reasons for Having a Natural-Resource Tax

However, there are some legitimate and constitutional functions of the government for which it is more difficult to assess how we can be fairly taxed to pay for them.  The military, foreign affairs, FBI, police, and fire departments fit into this category.  How can we fairly pay for them?  One way to think about this is to ask, "Who gets more protection from the military or the police or fire departments, Bill Gates or Aunt Pearl?"  While Aunt Pearl only has, say, a small apartment that benefits from military or police protection, Bill Gates gets quite a bit more protection because he owns many vehicles, buildings, and acres of land.  And he would suffer much more loss if we were to be successfully invaded by a foreign power.  The general principle is that those individuals or companies that own the most land or other natural resources should pay the most for these kinds of government services.  Thus, a natural-resource tax (NRT) would be a fair and just tax to be placed upon us.  Such natural resources include land, as well as coal, oil, aluminum and other minerals, etc. 

Another principle concerning natural resources is that they are a product of nature (i.e. our Creator and His Helpers) and thus are not produced by man.  Therefore, the only just way to deal with natural resources is to treat them as the property of the people as a whole.  So, if government wishes to sell or lease land or sell the rights to a company so that it can extract a natural resource, it is appropriate to tax that resource as compensation to the people for allowing the use or extraction of that resource from the commonwealth.

For example, in Alaska, private companies are permitted to extract oil from the ground.  To compensate the people of Alaska for this, Alaska taxes each barrel of oil removed, and that money goes into Alaska's Permanent-Fund Dividend.  These funds are paid to the residents of Alaska each year.  In 2008, the dividend was over $1,000 per person.

For consumable natural resources, the fairest way to apply the NRT is to tax it once—paid for by the company that extracts the resource. Thus, you would not pay a NRT on the aluminum can of Diet Coke you bought. But the company that extracted bauxite (an aluminum ore) would pay a tax to the federal government on each ton of aluminum it extracted. Of course, the cost of this tax would be passed onto the ultimate consumer, so in this sense those who use the most natural resources are those that pay for them.

In the case of land, only the land owner would be taxed, as a monthly land-tax fee. Note that there would be no NRT on the home or buildings on this land, because the NRT would have been paid previously by the companies that extracted the resources needed to build these structures. 

The legitimacy of this tax is based on the fact that no one has created the land. Thus, if a person or company 'owns' land, they have the right to control who is allowed on it. Therefore, they should pay for this right as a land-tax, which is one part of the NRT. 

Why the Natural-Resource Tax is Efficient

On the practical side, all local governments and some state governments have already established such taxes, usually called property taxes.  Thus, it would be fairly easy to have such a federal property/natural-resource tax as a replacement for the income tax (and Social Security/Medicare taxes, as well).  Ownership of property and natural resources such as land, oil wells, coal mines, etc. are already publicly recorded, so there would be no additional intrusion into our lives as a result of this tax.  It would take no tax attorneys, accountants, tax software, or tax forms to do our taxes.  Individuals that own land and companies that own land or extracts natural resources would be taxed regularly, preferably monthly.  Furthermore, property valuations that have already been done at the state or local level could be used at the federal level, thus avoiding another bureaucracy. 

Other Benefits to having a Natural-Resource Tax

There are many other benefits to a natural-resource tax.  For instance, today some of those who are wealthy can often live off tax-sheltered investments and pay virtually no tax.  With an NRT, those who are well-to-do would naturally pay more taxes than those who are not, because they would use more natural resources.  Own five homes?  No problem, but you'll be paying taxes on each lot that the homes are built upon, and would be indirectly paying for the natural resources used to build the homes.

It is important to reiterate that home owners (as well as owners of other buildings) would pay an NRT only on the land that their home sits upon and not upon the building itself.  Thus, in a given subdivision, all lots that are substantially the same would have the same taxable value and the tax assessors would not have to be concerned with the value of the home itself.  This would encourage people to build and maintain nice homes, since they don't have to worry about their taxes going up because of improvements they make.

Also, it would be fair to tax farm land, residential lots, and commercial lots at different rates, given their various uses.

Life would be easier on farmers as well.  They would only be taxed on their land and not on their profit.  Thus they would be encouraged to make the best use of the land they have.  There would be no incentive to not grow crops as there is now in some cases.

Because people naturally want to minimize their taxes, a wonderful side effect of an NRT is that if people want to save on taxes, they only need to consume fewer natural resources. This then encourages the use of more energy-efficient cars, homes, and buildings, and encourages recycling as well. 

The Natural-Resource Tax Dividend

And finally, but importantly, just as with Alaska's Permanent-Fund Dividend that is given to the people of Alaska from oil companies, the federal government could give all citizens and legal residents an NRT Dividend to compensate them for others' use of natural resources.  This would be a fair and just thing to do, and it would be an equitable way to assist the poor (and everyone else).  If done right, this NRT Dividend could replace all subsidies that the government gives out (except for the Health-Care Subsidy and Education Subsidy to be discussed in other posts), saving the taxpayer money from the reduced bureaucracy of administering hundreds of different subsidies.  The amount of this subsidy can be debated, but I'd like for it to be around $1000 per month per adult citizen or permanent resident of the U.S., adjusted each year for inflation.  We could encourage the more prosperous among us to refuse this subsidy, which would help keep the price down. (In order to keep the budget balanced, this amount of this natural resources dividend could be defined as 10% of the Gross Domestic Product - GDP).


Another Benefit of the Natural-Resource Tax Dividend

As time goes on, fewer and fewer low-skilled workers will be needed due to automation. The NRT Dividend will assist those by providing a base income to all. And no matter how much extra money they earn, this Dividend will never be taken away.

Conclusion

In summary, let's replace the income tax and FICA taxes with user fees, taxes on pollution, and a natural-resource tax.  It is the fair and just thing to do, and will create a cleaner environment and a more prosperous nation.

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Tim Farage is a Senior Lecturer in the Computer Science Department at The University of Texas at Dallas. The opinions expressed herein are those of the author. You are welcome to comment upon this blog entry and/or to contact him at tfarage@hotmail.com.
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