Re: Tax Leisure via Time Audits?
On Thu, Apr 25, 2002 at 11:36:31AM -0400, Robin Hanson wrote: > Once upon a time income taxes were difficult to collect, because > income was hard to cheaply monitor. So governments used less > efficient taxes, and arguably this was a reason the size of > government was lower. Today it seems that we can cheaply monitor > the act of paying wages, and so income taxes are feasible, and > government is larger. Robin, why are you proposing to increase tax efficiency, knowing that it's going to lead to larger government? Also, labor supply curves tend to bend backwards at high incomes, so perhaps we should subsidize instead of tax the non-work time of high-income people?
Re: Tax Leisure via Time Audits?
Why would you want to tax leisure? Wouldn't this promote less intense (i.e. more leisurely) and thus, less productive work? Gustavo - Original Message - From: "Robin Hanson" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Thursday, April 25, 2002 11:36 AM Subject: Tax Leisure via Time Audits? > Once upon a time income taxes were difficult to collect, because > income was hard to cheaply monitor. So governments used less > efficient taxes, and arguably this was a reason the size of > government was lower. Today it seems that we can cheaply monitor > the act of paying wages, and so income taxes are feasible, and > government is larger. > > Income taxes are inefficient, however, because people respond by > substituting leisure and home production for wages. But this > inefficiency need only apply if we assume that we cannot cheaply > monitor time spent working for wages. And as the technology of > surveillance improves, it should get easier to monitor this. > > Perhaps in the future, the government will randomly check on each > person ten times a year, and see if they are working for wages > at that moment. Taxes would then depend the fraction of times > that, when checked over the last few years, they were found to be > working for wages. Of course to implement this each person will > need a cell phone, beeper, or some way to be contacted at random > times when they are working for wages. But since most people will > have such things for other reasons, the presumption will be that > the exceptions are doing it to avoid taxes, and so failure to > contact will be coded as not working for wages. > > Anyone ever estimated the size of the deadweight loss from the > income tax distortion? > > > > > Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu > Asst. Prof. Economics, George Mason University > MSN 1D3, Carow Hall, Fairfax VA 22030- > 703-993-2326 FAX: 703-993-2323
Re: Tax Leisure via Time Audits?
At 11:33 AM 4/25/02 -0700, john hull wrote: >Instead of surveillance schemes that sound a bit >Big-Brotheresque, no offense, why not just take the >forms already extant and merely switch hours worked >for income earned? We know how to audit returns to check on the income earned. The question is how to audit time spent. We need enough data so that audits are feasible. >Question: Would such a program necessarily imply flat >taxation, instead of progressive, since income will >not be reported but hours will? Tax as a function of hours need not be flat. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Tax Leisure via Time Audits?
Fred Foldvary wrote: >Real-estate taxes were not that difficult to collect, and rather efficient. I won't argue that here, as it isn't central to this discussion. > > And as the technology of > > surveillance improves, it should get easier to monitor this. > >The technology would need to keep ahead of tax-evading encrypted texts. To evade taxes, you need to appear to be working when time audited, but actually be in leisure or home production. How do encrypted texts help with this? > > Perhaps in the future, the government will randomly check on each > > person ten times a year, and see if they are working for wages > > at that moment. > >And if you are working at home? They will need a video camera. It is up to you to convince them you were working, otherwise they'll assuming you weren't. It would then be in your interest to install that video camera, if that is what it takes to convince them. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Tax Leisure via Time Audits?
Howdy, Instead of surveillance schemes that sound a bit Big-Brotheresque, no offense, why not just take the forms already extant and merely switch hours worked for income earned? Question: Would such a program necessarily imply flat taxation, instead of progressive, since income will not be reported but hours will? -jsh __ Do You Yahoo!? Yahoo! Games - play chess, backgammon, pool and more http://games.yahoo.com/
Re: Tax Leisure via Time Audits?
Martin Feldstein has recently done work on the distortions created by the income tax that take into account broader notions of labor supply behavior, such as shifting taxable income into untaxed fringe benefits or better working conditions. The cite is Feldstein, Martin. "Tax Avoidance and the Deadweight Loss of the Income Tax," in Review of Economics and Statistics, November 1999, 81(4): pp 674-680. Also NBER Working Paper No. 5055. for a nice introduction see his May 1996 AER Richard Ely lecture on social security privatization or the introduction (it's basicallly the same paper) to his volume on Privatizing Social Security. Alex -- Dr. Alexander Tabarrok Vice President and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621-1428 Tel. 510-632-1366, FAX: 510-568-6040 Email: [EMAIL PROTECTED]
Re: Tax Leisure via Time Audits?
--- Robin Hanson <[EMAIL PROTECTED]> wrote: > Once upon a time income taxes were difficult to collect, because > income was hard to cheaply monitor. So governments used less > efficient taxes, Not necessarily. Real-estate taxes were not that difficult to collect, and rather efficient. Land has hitorically been used as a tax base. > Income taxes are inefficient, however, because people respond by > substituting leisure and home production for wages. Income taxes are also inefficient because they are complex, requiring tax lawyers and accountants, and million of hours of "home production" keeping records and filling out forms. > But this > inefficiency need only apply if we assume that we cannot cheaply > monitor time spent working for wages. What about taxes on profits? That will always be complex because of the question of what is a deductible expense. > And as the technology of > surveillance improves, it should get easier to monitor this. The technology would need to keep ahead of tax-evading encrypted texts. > Perhaps in the future, the government will randomly check on each > person ten times a year, and see if they are working for wages > at that moment. And if you are working at home? They will need a video camera. > Anyone ever estimated the size of the deadweight loss from the > income tax distortion? The book The Losses of Nations, estimates the US loss conservatively at over $1 trillion per year from all taxes. Fred Foldvary = [EMAIL PROTECTED] __ Do You Yahoo!? Yahoo! Games - play chess, backgammon, pool and more http://games.yahoo.com/
Tax Leisure via Time Audits?
Once upon a time income taxes were difficult to collect, because income was hard to cheaply monitor. So governments used less efficient taxes, and arguably this was a reason the size of government was lower. Today it seems that we can cheaply monitor the act of paying wages, and so income taxes are feasible, and government is larger. Income taxes are inefficient, however, because people respond by substituting leisure and home production for wages. But this inefficiency need only apply if we assume that we cannot cheaply monitor time spent working for wages. And as the technology of surveillance improves, it should get easier to monitor this. Perhaps in the future, the government will randomly check on each person ten times a year, and see if they are working for wages at that moment. Taxes would then depend the fraction of times that, when checked over the last few years, they were found to be working for wages. Of course to implement this each person will need a cell phone, beeper, or some way to be contacted at random times when they are working for wages. But since most people will have such things for other reasons, the presumption will be that the exceptions are doing it to avoid taxes, and so failure to contact will be coded as not working for wages. Anyone ever estimated the size of the deadweight loss from the income tax distortion? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
single-agent vs multi-agent decisions
Awhile back, we talked about the striking parallels between the behavior of automatic control systems and the business cycle. Robin pointed out, correctly, that automatic control theory is an application of single-agent decision theory. He also pointed out that economics is basically a multi-agent decision theory. This remark may warrant further comment. Certainly the great bulk of economics study is just as Robin charaterized it. But, Adam Smith noted that many entrepreneurs pursuing private interests (i.e., multi-agent decisions) produce the result, often unintended, of a public benefit as if "led by an invisible hand" (i.e., single-agent decisions). This may be the reason why automatic control systems behave so much like the business cycle. Automatic control systems reflect, in fact, single-agent decision theory, while the business cycle behaves as if it reflects single-agent decision theory. The usefulness of this observation is that automatic control systems are described well by very eloquent math. Not being an economist, I do not know if this math has been applied to economics, but I do know that von Mises eschewed the whole idea of such application. Von Mises may have had great insights into the business cycle, but, perhaps, he was a bit premature in dismissing the math. Perhaps, if math were applied to Austrian economics, Bryan would have one less reason why he is not an Austrian economist. Walt Warnick -Original Message- From: Robin Hanson [mailto:[EMAIL PROTECTED]] Sent: Thursday, February 14, 2002 11:51 AM To: [EMAIL PROTECTED] Subject: RE: mathematical assumptions (Physics & Economics) Walt Warnick wrote: >... the business cycle behaves strikingly like an automatic control >system that has a positive feedback loop and damping. ... >The parallel goes further. ... a stable automatic control system involving >continuous feedback can become unstable if that same feedback is, instead, >sampled. Control theory is an application of single-agent decision theory, and since economics is basically multi-agent decision theory, I'd say control theory is closer to economics than to physics. Of course one often needs to know some details of the physics of the situation one is controlling, but usually control problems are dominated by decision theory issues, not physics issues. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: misc - ignore!
>>> [EMAIL PROTECTED] 04/25/02 12:54AM >>> I am a dunce and I have inadvertently given Bryan's secret away. I promise, however, not to reveal the names of the other participants (especially if they send me large wads of cash - you know who you are.) My apologies to all. Alex Alex, I never thought you would stoop to blackmail! How much do you want to keep my secret safe? . . . . . . . . Oooops. I guess that won't be necessary. (hehe) - - Bill Dickens
