A Collection of Good, Feasible Ideas

Posted: 2013/07/24 by therealgreenplease in Uncategorized

First, a qualifier: I think they’re good ideas.

I’ve been gone from the Punkonomics radio show for a little over a month due to a temporary geographic relocation. However, I just couldn’t stay away. What follows are a collection of ideas that either I’ve had or stumbled across.

The Alternative Vote:

This is a simple concept that’s best explained by this YouTube video. Basically, you rank candidates rather than just outright vote for them. The idea is that it would be easier for other political parties and independent candidates to be elected. I’d explain it further but the linked video does a great job and it’s only four minutes long.

Build a Rail Gun to Shoot Stuff Into Space

THIS IS SO COOL! First, here’s a link to a paper on the idea… it’s shockingly old and rather arcane but, here, Ph.Ds said it’s totally feasible so it’s not like I’m making this up. For those who want something easier to read and with pictures here’s a recent article from Gizmag.

Right now, it costs $10,000/kg to get stuff into low-earth orbit. A rail-gun could do that for $50/kg. At $50/kg, a lot of stuff becomes possible. Like mirrors to slow global warming, 24 hour/day space based solar power, and an astroid defense system. Not to mention we could could assemble space ships in orbit which would drastically reduce the cost of something like a manned mission to Mars. 

Now what is proposed in the Gizmag article is a 1,000mile maglev train to launch stuff into space. I’ll concede that’s a bit ambitious. The reason it would be so long is that it would keep accelerations to under 3G so that it would be usable by humans. Recent Ph.D recipients from MIT have proposed a five mile long rail-gun that would accelerate objects at ~15Gs. Totally doable. The idea would be that raw materials would be rail-gun launched while humans, when we go up, would still ride rockets. For what it’s worth, only 10% of the cost of the International Space Station so far has been launching humans. The rest of the cost has been launching the modules themselves, gear, and supplies. 

Elimination of Corporate Taxation

[FLAMESUIT= ON] Hear me out people. Big companies like GE, Apple, Goldman-Sachs, etc complain about how high the corporate tax rate is in the U.S. and routinely claim that lowering it would be better for the U.S. economy. The thing is, said large companies essentially write the tax code through their lobbyists and end up paying essentially zero in corporate taxes. Zero. Nada. Heck, GE even manages to pay NEGATIVE TAXES! They do this through a series of financial vehicles and tricks that are simply out of reach for smaller companies… like the mom and pop businesses in your community. 

This tax framework is what we call an economic-moat. The tax code effectively protects large corporations from competition from smaller corporations. So I say we beat them at their own game: if we eliminate corporate taxation it forces everyone to play on the same level (from a tax standpoint). That means more competition and, if you’ve studied economics, you know that competition is a good thing. 

“What about all of that lost tax revenue?” Well, that’s a good question. I say you make it up by increasing personal income taxes and doing so by making the tax code more progressive. Sure, the wealthy could hide their income by keeping their income within the coffers of the companies they owned (known as “retained earnings”) but, in the long run, that money will either be spent on R&D, employee compensation, or it will eventually be distributed as a dividend and thus be taxed. 

Trade Higher Income Taxes for Elimination of the Estate Tax

[FLAMESUIT = STILL ON] There are some good arguments in favor of the inheritance tax, I’ll grant that (such as the illusion of wealth mobility). However, one of the nasty side effects of the inheritance tax is that family owned businesses lose out to large corporations. If you’re curious about the mechanics of this, hit me up in the comments. If you don’t believe me, I watched it happen with my family’s farm. Family farm closes up, agricultural conglomerate buys it up. Family owned real estate company closes up, giant publicly traded REIT buys the assets. Wash, rinse, repeat. This happens because the estate tax places a huge short term liability on the businesses/asset. The result is said businesses/asset is forced to liquidate and usually to do so at a fire-sale price. 

There’s another element at play here: wealth mobility. The truth is that wealth is mobile in this day and age. Beni will come in and argue that wealth/capital shouldn’t be mobile since labor is not (and that’s valid from an economic theory standpoint) but short of a major revolution I don’t see global capital controls happening (and they would have to be global). The U.S. is seen by the rest of the world as a financial safe-haven. If we were to eliminate the inheritance tax, many wealthy individuals would choose to live here rather than elsewhere. My own anecdotal experience with these individuals tells me that they’d be willing to trade higher income taxation for what would essentially be avoiding wealth taxation.

Are there flaws in this idea? Sure. But one thing I’d encourage my readers to keep in mind is that, in the long run, countries are in a global race to the bottom when it comes to taxation. It’s a slow race, but a race none the less. We either compete and maybe win or don’t compete and lose. The very wealthy already avoid the inheritance tax by relocating out of the U.S. in their later years (or by using ridiculous legal tricks). Why not keep them in the country and at least collect SOMETHING?

 

That’s it for now. I’ll have more in the coming days. Hit me up in the comments!

Comments
  1. Matt Pollitt says:

    Jesse, As a small business owner in Winter Park, I have to say it’s nice to hear someone being rational and using economics to see why changes should be made to our tax code. I agree completely with removing corporate tax. If I want to leave my money in my company to reinvest in the company, why should I have to pay income tax as if I withdrew the money into my personal account? Makes no sense. Love your show! Keep up the great work.

    Like

  2. dhermit says:

    Jesse, As a small business owner in Winter Park, I have to say it’s nice to hear someone being rational and using economics to see why changes should be made to our tax code. I agree completely with removing corporate tax. If I want to leave my money in my company to reinvest in the company, why should I have to pay income tax as if I withdrew the money into my personal account? Makes no sense. Love your show! Keep up the great work.

    Like

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