American Plutocracy

Basically, our laws and political structure give hilariously large amounts of power and protection to the wealthy.  This seems like a problem, because the vast majority of people aren't, you know, wealthy, and also because the wealthy already have a lot going for them without getting any help or special treatment.  I talked about this with respect to our tax code last post, but it applies in all sorts of venues.  Let's talk about them now:

1. Taxes - been here before but it's worth saying again.  The rich have an enormous advantage when it comes to taking advantage of tax exemptions.  Corporations (which are getting more and more like extremely wealthy people every court decision) are the most egregious example of this, with many "American" companies paying virtually no taxes as a result of complex accounting structures and multinational presences. All this made possible by complex tax codes and armies of lawyers and accountants.

2. Civil and Criminal cases - Legal fees make basically everything about the courtroom experience farcically favorable to the wealthy.  This is most awful in civil suits, where discrepancies in wealth lead to major corporations being able to bully people into settling cases that, given equal means, would assuredly go to court.  Recent examples: the GeoHotz fiasco, or any RIAA suit.  It's also pretty bad in criminal courts, where rich people have a great deal more access to effective legal council (there are public defenders, even really good ones, but that's a mixed bag), and can much more easily avoid the painful side effects of criminal suits because they can afford bail.  It's awful just how much time innocent poor people spend in prison waiting for their trial merely because they can't afford bail.  Likewise, rich people suffer significantly less from tickets and other fines and penalties, so they have much less incentive to obey laws whose violation results in such penalties.  All of this is before we even consider things like cronyism or bribery which are at least theoretically illegal.

3. Political Influence - I just recently was reading about a dinner party fundraiser hosted by the Obama campaign.  Tickets were going for 35,800 dollars.  For that price you got to eat and hobnob with the President of the United States, with only 60 other people around.  While I'm sure Obama has a fairly well established set of political views, it certainly can't hurt the agendas of the dinner guests to have a chance to chat with him.  If you consider the fact that all of the fund raising dinners, charity drives, and donation things that occur in the upper echelon of politics are attended more or less exclusively by people able to drop 35K on a dinner party then you can probably pretty quickly recognize why politicians might favor the agendas of the very wealthy.  It's almost an accident at this point, the very wealthy are the only people they're really hanging out and chatting with; how could they be expected to favor anyone else?  It get's a lot less accidental when you look at things like corporate giving and campaign donations and the like.  Money buys you media time, which gives you a disproportionately large voice in the public arena.  All of this rather handily explains items 1 and 2 in this list.  Turns out of wealth gives you a bigger voice in the making of laws, the laws will grow in favor of you.  I bet we are all surprised by this.

Taxes - how they should be (Part 2 Simple)

Complexity is the friend of the wealthy.  This causes problems all over our country, but I'm going to focus only on tax law right now.

Complexity problem 1: Wealthy people can afford lawyers and accountants, who exist entirely so that money can be made off of the complexity of our laws.  Unsurprisingly, this means that the well off are more likely to receive tax deductions &c.  They report and record their income and expenditures more carefully and they have access to experts who can maneuver the many loopholes and edge cases in our current system.

This is compounded by problem number 2: As some of you may have noticed from this income and expenditure spreadsheet, education trends with income.  That means that if you're not making a whole lot of money, it's likely that you don't have a whole lot of education or training in order to deal with the complexities of tax law, which means you probably wont be able to do as good a job as a highly trained professional expert tax payer like an accountant.  Surprise!

I'm not the first person to have noticed this, as you can see from Obama's recent budget speech, but I hope this expresses the issues succinctly.  Basically, I think tax payments should be a simple function of your income.  We should be adjusting the level of taxation to what we expected to make on average at each income level once deductions were applied, and we should leave social policy implementation out of our revenue stream.  This would have a whole pile of interesting side benefits like:

1. Taxes would be hilariously easy to calculate for people with regular salaries, which means the government could just send you a bill rather than forcing you to wade through a pile of inconvenient forms.  I'd love that.

2. Human beings might understand the tax code.

3. Politicians wouldn't be able to sneak in weird policy ideas under the guise of tax breaks.

4. Our revenue stream would be highly predictable on account of no variance being introduced by lawyers

5. We would put huge numbers of accountants out of jobs (Hurray!)