Monthly Archives: April 2018

The Illusion of Substance (Just for Fun)

The Illusion of Substance (Just for Fun)

 One of the many amazing facts that we take for granted is that solid objects exist. I like the following analogy: Assume the nucleus of an atom is the size of a golf ball. Place it in the very center of a football field. Now, how far away are the electrons? The answer is that they are circulating about 50 yards distant (at the goal lines and way past the sidelines)! What this means is that atoms are essentially just “space”.

If this is true, then why do objects appear and feel solid? The reason is that the electrons are moving at a speed of over 99% of the speed of light. In a sense, they provide a force field around the nucleus that provides the “illusion of substance”.

Atoms are extremely small. Our bodies are made up of over octillion atoms (1, followed by 28 zeros). We are primarily (99%) comprised of carbon, oxygen, hydrogen, calcium phosphorus & nitrogen atoms. While most of our atoms are oxygen, the 2nd most prevalent atom is carbon. The nucleus of a carbon atom is comprised of six protons and an average of six neurons (actually can vary from 2 to 12).  And you guessed it, there are six electrons. Thus, the atomic number of carbon is 6.

Our Insane Income Tax Code

Chapter 67 Our Insane Income Tax Code

The original Income tax code, a bit over 100 years old, was 400 pages. Today is now runs 70,000 pages! Originally the rate was a fixed 1% and only paid by highest income earners.

The 1935 form 1040 had 2 pages while the current form contains 100 pages of sub-forms and instructions!

It is estimated that the code results in 9 billion hours (that’s 9,000,000,000) to comply with the tax code and that equates to $400 billion in lost economic productivity In either lost personal time or the cost of paid preparers). This does not include the cost to fund the IRS which currently is running at $13+ billion.

The real problem with the tax code is that it has evolved as a result of special interest influence which creates a plethora of complexity to reward those interests.

The solution is relatively simple, but not politically feasible. The following suggestion is taken from one of my earlier posts as simple way to replace our current level of income tax revenue:

“You have heard several potential solutions to this issue and here is my suggestion:

An average flat income tax of (5%) on all gross income except for capital gains. My math could be a bit off here, but the rate stated should be close to working. I would segment this into five categories with gross incomes at or below the poverty level at 0% (currently $25,000 for a family of 4). I would not provide incentives for larger families). For incomes from $25,000 to $50,000 I would make the rate 2%, from $50,000 to $100,000  4%, from $100,000 – $250,000 6%, from $250,000 – $500,000 at 8%,  and all over $500,000 at 10%. These rates would become the automatic withholding and there would be no deductions

The above would not change either SS or Medicare tax rates.

I would completely eliminate capital gains taxes. Instead I would propose an annual tax on wealth (assets minus liabilities). The proposed rates would be: 1% for under $500,000, 1.5% for $500,000 – $1,000,000, 2% for $1,000,000 to $5,000,000 and 3% for $5,000,000 to $100,000,000 and 4% over $100,000,000.

Also, a flat national sales tax at 2% on all business sales at retail. I would completely eliminate corporate income taxes.

At this time, I would not suggest any change to the excise tax structure.

Note: I have done my best to ensure that the above would effectively replace the total revenue achieved by the current tax system and freely admit that the results may not be perfect, but you get the idea. These numbers can be tweaked to achieve the desired revenue results.”

Education revisited

Education revisited

Not long ago I posted a lengthy treatise (several posts) on the unwarranted costs associated with securing a College degree. One area of concern that I did not adequately address was the impact of these costs on the taxpayer. The advanced education system is heavily subsidized via student loans. Keep in mind that these costs have increased over the last 2 decades at a rate of 3x that of overall costs.

Updated: January 24, 2018

It’s 2018 and Americans are more burdened by student loan debt than ever.

You’ve probably heard the statistics: Americans owe over $1.48 trillion in student loan debt, spread out among about 44 million borrowers. That’s about $620 billion more than the total U.S. credit card debt. In fact, the average Class of 2016 graduate has $37,172 in student loan debt, up six percent from the prior year.

Since these are loans and not grants how does this impact us. Currently the default rate is in the neighborhood of 10%. I have not been able to verify the actual cost to tax payers, but if we assume a 10% default rate and an average of 4 years borrowing that would equate to an annual write off to tax payers of almost $40 Billion. This is not acceptable!

Our government does little to mitigate the rise in these costs. Actually, they facilitate the increases by loaning without questioning the rates that are being charged. While only slightly more than ½ of these borrowers actually earn a degree we still are successfully pumping out about 3 million that earn a four year or higher degree. Only 15% of graduates are assured a college level requirement job on graduation and over time only 40% ever realize this level of employment. About 40% will end up taking a subpar job, often in area not related to their college major. Fully 20% will end up in low paying positions where their high school graduate compatriots have had a four year head start on career progression.

All of this is taking place while there is a shortage in many of the technical skill trades.