Friday, June 28, 2013

The Flow of Information

I am a computer programmer. My primary interest is the flow of information.

I've put two reform packages on the table: The "The Medical Savings and Loan" concerns health care reform. The second is a tax reform proposal called "The Object Tax."

Both reforms are about the flow of information. Both reforms seek to give individuals greater control over their personal information.

In both reforms I talk extensively about the flow of money. I see money simply as a tool to quantify the value of resources.

I often note that information follows the flow of money. But this is tautology because money is nothing more than a bit of information.

When one follows the money, one follows the primary flow of information.

In the current health care system, the money flows from centralized pools to large health care providers. Our health care information follows the flow of money back to the centralized provider.

The Medical Savings and Loan gives each person a Medical Account. The money flows from this account and health information flows back into the account. This gives the individual greater control over personal health resources.

Our current tax system is quite convoluted. The money flows from employers in the form of payroll with-holdings. Employers report the finalized payments on a W2 Form. People then file a tax return with necessary adjustments.

The Object Tax is named after Object Oriented Programming. This is a programming technique used in system design. It is used in the design of most operating systems, web browsers, smartphones and the Internet.

The goal of the Object Tax is to change the flow of the money.  Object Technology allows us to change the flow of money with minimal disruption. The process works as follows:

We start by making an object model of the current tax code. This model can be implemented as the current income tax.

We invite financial institutions to create new implementations of the the tax code.

A Tax Aware Account is one possible implementation. This implementation works as follows: Workers have their entire paycheck deposited into a Tax Aware Account. They pay taxes when they withdraw money for spending.

The design of the Object Tax allows for incremental change. Congress creates a tax code that can be implemented as the current income tax. It invites financial firms to create implementations of the Tax Aware Account.

We can rigorously test the implementations before putting them into production. Once in production, people would gradually adopt the new technology as they found it advantageous.

The program is based on the same solid design techniques as smartphones and the internet. This is a solid approach to reform.

The long term affect of the reform is that it would give individuals greater control over their personal finances.

In contrast, the Fair Tax takes the opposite approach. The Fair Tax replaces individual income tax with a national sales tax. The National Sales Tax removes the individual from the tax equation altogether.

From a system design perspective, the Fair Tax horrifies me because it cuts people out of the system. When you cut people out of the system, the system grows, but the people diminish.

I challenged Fair Tax Supporters to a debate. All I've received is a condescending remark and a put down.

As I pointed out in the previous post, Tax Reform is in the air.

The Object Tax and the Medical Savings and Loan are basically the same idea. The goal of both programs is to change the flow of money so that it goes through individuals accounts. Changing the flow of money would give individuals greater power over their personal information.

Giving people control over their personal information empowers people.

I fear that the opportunity to discuss free market health care reform has passed.

The issue of tax reform is in the air. Presenting a tax reform based on the principles as free market health care could set our nation on a path of restoring our nation's experiment in self rule.

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