Cuban explains several things things about tax policy, some of them quite well.

wrecked houseby Horia Varlan

Thoughts on Our Federal Government, Taxes and Small Business and More
[Via Blog Maverick]

These are not meant to be researched items. These are “streams of consciousness” from the conversation yesterday’s post created.

First some housekeeping. I DO NOT like paying more in taxes. HOWEVER, I think that this country has created unique opportunities for entrepreneurs and paying taxes is a small price to pay.  Taxes are not a bad thing.  What bothers me are not the taxes I pay to help others and to support the services our country needs. What bothers me is the  mis-allocation and inefficient distribution of our tax money. Particularly when it leads to taking more money from those who can not afford it, and in this economy, even those making 250k per year can not afford it.

Our Congress, BOTH parties, has progressively lost the moral hazard of doing what is right for the country rather than doing what is right for the party and politician. Why wouldn’t a politician  go for the gold in their political career ? Why wouldn’t a party profess that their way is the only way  ? What is the financial or career downside of doing so ? None.  It may not serve the country very well, but careers and fortunes will be made . Our politicians are no better than the financial whores who helped get us into this mess. They put personal gain over the people they are elected to serve.

So what can be done ? Here you go:

[More]

I may disagree with some of Mark’s ideas – but only some because on the whole, he is right – but it would be a a discussion worth having because it would result in a better place. as opposed to the current climate where all we get are rants, pouting and screaming.

One point I do agree with is that politicians no longer have any moral hazard regarding doing what is right for the country or even what is right for their constituents. They actually get further ahead simply taking the money and running.

I agree with him about transparency. Good law is easy to understand. Bad law is purposefully made obscure to prevent people from seeing it as bad law. Never trust any law with a cute name. Like PATRIOT Act.

And I also think 10 year budgets are used inappropriately, allowing greater confusion in the budget process, more than it actually helps.

And I agree with him that people who do the most, who are the most successful and a real boon to society are generally driven to do so. Taxes just do not enter into their decision to go for it – whether it is creating a company, writing a book, teaching, doing research, etc. For those that actually benefit society the greatest, taxes have little effect on their choice.

Because humans are not perfect, it will always be true that the way taxes are spent will be inefficient. The goal is to do better, not to just get rid of taxes. The reason taxes are sometimes used inefficiently is because government spending has different pressures and incentives on it than the free market. The reason government spending is necessary is because it has different pressures and incentives than the free market.

Government can take on the risk of a transcontinental railroad. It can take on the risk of a national highway system. It can provide the direction to send men to the moon. It can provide safety nets society. It can provide fire and police protection. It can take the risk of educating all of our children. It can take the risk of providing mail service.

There may be poor policeman, or crooked developers, or the mail may be late. But the need is to correct those deficiencies, not do without the police, or builders or the Post Office.

I do not think you can completely remove the failure of inefficiencies while retaining all of the necessary successes. Reducing inefficiency can be a goal but there must be a recognition that some amount of slop will be required to provide for the greatest social gains of government spending.

Tearing down foreclosed houses might be interesting. I wonder what will happen though to the remaining houses in a decimated neighborhood? Being surrounded by empty lots would not be great for home values. And I assume someone is still paying taxes on the property. But it seems to me that a useful program might also turn the land into public parks. That would really increase the value of the other houses and provide plenty of new jobs.

Being a small businessman myself,  while regulations can be choking in many instances there is a need for them. But there is often little real coherency in the why, what and how of them. So I can’t get my septic tank cleaned out by someone a neighbor recommends. Because we both live close to the county line but in different counties. It costs the company too much time and effort to get licensed in both counties.

Greater transparency would help. And using technology to streamline the process or make it easier to find proper solutions. But throwing everything out – I would never want that. I read The Jungle.



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