MauledAgain

For as long as I’ve been writing this blog, I’ve been sharing a Thanksgiving post to express my gratitude for a variety of people, events, and things. Aside from 2008, when I did not post and I don’t have any recollection of why or how that happened, I’ve dedicated a post on or around Thanksgiving. I started in 2004, with Giving Thanks, and continued in 2005 with A Tax Thanksgiving, in 2006 with Giving Thanks, Again, in 2007 with Actio Gratiarum, in 2009 with Gratias Vectigalibus, in 2010 with Being Thankful for User Fees and Taxes, in 2011 with Two Short Words, Thank You, in 2012 with A Thanksgiving Litany, in 2013 with “Don’t Forget to Say Thank-You”, in 2014 with Giving Thanks: “No, Thank YOU!” , in 2015 with Thanks Again!, in 2016 with Thankfully Repetitive, in 2017 with Never-Ending Thanks, and in 2018 with Particularly Thankful This Time Around.

As I stated the past six years, “I have presented litanies, bursts of Latin, descriptions of events and experiences for which I have been thankful, names of people and groups for whom I have appreciation, and situations for which I have offered gratitude. Together, these separate lists become a long catalog, and as I have done in previous years, I will do a lawyerly thing and incorporate them by reference. Why? Because I continue to be thankful for past blessings, and because some of those appreciated things continue even to this day.” When I re-read those lists, I realized that the people, events, and things for which I am appreciative are far from obsolete.

So once again I will look back at the past twelve months, and remember the people, events, and things for whom and for which I give thanks. If some of these seem repetitive, they are, for there are gifts in life that keep on giving:

• I am thankful for a wonderful son, daughter, daughter-in-law, grandson, and granddaughter.
  
• I am thankful for the wonderful people in my maternal grandparents’ hometowns in Italy who welcomed me this past summer with open arms, enjoyable company, great food, and a fantastic experience.
  
• I am thankful that I had a few hours to go through some of the church records in my maternal grandmother’s home church, which helped me put together more pieces of the town’s family tree.
  
• I am thankful for my cousins in England who were most helpful when the rental car blew out a tire on an open, unseen storm drain.
  
• I am thankful for my congregation’s choir continuing to tolerate me as its president, and for our Director of Music Ministries, who continues to teach me and the others much more about music and singing than I realized I needed to learn.
  
• I am thankful that they continue to let me ring the narthex bell.
  
• I am thankful for having had the opportunity to continue teaching law courses.
  
• I am thankful for all the people in the world who continue to fight ignorance, crime, terror, evil, and corruption.
  
• I am thankful that I found the Windows 10 disks that came with the two desktop computers, because it saved me from paying again for something I had already purchased.
  
• I am thankful for people being willing to read the things I write.

Thirteen years ago, in Giving Thanks, Again, I shared my Thanksgiving advice. I liked it so much that I repeated it again, in 2009 in Gratias Vectigalibus, yet again in 2013 in “Don’t Forget to Say Thank-You”, still again in 2014 in Giving Thanks: “No, Thank YOU!” , even yet again in 2015 in Thanks Again!, even still again in Thankfully Repetitive, yet once more in Never-Ending Thanks, and last year in . Particularly Thankful This Time Around. For me, it does not lose its impact:

Have a Happy Thanksgiving. Set aside the hustle and bustle of life. Meet up with people who matter to you. Share your stories. Enjoy a good meal. Tell jokes. Sing. Laugh. Watch a parade or a football game, or both, or many. Pitch in. Carve the turkey. Wash some dishes. Help a little kid cut a piece of pie. Go outside and take a deep breath. Stare at the sky for a minute. Listen for the birds. Count the stars. Then go back inside and have seconds or thirds. Record the day in memory, so that you can retrieve it in several months when you need some strength.

I am thankful to have the opportunity to share those words yet again.

One never knows when, if at all, a tax issue will pop up in a television court show, and if one does pop up, what it will involve. Usually, the description of the episode does not mention tax, and the tax issue comes up collaterally. The other day, however, I knew there was going to be a tax issue because the description in the channel guide told me so. Of course I watched, because it would add to the ever-lengthening list of television court show episodes on which I have commented, including Judge Judy and Tax Law, Judge Judy and Tax Law Part II, TV Judge Gets Tax Observation Correct, The (Tax) Fraud Epidemic, Tax Re-Visits Judge Judy, Foolish Tax Filing Decisions Disclosed to Judge Judy, So Does Anyone Pay Taxes?, Learning About Tax from the Judge. Judy, That Is, Tax Fraud in the People’s Court, More Tax Fraud, This Time in Judge Judy’s Court, You Mean That Tax Refund Isn’t for Me? Really?, Law and Genealogy Meeting In An Interesting Way, How Is This Not Tax Fraud?, A Court Case in Which All of Them Miss The Tax Point, Judge Judy Almost Eliminates the National Debt, Judge Judy Tells Litigant to Contact the IRS, People’s Court: So Who Did the Tax Cheating?, “I’ll Pay You (Back) When I Get My Tax Refund”, Be Careful When Paying Another Person’s Tax Preparation Fee, Gross Income from Dating?, Preparing Someone’s Tax Return Without Permission, When Someone Else Claims You as a Dependent on Their Tax Return and You Disagree, Does Refusal to Provide a Receipt Suggest Tax Fraud Underway?, When Tax Scammers Sue Each Other, One of the Reasons Tax Law Is Complicated, An Easy Tax Issue for Judge Judy, Another Easy Tax Issue for Judge Judy, Yet Another Easy Tax Issue for Judge Judy, Be Careful When Selecting and Dealing with a Tax Return Preparer, Fighting Over a Tax Refund, Another Tax Return Preparer Meets Judge Judy, Judge Judy Identifies Breach of a Tax Return Contract, When Tax Return Preparation Just Isn’t Enough, Fighting Over Tax Dependents When There Is No Evidence, If It’s Not Your Tax Refund, You Cannot Keep the Money, Contracts With Respect to Tax Refunds Should Be In Writing, and Admitting to Tax Fraud When Litigating Something Else.

This time, it was episode 63 in season six of Hot Bench. The case as well as a tax-focused television court show episode could begin. One of the judges opened with this description of the case: “The thing Americans fear most, being audited by the government.”

The plaintiffs, a married couple, sued the accountant who prepared their federal and state tax returns. The Commonwealth of Virginia Department of Revenue, after noticing larger than usual deductions and credits, contacted taxpayers, asking for an explanation. In turn, the plaintiffs contacted the defendant, who examined the returns and concluded there had been a software error.

The defendant explained to the court that when he examined the returns, he figured out that the software pulled amounts from the federal return onto the state return, generating erroneous deductions and credits. He also explained that when he spoke to someone at the Department of Revenue, that person informed him that thousands of Virginia taxpayers had been affected by this software glitch. Accordingly, the Department of Revenue waived all penalties but did not have the authority to waive interest.

The plaintiffs argued that the defendant should have noticed the error before filing the returns, and wanted him to pay the entire amount demanded by the Department of Revenue. The defendant replied that it was an error by the software and not his fault. He also pointed out that he was willing to pay the interest owed by the plaintiffs, but that during negotiations the plaintiffs refused that offer because they wanted him to pay the entire amount due, including the tax.

The court concluded that the defendant had not acted intentionally or maliciously and that the tax that was due was an obligation of the taxpayers that they would have paid on time had the software error not occurred. Accordingly, the court held that the defendant was liable for the interest.

No one mentioned the maker or seller of the tax software in question, and I have not made more than a cursory attempt to identify it because my search terms did not generate anything helpful. Errors in tax software do happen, as do errors in all sorts of software. That is a risk of using tax software. Yet when tax returns are prepared manually, errors also occur, and at a higher rate. Sometimes risk cannot be avoided, and the best course is to take steps that reduce risk even if it cannot be eliminated.

On several occasions I have written about the misuse of the word “tax.” My explanation of the difference between a tax and some other charge appears in posts such as Please, It’s Not a Tax, So Is It a Tax or a Fee?, Tax versus Fee: Barely a Difference?, Tax versus Fee: The Difference Can Matter, and When is a “Tax” Not a Tax?. All but the last of those posts focused on the difference between different types of charges imposed by governments. In the last of those posts, I described why a fee or charge imposed by a person or entity that is not a government is not a tax and ought not be called a tax.

Now my attention turns to an interestingly named “google tax.” As described in this article, several countries have enacted taxes to deter “multinational corporations from shifting income to low-tax jurisdictions.” The taxes have formal names, such as Multinational Anti-Avoidance Law in Australia and Diverted Profits Tax in the United Kingdom, but these tax end up being called a “google tax” because they have been enacted in response to tax planning techniques used extensively by Google.

Recently, I discovered that the term “google tax” is being used to describe charges that are not taxes. According to Seth’s Blog, there is “The Google tax. Actually, there are two.”

The first of the two “taxes” described in the blog is the amount companies pay to push their google search results to more prominent positions. The second is the presumably increased cost of starting up businesses because new businesses are more difficult to find using google search.

It appears, though the Seth’s Blog commentary doesn’t say so, that Google’s monopoly or near-monopoly market position forces businesses to pay an amount they don’t want to pay and that they cannot avoid. That, however, does not make amounts paid to Google, or amounts paid to position a new business so that it shows up more often in Google searches, a tax.

There are many instances in which a person has no choice but to pay, even though the theorists claim that a person can always choose not to make a payment and suffer the consequences. Consider a person who arrives late at night at an airport after a long flight delay, is hungry, and discovers that not only are all but one of the food establishments closed but also that the open one has only hot dogs and apple juice in stock. The person might feel as though they have no choice but to pay for a hot dog and apple juice. Yes, in theory, the person can choose not to purchase the hot dog and apple juice, and suffer the consequences, such as hypoglycemia and dehydration. But as a matter of practical reality, the person has no choice. That does not make the cost of the hot dog and apple juice a tax.

From this perspective alone, the use of the word “tax” by Seth’s Blog to describe a charge imposed by a private enterprise is no different from the use of the word “tax” to describe the fee or charge imposed by Major League Baseball on high-spending clubs. That’s bad enough, but Seth’s Blog uses the phrase “google tax” when, in fact, that phrase has already been put to use as a shorthand to describe actual taxes that go by a variety of names.

So there is double confusion. Something that is not a tax is being labeled a tax, and it is being labeled with a phrase that already is in use to describe what are, in fact, taxes.

The term that would better, and far more accurately describe the costs criticized by Seth’s Blog is “monopolistic charge.” Note that I am not critiquing the substance of the concern raised by Seth’s Blog, as I think monopolistic charges pose a variety of concerns, dangers, and inequalities. My complaint is that by using the word “tax” the criticism of a private enterprise comes across to many people as another reason to criticize government, when in fact the problem is not one of government but of the private sector that survives beyond the voting booth. Once again, the misuse of the word “tax” is confusing and counterproductive.

Reader Morris, like many other readers of MauledAgain, knows that I am an advocate of the mileage-based road fee. For years, he has been reading my many posts on the topic, including Tax Meets Technology on the Road, Mileage-Based Road Fees, Again, Mileage-Based Road Fees, Yet Again, Change, Tax, Mileage-Based Road Fees, and Secrecy, Pennsylvania State Gasoline Tax Increase: The Last Hurrah?, Making Progress with Mileage-Based Road Fees, Mileage-Based Road Fees Gain More Traction, Looking More Closely at Mileage-Based Road Fees, The Mileage-Based Road Fee Lives On, Is the Mileage-Based Road Fee So Terrible?, Defending the Mileage-Based Road Fee, Liquid Fuels Tax Increases on the Table, Searching For What Already Has Been Found, Tax Style, Highways Are Not Free, Mileage-Based Road Fees: Privatization and Privacy, Is the Mileage-Based Road Fee a Threat to Privacy?, So Who Should Pay for Roads?, Between Theory and Reality is the (Tax) Test, Mileage-Based Road Fee Inching Ahead, Rebutting Arguments Against Mileage-Based Road Fees, On the Mileage-Based Road Fee Highway: Young at (Tax) Heart?, To Test The Mileage-Based Road Fee, There Needs to Be a Test, What Sort of Tax or Fee Will Hawaii Use to Fix Its Highways?, And Now It’s California Facing the Road Funding Tax Issues, If Users Don’t Pay, Who Should?, Taking Responsibility for Funding Highways, Should Tax Increases Reflect Populist Sentiment?, When It Comes to the Mileage-Based Road Fee, Try It, You’ll Like It, Mileage-Based Road Fees: A Positive Trend?, Understanding the Mileage-Based Road Fee, Tax Opposition: A Costly Road to Follow, Progress on the Mileage-Based Road Fee Front?, Mileage-Based Road Fee Enters Illinois Gubernatorial Campaign, Is a User-Fee-Based System Incompatible With Progressive Income Taxation?. Will Private Ownership of Public Necessities Work?, Revenue Problems With A User Fee Solution Crying for Attention, Plans for Mileage-Based Road Fees Continue to Grow, Getting Technical With the Mileage-Based Road Fee, and How Not to Raise Money to Fix Roads.

Recently, reader Morris came across an article from a year and a half ago. After reading the article, I understood why reader Morris asked me the questions he posed.

The article explains the challenge facing local governments in Indiana that are required to spend enormous sums of money to fix local roads suffering significant damage from the horses used by the Amish to pull their buggies. The steel horseshoes chip up the asphalt and create divots, and cause even more damage where hot mix asphalt is used. The chipped asphalt and divots also increase the opportunity for water to get into the surface and cause potholes. One county reports that half of its roads have been damaged by horseshoes. At least one county regulates the materials used in horseshoes, which lessens the impact, but heavy-duty horseshoes are needed if roads are wet, icy, or snow-covered. Rubber horseshoes have been proposed, but they wear out quickly. Local sheriffs and police have been reluctant to stop buggy drivers to check the shoes on the horses. In one area, the Amish plan to limit use of the heavy-duty shoes to the snowy half of the year and switch to less abrasive shoes in April, though it’s unclear whether this will make much of a difference.

One country imposes a $100 annual buggy plate fee, and another imposes a $55 fee. The $100 fee generates about $150,000 in annual revenue, but the cost of repaving one mile of road is roughly $100,000. In other words, the buggy plate fee doesn’t come close to covering the cost of repairs.

Reader Morris asked me three questions. Here are my answers.

First, he asked, “How would you design a horse and buggy mileage fee?” One feature of the mileage-based road fee is that the amount per-mile can be adjusted to reflect the size, weight, and other road damage characteristics of the vehicle. Every mileage-based road fee proposal that I’ve seen suggests higher per-mile fees for tractor trailers than for cars. Some are more refined, with the per-mile fee being proportional to weight. So it would not be difficult to set the per-mile fee for conveyances that do not have motors. It would require some research and analysis to determine the per-mile fee that would offset the damage done by horseshoes. Undoubtedly, it would increase what currently is being paid, but a $55 or $100 annual plate fee is much less than what is paid by other users of the road who are subject to fuel taxes.

Second, reader Morris asked, “How do you define carriage?” I don’t see a need to define carriage. If the per-mile fee were set differently for horse-drawn vehicles, as it presumably would be for trucks, then the required definition would be for “horse-drawn” or “animal-drawn,” just as there would need to be definitions for “truck” if the per-mile fee was set, in addition to or alternatively to a weight standard, differently for trucks.

Third, he asked, “Could you argue the fee or tax is unconstitutional because it applies to the Amish population and discriminates against their religious principles?” The fee, like the annual buggy plate fee, is not in and of itself unconstitutional. The buggy fee does not discriminate against the Amish, and in fact it shifts the cost of the damage done by horseshoes onto those paying fuel taxes or otherwise funding the road repairs. Religious principles might generate an issue when it comes to the placement of a mileage-based road fee tracking device in the buggy. I don’t know if that would violate religious principles of the Amish. I know that “Amish” is too general of a term to describe religious principles, because there are a variety of sects within the ambit of “Amish,” with different interpretations on various issues. Is the placement of a mileage-based road fee device in a buggy equivalent to using an electronic device or appliance powered by electricity, assuming it is not touched by anyone in the buggy, or is it similar to the use of electrically-powered highway street lights while out at night? Would it be similar to the red blinking lights some jurisdictions require on buggies? Someone proficient in the nuances of Amish theology is welcome to share their thoughts on whether a mileage-based road fee device would violate Amish religious principles.

Though the United States federal income tax moving deduction was suspended by the 2017 tax legislation, there continues to be a moving expense deduction under Canadian tax law. Reader Morris recently shared an article describing the tax return experience of a Canadian taxpayer, John Konecny, who moved from his school-year teaching job in southern Ontario to his summer teaching job in eastern Ontario and back again back again each year. His case involved several issues, such as whether the move was for work or vacation purposes, and though in an earlier case the judge said no, in a later year the revenue authority accepted his position. What caught my eye, and presumably what got the attention of reader Morris, was how Konecny moved.

When the moving expense deduction was in force in the United States, tax return preparers typically thought in terms of expenses for moving vans, travel by automobile, plane, or train from the old residence to the new residence, moving supplies, temporary storage of household items, and similar things. But those weren’t the sort of costs Konecny incurred on his last move.

One of the other issues in the case that Konecny lost was whether the total moving expenses were reasonable. In that case, when dealing with the cost of the moves, the judge said to Konecny, “Could you move in a canoe?” So Konecny took up the challenge and that’s how he moved from his one teaching job to the other. It ended up being about 30 percent cheaper than his previous moves by automobile. According to a moving company professional, the cost incurred by Konecny in moving by canoe was “about what a professional moving company would have charged.” He added that he didn’t think people moving by canoe would put moving companies out of work and concluded, "I've been in the business 37 years and I've never heard of it. It's hilarious!"

A Canadian tax law professor noted, "This fellow did something slightly unusual in the selection of the mode of transportation. But in principle, he's doing the exact same thing as the person who's going across the country in an automobile. He's just doing it on the cheap." That’s quite right.

Though at one time moving by canoe in Canada was “commonplace,” it apparently no longer is. I suppose during the nineteenth century, before the United States income tax was enacted, people moved by riverboat, and perhaps canoes. But I’m confident few, if any, people move that way nowadays. But if someone did during the time that the moving expense deduction was operative, or does so in the future when and if it returns, the fact that a canoe or riverboat is used rather than an automobile, rented truck, or airplane ought not make a difference.

Though some of Konecny’s previous moving expense deduction claims had been denied, the costs of his canoe move were allowed by the revenue authority. Konecny thinks “he may be the first person to have successfully claimed expenses for a move by canoe since the Income Tax Act underwent a major rewrite in 1972.”

So what’s next? Konecny explained, "So my friends have suggested a really great move would be dog sled." That’s NOT going to work in Ontario for moves undertaken in the summer. But perhaps someone else in Canada might do a move by dogsled in the winter. But, again, it ought not make a difference other than some of the costs, such as dog food and harnesses, might be novel.

Sometimes, tax law isn’t quite so boring. Sometimes it gets interesting.

Reader Morris directed my attention to this story, asking me, “Can a fee that is not a tax be considered double taxation?” The answer is no. How can something that is not a tax be considered a contributor to double taxation?

According to the story, people shopping at stores in a Pasco County, Florida, shopping center have noticed a 0.50 percent charge on their receipts tagged “FL PUF 0.50%.” Several people complained to the county tax collector. He explained that it was not a tax, and that in his opinion, “It’s almost fraudulent.” Though the letters “FL” suggest that it is a state-imposed tax, it is a public user fee. That’s the “PUF” portion. It is a fee charged by the developer of the shopping center.

The fee is computed as a percentage of the total price, including the Florida sales tax. That means the developer is collected an amount equal to 0.50 percent of the sales taxes paid by shoppers at the shopping center. The county tax collector commented, “You’re getting hit twice. It’s double taxation almost.”

After the tax collector pointed out that there should be signs explaining that the fee is being charged, signs appeared at the stores in the shopping center. The developer, however, refused to comment when asked by the writer of the story for more information. Some stores are paying the fee on behalf of their customers.

The fee is not a tax. It is not imposed by a government, nor does the revenue it generates go to a government. Thus, there is no double taxation.

Too often people toss the word “tax” around in situations where there is no tax. For example, Major League Baseball imposes a Competitive Balance Tax on clubs that spend more than specified amounts on player salaries. This fee often is called the “luxury tax.” But it’s not a tax and it ought not be called a tax. It’s a fee. There’s a difference.

I have discussed the difference between a tax and a fee in posts such as Please, It’s Not a Tax, So Is It a Tax or a Fee?, Tax versus Fee: Barely a Difference?, and Tax versus Fee: The Difference Can Matter. Those discussions focused on the difference between different types of charges imposed by governments. In the case of the fee charged by the shopping center developer, and the fee or charge imposed by Major League Baseball on high-spending clubs, the amount being charged is not being charged by a government. In the analysis of whether something is a tax or fee, the first question is whether it is being imposed by a government. If the answer is no, the amount being charged is not a tax, and thus it is not necessary, nor appropriate, to debate whether the amount in question is a tax or fee.

The addition of the signs in the stores resolves the underlying problem. The use of short acronyms, such as “FL PUF,” confuses people, and suggests that perhaps the amount added to their bills is a tax, particularly when “FL” is matched with “0.50%.” Why not “DEV FEE” instead of “FL PUF”? Hopefully the signs are legible, conveniently located, and easy to understand. Perhaps the sign should include, and perhaps it does include, a legend stating, “This is not a tax.”

According to this report, voters in the city of Lowell, Michigan rejected by an almost 2-to-1 margin a proposal to enact a 1 percent (0.5 percent for nonresidents) income tax to fund road repairs. The city manager attributed the result to the anti-tax movement, pointing out that people want services but do not want to pay for them. The reporter pointed out that other Michigan cities have income taxes but did not elaborate on what the revenues were used to pay.

To me, the issue is how road repairs should be funded. For more than 15 years the debate has been between advocates of fuel taxes versus and advocates of the per-mile road fees, which I have discussed in commentaries such as Tax Meets Technology on the Road, Mileage-Based Road Fees, Again, Mileage-Based Road Fees, Yet Again, Change, Tax, Mileage-Based Road Fees, and Secrecy, Pennsylvania State Gasoline Tax Increase: The Last Hurrah?, Making Progress with Mileage-Based Road Fees, Mileage-Based Road Fees Gain More Traction, Looking More Closely at Mileage-Based Road Fees, The Mileage-Based Road Fee Lives On, Is the Mileage-Based Road Fee So Terrible?, Defending the Mileage-Based Road Fee, Liquid Fuels Tax Increases on the Table, Searching For What Already Has Been Found, Tax Style, Highways Are Not Free, Mileage-Based Road Fees: Privatization and Privacy, Is the Mileage-Based Road Fee a Threat to Privacy?, So Who Should Pay for Roads?, Between Theory and Reality is the (Tax) Test, Mileage-Based Road Fee Inching Ahead, Rebutting Arguments Against Mileage-Based Road Fees, On the Mileage-Based Road Fee Highway: Young at (Tax) Heart?, To Test The Mileage-Based Road Fee, There Needs to Be a Test, What Sort of Tax or Fee Will Hawaii Use to Fix Its Highways?, And Now It’s California Facing the Road Funding Tax Issues, If Users Don’t Pay, Who Should?, Taking Responsibility for Funding Highways, Should Tax Increases Reflect Populist Sentiment?, When It Comes to the Mileage-Based Road Fee, Try It, You’ll Like It, Mileage-Based Road Fees: A Positive Trend?, Understanding the Mileage-Based Road Fee, Tax Opposition: A Costly Road to Follow, Progress on the Mileage-Based Road Fee Front?, Mileage-Based Road Fee Enters Illinois Gubernatorial Campaign, Is a User-Fee-Based System Incompatible With Progressive Income Taxation?. Will Private Ownership of Public Necessities Work?, Revenue Problems With A User Fee Solution Crying for Attention, Plans for Mileage-Based Road Fees Continue to Grow, Getting Technical With the Mileage-Based Road Fee, and Once Again, Rebutting Arguments Against Mileage-Based Road Fees. I think most advocates on both sides of that debate would agree that an income tax is not the best, nor even appropriate, means of raising road repair funds. There is little correlation between a person’s income and the wear-and-tear that the person imposes on city streets. Fuel taxes and the mileage-based road fee bear some correlation between fuel quantity or mileage and the impact of driving on roads, though the latter has a higher degree of correlation.

Perhaps a different wording of the ballot question would have generated a better outcome. What would have been the outcome to the following question (assuming the city had authority to pursue any of the choices)? Are you in favor of (pick one) (1) a 1-percent income tax (0.5 percent for nonresidents) to fund road repairs, (2) a 5-cent-per-gallon increase in fuel taxes to fund road repairs, (3) a one-fifth-of-one-cent per mile mileage-based road fee to fund road repairs, (4) a $20 increase in the annual vehicle registration fee to fund road repairs, (5) cutting to once a month trash collection to fund road repairs, (6) eliminating city snow plowing to fund road repairs, or (7) doing nothing, letting the roads get worse, and paying for tire, wheel, front-end alignment, and other costs incurred from driving on bad roads.

My guess is that a run-off between the top two or three vote-getting choices would be necessary.

Throughout the years I have decried not only the growing wealth and income inequality that threatens the survival of the nation, but also the tax cuts for the wealthy that exacerbate those inequalities, fail to generate the promised benefits to those who are not wealthy, and that undermine the fiscal integrity of the government. On several occasions, I have compared the economic abyss into which the nation is heading with feudalism, another structure that benefitted a handful of oligarchs at the expense of the other 99 percent.

For example, seven years ago, in What Sort of War is the “Real Budget War?, reacting to the combination of tax cuts for the wealthy and benefit reductions for everyone else, I wrote:

Or is the great wealth shift – the one that occurs when Social Security, Medicare, Medicaid, and other programs benefitting so many Americans are cut so that taxes can be reduced for the wealthy in exchange for empty promises of jobs – going to be the event that future historians identify as the defining moment in the transition of this nation from democratic republic to corporate feudal fiefdom?

Almost two years ago, in What Losing Federal Personal and Dependency Exemptions Does to Michigan (and Other) Taxpayers, I shared this perspective:

All of this further reinforces the inescapable fact that the Congress did a slipshod job of dealing with tax “reform” and “simplification.” It did not reform the tax law nor did it simplify the tax law. It simply let the donor class, the 150-some families that now run the country, grab whatever they could grab in step one of a multi-step “return to feudalism and call it free market capitalism” plan that ought to be called “socialism for the oligarchy.”

Three months later, in Who Should Decide Tax Policy?, I explained why erosion of the income tax threatens the well-being of the nation:

One of the principal purposes of the income tax is to eliminate the wealth and income inequality that almost destroyed the nation’s economy during the era of unregulated wealth when a paradise existed for robber barons. By distorting the income tax, Congress has, over the past three and a half decades, reopened paradise for the wealthy. Congress claims to act on behalf of everyone, but it acts in accordance with the conditions imposed on the funding its members receive. One of those conditions is to make it even easier for the wealthy to restore the oligarchy of feudalism, which is their paradise.

Several days ago, I noticed that another commentator is making the same comparison. In

a Philadelphia Inquirer opinion piece aptly titled, “Today’s CEO pay echoes the feudalism of William the Conqueror,” Sam Pizzigati described medieval feudalism as “a time, in some ways, not unlike our own.” He points out that 50 large corporations pay their CEOs “more than 1,000 times what they paid their median workers in 2018.” In one instance, the CEO pay is 3,566 times the median employee salary. Pizzigati provides an interesting perspective: “If some lord in 1066 had collected 1,000 times the earnings of his peasants, those poor unfortunates would still be working today — 953 years later — to make as much as their lord pocketed in a single year.” Though some people think, and claim, that the lowly-paid worker or peasant should be grateful that he or she “even has a job,” a system in which the person doing most of the work earns one-one-thousandth of the person reaping most of the benefits of that work violates pretty much every decent moral, philosophical, and theological approach to life that the species has created.

Pizzigati notes that CEOs, seeking ever-increasing amounts of compensation, have “boosted short-term stock values by any means necessary, from cooking the books to inflating the housing bubble to flooding poor communities with opioids.“

If I were to criticize Pizzigati’s commentary, it would be the omission of any mention of the wealthy who are not CEOs. While CEOs pulling in annual incomes measured in seven and eight digits are among those on the high side of the inequality border, they’re pretty much earls compared to the royalty pulling in eight and nine-digit incomes, many of which flow from trust funds to the benefit of people who haven’t lifted a finger to do anything deserving of compensation at that level. But perhaps Pizzigati didn’t take his commentary this far because of word or other space limitations imposed by the newspaper. Or perhaps he has another commentary in the works.

Pizzigati notes that there are several ways to curtail this growing inequality. He describes the Portland, Oregon, tax on corporations that pay their CEOs more than 100 times the median pay of their workers. San Francisco has a similar tax on its ballot next year, and seven states are considering the same sort of tax. Presidential candidate Bernie Sanders is proposing a tax plan at the federal level to deal with this discrepancy. Pizzigati suggests another approach, namely, giving corporations with “modest CEO-worker pay gaps a leg up in the [government contract] procurement process.”

What’s frustrating is that there existed a mechanism to tamp down the wealth and income inequality that is so dangerous to a democratic republic. It’s called a progressive income tax, and when its rates were high enough, brakes were applied on the acquisition of ever-increasing amounts of income and wealth. Those rates were torn down by those who claimed high income tax rates are bad for the country. Why? Pizzigati puts it this way, “And the more CEOs get, the more they want, and the more recklessly they behave to get it.” The same can be said of the non-CEO oligarchs who also can’t get enough income and wealth.

Some call it greed. A better perspective is to see it for what it is. It’s an addiction. It’s an addiction to wealth and money, driven by various insecurities. And unlike some addictions that are limited in the scope of their harms, this addiction threatens to destroy the nation. As I wrote in Judge Judy Almost Eliminates the National Debt about the attacks on the IRS and the income tax:

Unfortunately, because a majority of the Congress underfunds the IRS and at least one member of the executive branch wants to eliminate government, it is * * * no wonder more and more people toss aside their civic obligation to pay taxes. It will be interesting to hear their stories after governments collapse and the feudal system returns.

I suggest they engage in some intensive studies of history. Especially the parts about the demise of feudalism.

A week ago, in The Role of Age in Taxation, I shared my distaste for the idea that once a person attains a particular age, that person should be relieved of paying taxes. I pointed out why age is an irrelevant factor in determining tax liability. In that commentary, I also addressed the claim that people without children should not pay taxes for education purposes.

Shortly thereafter, reader Morris pointed me to this cleveland.com article, noting “I thought you would find this article disturbing.” Reader Morris is correct. The news in this article indeed is disturbing.

According to the article, early in 2019 attempts were made to insert into the Ohio budget a provision giving a tax break for wealthy residents of Hunting Valley. The break would absolve these residents from paying property taxes used to fund public education. The governor vetoed the provision, but attempts to enact the tax break continue. Hunting Valley is the nation’s 17th wealthiest towns in the country. According to the article, its mean household income is $507,214, and the average home value is $1.3 million.

If the tax break is enacted, it almost certainly would destroy the school system in which the town is located. It also could cause similar requests in other affluent Ohio localities. Enactment of the tax break would encourage everyone to seek tax breaks, based on the claim that if the wealthy don’t pay, why should anyone else? Of course, elimination of taxes and the shifting of education into oligarchic privatization is the goal of the anti-tax crowd.

Apparently, the wealthy individuals resent paying property taxes to fund public education because so few of their children attend public schools. Yet they do not explain why families bringing in more than half a million dollars a year in income cannot afford private school tuition and public education property taxes.

As part of the renewed effort to get the tax break, these wealthy residents are using their money in an attempt to put people on the school board who will support their position. Perhaps that’s why they feel impoverished by their obligation to pay property taxes. It costs a lot of money to purchase public offices.

What the wealthy residents of Hunting Valley don’t understand is that they do not pay real property taxes to fund public education for their children. That perception is at the root of their attempt to avoid paying taxes. Instead, they pay real property taxes to educate America, and an educated America is good for everyone, including wealthy people. As I wrote in Cut Taxes + Cut Spending = Reduced Education?:

People [who do not want to pay real property taxes to fund public education because they do not have children in public schools are] clueless when it comes to identifying the indirect benefits they receive by living in a nation with an educated citizenry and workforce that contributes to the high standard of living they’ve had the opportunity to attain, in comparison to most other places on the planet. These folks are expertised in the “taxes are good when they benefit me but otherwise are evil” approach and in the “I like to take but hate to give” philosophy of life.

Perhaps the wealthy folks in Hunting Valley are satisfied that the private school education being received by their children will contribute to their children’s success in life. Their children will end up as business owners and professionals. But who will be their customers and clients? Who will be their employees? Who will cut their lawns? The people that they need in their life also need to be educated, because very few businesses and professional practices can succeed in a country in which 99 percent of the population is uneducated, badly educated, or undereducated. Paying taxes to fund public education is an investment and not an expense. Perhaps these wealthy people in Hunting Valley need some additional education to learn more about economics, tax policy, and civic virtue than they apparently understand at the moment. Eventually, perhaps they will learn that the property taxes they pay to fund public education will provide a return on investment far superior to the alternatives.

Reader Morris emailed me last week, commenting that someone must be reading my blog posts. I certainly hope so, and I hope that the someone is plural. Actually, blogspot provides statistics so I do have a rough idea of how many people are reading MauledAgain.

Reader Morris directed my attention to one of the many posts in which I have advocated holding back tax breaks until the recipient delivers on the promises that are used to justify the tax break. For several years, I have been criticizing handing out tax breaks before the recipient does what the recipient promises to do in exchange for the tax breaks, and advocating holding back the tax breaks until the recipient actually does what the tax break requires, in posts such as How To Use Tax Breaks to Properly Stimulate an Economy, How To Use the Tax Law to Create Jobs and Raise Wages, Yet Another Reason For “First the Jobs, Then the Tax Break”, When Will “First the Jobs, Then the Tax Break” Supersede the Empty Promises?, No Tax Break Until Taxpayer Promises Are Fulfilled, When Job Creation Promises Justifying Tax Breaks Are Broken, and When Tax Break Giveaways, Praised as “Investments,” Deliver Low Returns. Reader Morris directed my attention to the final paragraph of that last post, in which I wrote:

As I’ve argued for years, the deal with these companies should be along the lines of the following: “OK, if you relocate here, or stay here, and prove that you generated the economic benefits you are promising, then, and only then, will you receive a tax break.” It’s that simple. If every federal, state, and local government adopted that approach, the economy would improve. Don’t believe me? Try it. Prove me wrong.

What prompted the comment by reader Morris was a new strategy proposed by the Connecticut Department of Economic and Community Development outlined in this article. As described in the article, politicians in Connecticut are reluctant to continue “forking over upward of $200 million a year” funded with borrowing that are used to “bribe handpicked businesses with custom-tailored packages — grants, loans and tax credit awards worth as much as $40,000 per job and sometimes even more.” David Lehman, commissioner of the Department of Economic and Community Development, is proposing to the legislature a new approach. The tax break, essentially a refund of a portion of the state income tax already paid by the tax break recipient, would be paid after the recipient creates at least 25 eligible jobs. The jobs would need to exceed a preset pay threshold.

Whether the Connecticut proposal reflects someone reading my MauledAgain blog posts or something that popped up independently in the mind of someone in Connecticut is a question I cannot answer. Perhaps someone in Connecticut can. If indeed that person reads MauledAgain, I hope they let me know. What matters most is that the proposal is implemented, not so much whether it originated in my mind or someone else’s brain.

It will be interesting to see how the proposed Connecticut approach plays out in Connecticut, assuming the legislature approves it. As one legislator put it, “You’re rewarding good behavior.” That surely is a much better approach than dishing out tax breaks and hoping that promises are kept. So who would object to this approach? The folks who have been lining their pockets with tax break money while fulfilling few, if any, of their promises. It’s time to put an end to what these takers have been doing.

Readers of MauledAgain know that television court shows get attention from me when they involve tax issues. I have written about several dozen episodes, including Judge Judy and Tax Law, Judge Judy and Tax Law Part II, TV Judge Gets Tax Observation Correct, The (Tax) Fraud Epidemic, Tax Re-Visits Judge Judy, Foolish Tax Filing Decisions Disclosed to Judge Judy, So Does Anyone Pay Taxes?, Learning About Tax from the Judge. Judy, That Is, Tax Fraud in the People’s Court, More Tax Fraud, This Time in Judge Judy’s Court, You Mean That Tax Refund Isn’t for Me? Really?, Law and Genealogy Meeting In An Interesting Way, How Is This Not Tax Fraud?, A Court Case in Which All of Them Miss The Tax Point, Judge Judy Almost Eliminates the National Debt, Judge Judy Tells Litigant to Contact the IRS, People’s Court: So Who Did the Tax Cheating?, “I’ll Pay You (Back) When I Get My Tax Refund”, Be Careful When Paying Another Person’s Tax Preparation Fee, Gross Income from Dating?, Preparing Someone’s Tax Return Without Permission, When Someone Else Claims You as a Dependent on Their Tax Return and You Disagree, Does Refusal to Provide a Receipt Suggest Tax Fraud Underway?, When Tax Scammers Sue Each Other, One of the Reasons Tax Law Is Complicated, An Easy Tax Issue for Judge Judy, Another Easy Tax Issue for Judge Judy, Yet Another Easy Tax Issue for Judge Judy, Be Careful When Selecting and Dealing with a Tax Return Preparer, Fighting Over a Tax Refund, Another Tax Return Preparer Meets Judge Judy, Judge Judy Identifies Breach of a Tax Return Contract, When Tax Return Preparation Just Isn’t Enough, Fighting Over Tax Dependents When There Is No Evidence, If It’s Not Your Tax Refund, You Cannot Keep the Money, and Contracts With Respect to Tax Refunds Should Be In Writing.

Recently, reader Morris found a five-year-old Judge Mathis episode involving a tax issue. I thank reader Morris. He knows that although I get to see many television court show episodes, there are probably even more that I have missed for one reason or another.

The linked video is a snippet from a longer segment, which I cannot find. So I am guessing that the dispute between the plaintiff and defendant involved much more than the issue on which the snippet focuses. The judge’s offhand remark about the plaintiff and defendant having some disagreement about infidelity strengthens that guess.

It appears that one of the transactions between the plaintiff and defendant was an arrangement through which the defendant, apparently at the time a boyfriend of the plaintiff, claimed the plaintiff’s daughter on his 2013 tax return for purposes of the child tax credit even though the youngster was not his child.

The plaintiff explained that the defendant was supposed to “give me half the taxes.” The judge asked the plaintiff if she and the defendant were married. She replied no. He asked if the defendant had adopted the child. Again, the plaintiff answered no.

So the judge, referring to the agreement, asked, “You know that’s illegal?” The plaintiff replied, “They told me it was fine.” The judge asked, “Who told you? The IRS?” The plaintiff replied, “No, the people at the tax [preparation office].”

Judge Mathis then asked for the tax form on which the child had been claimed. After looking at it, he explained that the tax return preparer had put the plaintiff’s child as “daughter” on the defendant’s return even though the child was not his. Judge Mathis pointed out that someone had lied to the tax return preparer.

Judge Mathis then asked the plaintiff, “You still want half of the taxes?” The plaintiff replied, “I don’t know,” and the judge told her, “So you’ll go to jail with him?” He then summed up the issue, “So the agreement was he would give you half of the taxes for the illegal tax return that he filed.” At that point it appeared that the plaintiff was not going to recover that amount.

Then the defendant interposed, “As far as the taxes go, I feel,” and the judge interrupted him with “Leave that alone.”

There are two lessons to be learned. One is a picky point. What was in dispute in this issue was not “half the taxes” but half of a “tax refund.” The parties and the judge consistently used “taxes” rather than “tax refund,” an inaccurate description I’ve heard more than a few people use when describing tax refunds. The other lesson is that one should be careful when speaking in public, especially when on radio, television, or social media. The judge did the defendant a favor by cutting him off, but the damage had already been done. I doubt that IRS agents are watching television court shows to find the two or three or ten percent that involve tax errors and tax fraud, but there is a chance that the tax return in question was pulled for audit back in 2014 or 2015. We’ll never know. What we do know is that it absurdly foolish to claim that someone who is not a child is a child.

Recently, Kathi Angelone of Cape Coral, Florida, wrote letter to the editor of the Cape Coral News-Press. She wrote:

I have not been blessed with children, but since renting my first apartment at age 21, I have been paying property taxes to pay for our schools. Hundreds of thousands of dollars to educate other people's children.

Shouldn't there be an age limit on paying school taxes? Shouldn't there be a limit on what you are compelled to pay? Especially here, in Lee County where impact fees have been waived for over a decade? Why aren't the people who are causing the need for more schools be obliged to finance them? Why are seniors, like me, who have paid for other people's children, to our financial detriment still pay for these schools?

The Lee County school budget is over $1 billion. Where is the scrutiny of the spending? When will a commissioner propose an age limit for paying school taxes? Way past time, in my opinion.

I answered this question last December, commenting on a facebook meme that might have influenced Angelone. In Warped Perspectives on Tax Policy, I wrote:

Facebook is beginning to challenge television court shows as a provider of material for this blog. A few days ago, someone posted a meme that showed up on my newsfeed. It was a picture of several elderly gentlemen sitting on a bench, with the following caption: “After the age of 65 you should be 100% tax exempt. You have already more than paid your dues. Like and share if you agree.” Of course, I did not like or share the post. But I did comment.

My reaction to this meme was simple. It was a rhetorical question. I asked, “So those 70 year old billionaires would be tax-exempt? Really?”

The first response was a comment that failed to address the question. It was a typical me-focused, toss-aside-a-wider-perspective analysis, the sort that leads to stereotyping groups because of one person or incident. The response stated, “I just turned 65 and I've paid my fair share.” Was this response intended to imply that all people who have “just turned 65” have paid their fair share, whatever that might be? Does it distinguish between people who have attained the age of 65 and are wealthy and those who have attained the age of 65 and are destitute? Or does it lump together all persons who have attained the age of 65 without distinguishing economic situations even though the issue is an economic issue?

The second response was another example of this narrow, view-the-world-through-my-lens-and-ignore-the-wider-perspective thinking that is destroying not only the nation but the planet. The response stated, “I totally agree with these old gentlemen . Work your aaa off for over 45 years, pay more than your fair share and the Govmt , still taxes your partial pension, they screw you coming and going . And now they want to screw You again , while congress has all the perks of men and women who goof off.” Without defining “fair share,” this commenter went beyond the claim of the first commenter and decided the payment had been “more than” a fair share.

Whether a tax reflects ability to pay, or not, or whether a tax or user fee reflects usage, or not, certainly age should not be a consideration in whether someone is subject to, or exempt from, a particular tax.

In addition to the absurd “I’m over 65 and thus should be exempt from taxation” claim on which I commented in response to the facebook meme, Angelone also argues that she has paid enough to “educate other people’s children” and that school taxes should be paid by people with children in the schools. I shared my reaction to this position in Cut Taxes + Cut Spending = Reduced Education?, in which I wrote:

People without children in the schools will continue to complain about taxes and clamor for cuts in everything, arguing that they don’t benefit because they have no children in the school, forgetting that when they were in school plenty of taxpayers without children in the schools contributed to their own education and forgetting that while their own children were in school others without children, now long gone, were pitching in. And they’re clueless when it comes to identifying the indirect benefits they receive by living in a nation with an educated citizenry and workforce that contributes to the high standard of living they’ve had the opportunity to attain, in comparison to most other places on the planet. These folks are expertised in the “taxes are good when they benefit me but otherwise are evil” approach and in the “I like to take but hate to give” philosophy of life.

When I encounter tax policy perspectives such as the ones expressed by Angelone, I understand part of the reason the nation faces the problems it has encountered. As I wrote in Warped Perspectives on Tax Policy:

It is unfortunate that much of the political and social unrest, including angry reactions to taxation, reflects a lack of a wider perspective that can be acquired both through formal education and through traveling outside the bubble, whether it’s a gated community, a closed social or religious community, or a neighborhood characterized by a singularity of perspective. Too many people think that when the encounter something, it becomes a truism. Thus, we observe people attaining a particular age and turning it into a category with attributes reflecting a singular or limited experience. So we see “I am over 65, I have paid taxes, I am being taxed on my pension, and I don’t have as much money as I would like” being translated into “Everyone who is over 65 should be exempt from paying taxes because [presumably] everyone over 65 is in the same position I am in because everyone over 65 is in the same economic position.” The flaw in the reasoning, if that is what it can be called, is obvious the moment thought is given to the proposition. The inability to view things from a wide enough perspective, reflecting a broad exploration of life, causes people to see things from a warped perspective, one that does not reflect all of reality. Here, I saw it with respect to taxation, but it exists not only with respect to economic issues but also with respect to political, religious, cultural, and social issues. It’s a narrowness of experience that become a narrow-mindedness of cognitive dissonance. It is a dangerous thing except for those who profit from the narrow-mindedness of the masses.

Unfortunately, narrow-mindedness is becoming even more, not less, prevalent, like a disease that becomes a pandemic. No wonder the nation is in trouble.

From the outset of this blog, I have made it a point to work Halloween into MauledAgain, usually looking for the silly or goofy but occasionally taking a more serious approach. The posts began with Taxing "Snack" or "Junk" Food (2004), and have continued through Halloween and Tax: Scared Yet? (2005), Happy Halloween: Chocolate Math and Tax Arithmetic (2006), Tricky Treating: Teaching Tax Trumps Tasty Tidbit Transfers (2007), Halloween Brings Out the Lunacy (2007), A Truly Frightening Halloween Candy Bar (2008), Unmasking the Deductibility of Halloween Costumes (2009), Happy Halloween: Revenue Department Scares Kids Into Abandoning Pumpkin Sales (2010), The Scary Part of Halloween Costume Sales Taxation (2011), Halloween Takes on a New Meaning and It Isn’t Happy (2012), Some Scary Halloween Thoughts (2013), The Inequality of Halloween? (2014), When Candy Isn’t Candy (2015), Beyond Scary: Tax-Based Halloween Costumes (2016), Another Halloween Treat? I Think Not (2017), and If Halloween Candy Isn’t Food, Is it Medicine? (2018).

Recently, I noticed new phrases. Perhaps they have been in use for several or more years and I haven’t noticed. It’s the “parent tax,” or the “dad tax,” terms used to describe the candy that a parent extracts from a child for having accompanied the child on the neighborhood candy collection tour, though the “dad tax” has a broader scope. According to this commentary asking how much the tax should be, “74% of parents admit to taking at least a few pieces of their kid's Halloween candy. That's a lot but that still seems low to me. I think every single parent is swiping at least one piece of candy,” and “4% of parents surveyed said they typically eat all of their child’s Halloween candy.” Wow.

Another commentator explained, “The way I see it, if the government is going to tax an adult's income 20-30%, than the child should have to pony up that amount of their Halloween candy. Think of it as preparing them for the REAL WORLD, which very much involves paying taxes.”

When I was a child, my parents did consume a small portion of what my siblings and I brought home. But it wasn’t a matter of an involuntary “tax” teaching us that in the “real world” we would be paying taxes. It was a lesson in sharing. We were given insights into why it would be appropriate and generous to offer candy to our parents in appreciation of their help, not only in accompanying us around the neighborhood but also in assisting the design and construction of costumes. That is why, even after we reached ages at which we created and built our own costumes and went about multiple neighborhoods on our own, we continued to share our “candy loot” with our parents. It was only when we undertook paid employment that we discussed budgeting and learning to share household expenses, albeit at a minimal level. The “there are taxes” lesson was being learned “on the job.”

So although some people think Halloween presents an opportunity to teach children that “the government” is going to “take some of what you earn,” I think it provides an even better opportunity to teach children the concepts of generosity, empathy, and sharing. Those character traits are disappearing too rapidly among certain segments of society.

And, no, I did not take or accept Halloween candy from my children. Despite my sweet tooth, by the time they were of Halloween-adventuring age, I had reached the point where I tried more diligently to reduce sugar intake. I had enough candy coming in from other sources. But, yes, my children did offer. That is what mattered.

Reader Morris posed a question to me. “Can a robot write a tax blog?” I didn’t reply directly to him. He now will get my answer.

Yes.

Of course.

But the more important question is whether a robot (or artificial “intelligence” software) can write a sensible, comprehensible, accurate, well-reasoned tax blog?

The answer?

Perhaps. Someday.

Artificial “intelligence” software has been used to write stories, news, novels, music, movies, musicals, poetry, and probably other things I’ve not noticed. Some of it is very good, some of it is hilarious, some of it is atrocious.

If you want a good laugh at the sorts of things artificial “intelligence” can do, check out These Hilarious Scripts Written By A "Bot" Will Make You Laugh Out Loud.

If you want to be terrified at the prospect of artificial “intelligence” taking over activities reflecting human creativity, read this article about computers generating fake news.

And when artificial “intelligence” goes wrong, sometimes it can make a person cry with laughter, but too often it will make people cry in horror.

I suppose at some point an enterprising software engineer, or a robot, will write code that creates a virtual James Edward Maule, that will pick up writing MauledAgain when I decide, or life decides for me, that it is time for me to stop writing a tax blog. Of course, there are those who think that even now the MauledAgain blog is being written by a robot. Or perhaps, more accurately, an android.

Once again, it’s time to respond to the arguments put forth against the mileage-based road fee. For many years, I have explained, defended, and advocated for the mileage-based road fee, in posts such as Tax Meets Technology on the Road, Mileage-Based Road Fees, Again, Mileage-Based Road Fees, Yet Again, Change, Tax, Mileage-Based Road Fees, and Secrecy, Pennsylvania State Gasoline Tax Increase: The Last Hurrah?, Making Progress with Mileage-Based Road Fees, Mileage-Based Road Fees Gain More Traction, Looking More Closely at Mileage-Based Road Fees, The Mileage-Based Road Fee Lives On, Is the Mileage-Based Road Fee So Terrible?, Defending the Mileage-Based Road Fee, Liquid Fuels Tax Increases on the Table, Searching For What Already Has Been Found, Tax Style, Highways Are Not Free, Mileage-Based Road Fees: Privatization and Privacy, Is the Mileage-Based Road Fee a Threat to Privacy?, So Who Should Pay for Roads?, Between Theory and Reality is the (Tax) Test, Mileage-Based Road Fee Inching Ahead, Rebutting Arguments Against Mileage-Based Road Fees, On the Mileage-Based Road Fee Highway: Young at (Tax) Heart?, To Test The Mileage-Based Road Fee, There Needs to Be a Test, What Sort of Tax or Fee Will Hawaii Use to Fix Its Highways?, And Now It’s California Facing the Road Funding Tax Issues, If Users Don’t Pay, Who Should?, Taking Responsibility for Funding Highways, Should Tax Increases Reflect Populist Sentiment?, When It Comes to the Mileage-Based Road Fee, Try It, You’ll Like It, Mileage-Based Road Fees: A Positive Trend?, Understanding the Mileage-Based Road Fee, Tax Opposition: A Costly Road to Follow, Progress on the Mileage-Based Road Fee Front?, Mileage-Based Road Fee Enters Illinois Gubernatorial Campaign, Is a User-Fee-Based System Incompatible With Progressive Income Taxation?. Will Private Ownership of Public Necessities Work?, Revenue Problems With A User Fee Solution Crying for Attention, Plans for Mileage-Based Road Fees Continue to Grow, and Getting Technical With the Mileage-Based Road Fee.

This time, it’s an analysis presented by Glostone Trucking Solutions. In all fairness, the analysis lists both pros and cons, and is a reaction to the floating of trial balloons suggesting that commercial trucks be subjected to a mileage-based road fee. Though commercial trucks, on average, create more wear and tear on highways and require the building of stronger bridges and taller tunnels, they are not the sole cause of highway expense. Any mileage-based road fee ought not be limited to commercial trucks.

Glostone notes, “Privacy concerns remain the biggest fear, that a mileage-based system could allow the government to track the whereabouts and movements of motorists.” I responded to this concern in Is the Mileage-Based Road Fee a Threat to Privacy?, addressing an Adam Brandon editorial:

Brandon * * * seems nervous about the prospect of the possibility that “the government will know where you are at all times.” But the mileage-based road fee device will not provide that capability. Why? Because it can track only the location of the vehicle. Thus, even if a government wanted to know, and figured out, that a person’s vehicle was in a shopping mall parking lot, there would be no way of knowing from that information which stores the person visited, what the person purchased, or how much the person paid for those purchases. Nor would it provide any information about the identities of individuals with whom the person met or the content of their conversation. As I explained in my last post on the topic, Mileage-Based Road Fees: Privatization and Privacy:

And, yes, there is a risk that a mileage-based road fee system can be used to determine where a vehicle has been. Vehicles, of course, do not have privacy rights. But because people assume that an owner of a vehicle is wherever the vehicle happens to be, it is understandable that knowing where a vehicle has been might reveal where the owner has been. Of course, a mileage-based road system need not track location, though those being considered and those in place do so, provided that the fee did not change based on the road being used. Connecting to the odometer would suffice. It also is important to remember that for many decades, the location of vehicles has not been a private matter hidden behind the sacrosanct walls of a person’s home. For a long time, law enforcement officials, investigative journalists, and even nosy neighbors have been able to determine where a vehicle has been, aided by the existence of license plates, bumper stickers, and other identifying characteristics. There’s nothing private about being in public.

Thus, Brandon’s concern that “tax collectors can access our physical location at the touch of a button” is overstated, because at best, the only location that could be accessed is the location of the vehicle. And considering that the system could be outfitted with a delay such as that used with EZPass and similar systems, because information about the use of the road need not be real-time for a fee to be imposed, by the time the button is pushed the vehicle very well could be at another location, its driver could be out of the vehicle, or another person could be driving the vehicle.

Existing technology, such as roadside cameras, credit card receipts for fuel purchases, electronic toll systems such as EZPass, and observations by law enforcement authorities, already provide substantial information concerning the location of a vehicle. Similarly, the location of an individual when in public areas is not a secret. The mileage-based road fee does not generate a significant increase in the revelation of vehicle location information, and does nothing to increase the disclosure of individual location information.

The Glostone analysis concedes that advocates of the mileage-based road fee “say privacy concerns are addressable,” and cites the limits Oregon places on the data recorded by the tracking device. Indeed, those who raise privacy concerns either haven’t yet thought through the analysis, or oppose the mileage-based road fee for other reasons and use privacy concerns to tap into the fears of the ignorant.

The Glostone analysis describe cost as the “largest problem.” It notes that the devices would need to be installed in all vehicles. The device don’t cost very much and are very easy to install. I have one in my car. It took all of 5 seconds to install. The Glostone analysis claims that the mileage-based road fee “would require every vehicle owner to periodically report distance tax and create a costly new bureaucracy that would have to audit these reports,” and that the “added bureaucracy alone could eat up any gains in tax revenue.” The tracking device reports without any need for owner intervention. Digital technology eliminates the need for the roomfuls of eyeshade-wearing human auditors.

The Glostone analysis notes that existing laws that address gas tax revenues would need revision. That’s correct, and I discussed this a few days ago in Getting Technical With the Mileage-Based Road Fee. It’s very easy to do. Model legislation would provide a template for legislatures.

The Glostone analysis claims that a mileage-based road fee “could reward users or increase purchases of less efficient vehicles while monetarily punishing drivers of energy-efficient cars by leveling similar charges for all drivers, weakening incentives to buy energy-efficient electric and hybrid cars.” If the mileage-based road fee was designed in that fashion, that would be the outcome, and it would be foolish. One of the advantages of the mileage-based road fee is that the tracking device can be calibrated to the weight, energy efficiency, pollution output, and similar characteristics of the vehicle. It obtains this information because it is plugged into the vehicle’s OBD port.

The Glostone analysis points out that “Some drivers in rural areas worry may have to pay more because they drive farther between destinations than do urban drivers. They argue that while they do drive greater distances on the roads, they drive at faster speeds that are more fuel-efficient.” The response is simple. The longer the road, the more expensive it is to build and maintain. The tracking device, as I pointed out, can and should be calibrated to adjust for the higher fuel efficiency. Even under the existing fuel tax, drivers who drive more miles pay more tax because they use more fuel. Thus, the mileage-based road fee isn’t disadvantaging them in that manner.

Finally, the Glostone analysis reminds us that “these on-board distance tracking devices may be vulnerable to tampering.” I also addressed this concern in Is the Mileage-Based Road Fee a Threat to Privacy?, again addressing the Adam Brandon editorial:

Brandon also poses an interesting concern. He predicts that some people, in an attempt to avoid paying the fee, would tamper with the device. Or at least would try. He’s correct, because it is unquestionable that people exist who want something for nothing and want road use for free. The answer is not to ditch the proposal, for the same reason people don’t stop buying houses because burglars exist. The response is to create a device that is as tamper-proof as possible, and to provide for serious penalties for those caught trying to tamper with the device. But when Brandon tries to explain why the possibility of tampering demonstrates what he sees as the inadvisability of the proposal, he makes an awkward assertion. Brandon claims, “Do we really own our own cars if we are not allowed to modify them?” The answer is yes. Under current law, it is illegal to tamper with odometers, certain safety features, catalytic converters, and some other items. Adding the mileage-based road fee device to the list does not make the owner of the vehicle any less an owner.

The Glostone analysis closes by arguing that “the debate needs to continue,” that “technology needs to advance,” that “an increase in funding for infrastructure cannot wait,” that “something will change,” and that “we all need to educate ourselves.” It also claims that there “is no simple, cost efficient answer that is available with today’s technology and social climate.” I disagree in part. The technology exists, and it is cost efficient. As for the social climate, perhaps a few more bridge and tunnel collapses and a surge in damage, injuries, and deaths from potholes, badly marked highway lanes, and other existing problems will bring about social climate change. As the Glostone analysis puts it, “In all likelihood, the answer will be a long term conversion process that starts with what can be done today (tax increase) and move towards a VMT as technology improves and social attitudes change.” I happen to think the time frame will be much shorter than long term. I give it three to five years.

In their new book, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them PayEmmanuel Saez and Gabriel Zucman demonstrate that in 2018, the average federal income tax rate on capital was less than the average federal income tax rate on wages. That hasn’t happened for at least 100 years. I’m confident that it has never happened in the history of the federal income tax, because one of the chief purposes of that tax was to moderate the income and wealth inequality of the 1890s that caused so much disruption to the nation’s economy.

For the past 38 years, average federal income tax rates on capital have been dropping, and those on wages and self-employment income have been rising. Though the former have been higher than the latter throughout the past century-plus, they changed places in 2018. The reason is simple to identify. It was that ill-advised tax cut legislation of 2017. Proponents of that legislation claimed that it would fuel tremendous increases in business investment. That hasn’t happened. They claimed that wages would increase to levels necessary for workers to pay for the necessities of life. With the average bonus increasing between 2017 and 2018 by a penny, and with more workers needing to take on a second or third job to succeed, the promises of those who have continued to preach supply-side trickle-down nonsense were, as usual, quite false.

In their book, Saez and Zucman challenge the theory that tax rates on capital should be low, even zero. Advocates of special low and zero tax rates on capital claim that by lowering or eliminating taxes on capital, owners of capital have more resources to hire more workers and increase worker pay. Of course, that hasn’t happened. Instead, the tax cuts handed out to the owners of capital, particularly large corporations and wealthy individuals, were stashed or used to pay dividends or buy back stock. And of course, this process compounds the growth of capital, enlarging the income and wealth inequality gaps.

So why don’t tax cuts for the owners of capital create jobs? I answered that question many times, most recently in in Tax Cuts for Employers Do Not Create Jobs:

Whether it’s an existing business paying less tax or a new business writing off capital expenditures, those folks are not going to hire people unless they have something for those people to do. To have something for those people to do, those businesses, whether existing or start-up, need to sell goods and services. To sell goods and services, these businesses need customers. To have customers, these businesses need a vast consumer class that can afford to make those purchases. The proposed legislation [the 2017 tax cut deal] gives some of the consumer class a few dollars and actually raises taxes on another portion of the consumer class, thus reducing their purchasing power. Aside from that deep flaw, why would companies spend $1,000,000 on a piece of equipment in order to reduce taxes by $200,000? Why deplete those huge cash reserves by $800,000 if the equipment isn’t needed because there’s no one to purchase the goods it makes or the services it provides? Talk about voodoo economics.

So it’s no surprise that wealth inequality is growing at an alarmingly dangerous rate.

Aside from the question of whether taxes should have been cut when there is a budget deficit, if taxes were to be cut, the question of how those cuts should have been directed was answered incorrectly. Putting into the hands of the bottom 90 percent the unneeded tax breaks that were handed to the large corporations and top one percent of individuals would have caused an upsurge in true economic demand, required owners of capital to hire more workers, and increased tax revenues to offset the budget impact of the cuts. That’s called demand-side economics, and it works. It’s time to put supply-side economics in the rubbish bin of history.