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July 27, 2007

Tax modeling.

no tags — evan @ 12:11 am

I was bored tonight and pro­cras­ti­nat­ing, as per usual, so I decided to toy around with some simple sim­u­la­tions. The sub­ject for these exper­i­ments was tax­a­tion, which I’m sure every­one and their dog finds wildly excit­ing, but these kinds of things are impor­tant, and if my life was excit­ing I wouldn’t be writ­ing simulations.

The setup is this; take some fixed number of indi­vid­u­als, toss them into bins accord­ing to a normal dis­tri­b­u­tion (Likely too narrow, really, as a lot of them end up empty. Might need to raise my sigma?), then crudely apply the effects of income, infla­tion, tax­a­tion, random chance, etc. The tax­a­tion comes in two modes. Pro­gres­sive, rising steeply towards the top, and flat for income and cap­i­tal gains. I eye­balled the curve for pro­gres­sive, since I didn’t want to cal­cu­lat­ing each time, and I was too lazy to cal­cu­late it in the first place. Rates are 95% for the top bracket.

Some stats:

  • Twenty bins in 5000 unit incre­ments, start­ing at 20000.
  • 10000 + 0 – 10000 start­ing invest­ment capital.
  • 10000 unit tax brack­ets (at the start).
  • Infla­tion fixed at 4% per year, and brack­ets scale with it.
  • Yearly wage increase is infla­tion +- 2%, with a 5% chance of losing or gain­ing 0 – 10% to sim­u­late job changes.
  • Cap­i­tal gain is 5% if your cap­i­tal is below a cer­tain point, 8% above that, to sim­u­late incred­i­bly crudely that if you have more money, you have access to a better class of invest­ments. Also there is a 10% chance of losing or gain­ing 0 – 20% to sim­u­late above or below aver­age years.
  • No one ever dies or has major life changes.
  • Income is the sum of your post-​​tax wages and post tax invest­ment cap­i­tal for bracket cal­cu­la­tion purposes.

Ini­tial results are what you would expect, if you’re rea­son­ably famil­iar with the theory. Flat taxes tend to spread people out over time, even­tu­ally pop­ping people off the top of the sim­u­la­tion and drop­ping them off the bottom.

Pro­gres­sive taxes tend to squeeze people towards a stable middle, with out­liers being fairly quickly cor­rected. It’s crit­i­cal to lock the brack­ets to infla­tion or every­one falls off of the bottom in short order.

Obser­va­tions:

  • Cap­i­tal tends to vanish if you have very little of it to start. At first, I started each person with 0 – 20000 unit of invest­ment capi­tol. After a few thou­sand iter­a­tions, the vast major­ity of people had noth­ing. I’m fairly sure that this is a mod­el­ing issue.
  • Pro­gram­ming to learn some­thing new is a great way to remem­ber why you started doing it in the first place.
  • This is likely the least inter­est­ing post I’ve ever done. I haven’t defamed a single person!

If anyone is inter­ested in look­ing at the code, or has a sug­ges­tion for refin­ing the model, drop me a note. I’d have to clean the code up a little, but it’s not shame­fully messy.

July 21, 2007

Trapped.

no tags — evan @ 10:59 am

The Trap: Sell­ing Out to Stay Afloat in Winner-​​Take-​​All Amer­ica, by Daniel Brook

This book is quite likely to make you angry. Angry, if you’re a con­ser­v­a­tive, at a white, yale-​​educated author whin­ing about how in order to make ends meet, living in a big city, he has to either suffer or ‘sell out’. If you’re a lib­eral, it’ll make you angry at how bleak the pic­ture he paints is, how com­pletely the right has won cer­tain rhetor­i­cal bat­tles. I, per­son­ally, am in the latter camp, as dis­claimer. Also, I’m more or less a part of the class that he’s talk­ing about, as I went to a good school and have a good job and still can’t afford a house in the place where I want to live.

The book is essen­tially a paean to the era of pro­gres­sive tax­a­tion and new deal social poli­cies that the right in Amer­ica has been dis­man­tling for the last forty years or so. I don’t know the his­tory as well as I’d like, so there’s a lot here that I have to take on faith. But the pri­mary argu­ment, that a tax struc­ture that shrinks the middle class is bad for the coun­try. This is not some­thing that we should be aiming for (dis­claimer, the EPI is a lefty think tank, take with salt, but I imag­ine those num­bers are kinda hard to fudge). I’ll admit that I was sold on the argu­ment before I picked up the book, since hous­ing prices in San Fran­cisco, where I live, seem to aver­age around 5 – 700,000 USD for stu­dios, lofts, and one bed­room apart­ments. I might be able to afford one, because I’ve been very, very lucky, but I’m fairly sure that no one I con­sider part of my peer group, other than the people I work with, will be able to.

The book is light, and in a lot of places would be bol­stered by having better direct access to the sta­tis­tics involved. It’s writ­ten like it’s intended to be made into a doc­u­men­tary. Its pri­mary weak­ness, how­ever, is linked to its main point, which is that if the chil­dren of the upper middle class can’t make it trying to do good, then almost no one can. Unfor­tu­nately, it’s too easy to get hung up on the fact that it is about the chil­dren of the upper middle class, Ivy Lea­guers and grad­u­ate stu­dents. This is not actu­ally a weak­ness of the argu­ment, which still holds water, but a weak­ness to attack. These people (we people?) are not, by def­i­n­i­tion, a deprived minor­ity. Any com­plaints that we make are easily attack­able by our ide­o­log­i­cal ene­mies as the whin­ing of people who want it even easier than we’ve had it. That we deserve to be able to remain middle class because that is where we were born.

This isn’t, of course, the argu­ment that Brook is making, but it’s the easy per­cep­tion and the stan­dard line of attack. As of the moment, the book has 14 Amazon reviews, six with five stars, one with four, none with three, one with two, and six with one. I am will­ing to bet, how­ever, that these rat­ings track the reviewer’s polit­i­cal affil­i­a­tion more than they track age or socioe­co­nomic class. Most of the neg­a­tive ones essen­tially run, “Shut the fuck up and get a real job, you whiner.” Few of them dis­pute and of the argu­ments put forth, and when they do, they don’t attack the argu­ment, they attack Mr. Brook, with stan­dard apho­risms of the right; “You’ll under­stand when you get older.”, “Stop look­ing for a free ride and work for a living.”, etc.

Let me spell this out for anyone else who reviews this book. This is not a book about Mr. Brook’s or his classmate’s enti­tle­ment to a middle class lifestyle. It’s a book about how Reagan– and Goldwater-​​ite con­ser­v­a­tive poli­cies on tax­a­tion have made the rich richer and have done noth­ing for the middle class. How if the rich con­tinue to get richer, no one but the rich will be able to live in our most vibrant cities. How an unreg­u­lated market for hous­ing and edu­ca­tion squeezes out oppor­tu­ni­ties for the rest of us.

The book is only about the chil­dren of the upper middle class because it’s some­thing that’s finally reach­ing us. It’s already gotten every­one else. We’re not the canaries, not even the miners, we’re the first shift bosses to suc­cumb. If it’s made it this far, what’s next?

So, read the book. Think about it some. Take a trip to some of the other advanced democ­ra­cies in the world, assum­ing that you can afford it, and that you can get the time off to go. Talk to some people there, tell them that you’re from Canada, if telling them you’re from the USA is col­or­ing the dis­cus­sion too much. Take a step out from behind the Amer­i­can excep­tion­al­ism that has been so care­fully incul­cated in you and me and real­ize that while it’s nice here, if you’re lucky, you most often don’t have to be lucky for it to be nice in one of the other advanced nations, where you wouldn’t be sad­dled by col­lege debt, you wouldn’t have to con­stantly worry about what neigh­bor­hood you live in to make sure that your kids don’t go to a shitty school, you don’t have to work sixty or more hours a week to own a house.

Mr. Brook isn’t saying that he and his gen­er­a­tion don’t want to work, or that they just want some­thing to be given. He just wants to see them, us, be able to work to enrich our own lives, rather than the lives of the people who employ us. To be able to work hard for the things that matter, rather than having to make a choice between our lives and our ethics.

To raise the tone to an incen­di­ary level and to clearly step out­side of the argu­ment made by this book. I’d like to put forth the thesis that con­ser­v­a­tive, regres­sive tax poli­cies are are aimed at cre­at­ing a semi-​​hereditary upper class, an ever less per­me­able nobil­ity. This is some­thing that, as Amer­i­cans, as people true to the spirit of the Con­sti­tu­tion, we should be fight­ing tooth and nail. Now stop whin­ing, suck it up, and go out there and vote for some­one who’ll raise your damned taxes and spend them on equal­ity and the health and wel­fare of the people of this country.

July 4, 2007

You should really watch this.

no tags — evan @ 10:43 am

Some truly remark­able data visu­al­iza­tion stuff here. Also, the pre­sen­ter, Hans Rosling, is a hell of a public speaker. And it’s not just tech glitz, either. Much thought­ful analy­sis of numer­i­cal trends as they relate to devel­op­ment. It gets weaker towards the end, but I think that this is just because I am less impressed with his dol­larstreet soft­ware than I am with Gap­min­der and Tren­dal­yser, which, I think are the best tools I’ve seen thus far for nar­ra­tivis­ing numer­i­cal sequences. Really, noth­ing quite like them for telling a story with numbers.

The video ends on quite a weird note, but it’s only 20 min­utes, so you can’t go in expect­ing 100% thought­ful analy­sis of poten­tial solu­tions and those that have been tried in the past.