[First published on the Increa Blog, 11/4/2005]
John C. Reece was the IRS CIO from March 2001 to April 2003. In the
July 18th issue of Federal Computer Week, he proposed a tax system
implemented as a Web-based solution that would collect federal taxes in
much the same manner that sales taxes are collected - that is, as part
of each transaction in which federal income taxes are payable.
Collection transactions are posted to my record, and I just have to log
in once a year, update info, and "balance the checkbook", sort of speak.
OptimizationOptimization is representative of a larger trend I've observed that bothers me.
I first saw it at the United States Post Office, where I used to be
able to ask what the fee schedule is for mailing things under different
categories. I ask this information because it's the immediate cause and
necessary information for me to make a smart decision about my action,
specifically how I'll ship a package.
Times have changed. The methods, rules, or algorithms that define
shipping services, return receipts, insurance, registration, and
delivery times are no longer available. Instead, the textbook answer is
"bring me the package, I'll put it on the scale, and tell you your
Sadly, this methods serves robotic USPS employees, not me. Once the
package is on the
scale, the USPS computer defines options to accept the package. But I'm
deprived me of information to analyze my options. These new methods
work if I've already committed to shipping with the USPS. But maybe I
to go with UPS. In which case, USPS requires brown wrapping over marked
boxes, and no strings. UPS refuses packages wrapped in brown paper, but
will accept tie wrapped items. UPS gives $100 insurance free. USPS
doesn't. And so on.
I want to optimize my decisions before I commit. Because nobody
releases algorithms and relationship information, I can't. I am
processed as a serial stream of events - batch processed, with no
mid-stream, read-time corrections.
Reading Mr. Reece's article made me realize this is an even more potent
and onerous change in the realm of federal taxation. In a manner
similar to the UPS interaction, the user is deprived of any comparative
analysis. "Tell us who you are, and your situation, and we'll tell you
the required tax." This is NOT enough for my decisions of how to live a
life! You have satisfied your agency needs, but deprived me of an
important aspect of what the traditional partnership has been. I need
to know how you do it, so I can optimize my choices to optimize (or minimuze) how much money I have to give up.
In fact, the depth of importance of knowing the algorithms is witnessed
to by the fact that a normal person spends hundreds of dollars on tax
filing services, but the big bucks are spent on estate or retirement
planning. BIG dollars are spent customizing (more specifically,
numerically optimizing) each person's future interaction with the IRS because
individuals value the outcome. If you deprive people of their valued outcome,
the method, by definition, is a failure.
Even with web-based IRS accounts for each individual, I'm sure
somewhere in the National record, a person will still be able to
extract a description of how the taxes are calculated, but this will
NOT be lucid.
For example, the FASFA form is a step by step IRS-like form used to
provided Federal assistance to college students. The Federal
precidence has now spilled over to where nearly every organization you
engage with will require a copy of the Federal form because it's been
so standardized. In the entire FAFSA college-funding game,
nowhere will you find the core truth that, once past the low-income
deductibles, expected family college contribution is 5.6% (check) of
any savings and investments, and a full 48% of any income cash flow.
Balance this with a combined marginal federal, state, city, social
security, Medicare, and sales taxation of over 50%, and you'll see why
families hurt with kids in college. Loans are inevitable. My point here
is that the batch
processed forms and web-field entry calculators don't reveal this
without dedicated and knowledgeable analysis. I'll guarantee you most
college administrator have never realized the content of this paragraph.
Even if you do have the intrepid character to tear into all the
foundational regulations and laws (or finances to hire someone else to
do it), here is a scary societal issue: when they differ, the batch
processing web page will be taken as truth. What it says is "how much
you owe", regardless of what the original regulations say.
Don't believe me?
I was in this type of trap in the realm of estate gifts to minors.
There is a concept of "future interest" that is well defined in the tax
laws, but somewhere it got misread, and propagated through the
I was in this type of trap in the realm of comm-out procedures for
military pilots who have been given a heading to fly by the
ground-based air traffic controllers. An initial mis-reading was
promulgated through years of publication of the Flight Information
Handbook used by USAF pilot training.
I was in this type of trap with the USAF Reserve payroll system, when
they blurred the distinction between "commuting areas" and "local
I was in this type of trap with Federal civilian benefits people, when
an organization had grown so numb accepting bad certifications from
another agency, they forgot how to do their own calculation they were
required to do.
I was in this type of trap when nobody knew anymore what "contingency
orders" were because each stage in the game, "somehow the information I
need shows on my computer - don't know who puts it there, don't know
the criterion for it to be there, don't know if it's correct; my
process is to look at the checkmark."
In all cases, it took months of effort to reconcile the executing arm
of the supposed rule with the original source. With the finance issue,
it took written correspondence with three IRS auditors (Three because
what any employee says means nothing legally, so I figured if I got the
same answer 3 independent times, chances were good it was right), and
the legal department of a national investment firm. With the pilot
issue, it took multiple letters to the military publications office,
highlighting the FAA regulations that were misunderstood. With the pay
issue I had to escalate the issue to the office of the commander at
both the Reserve personnel center and the local base I was stationed at
before the change was made. With the benefit and orders issues, it took years and a dozen people.
The point is that once the batch process is entrenched, it becomes the
truth. You have to dive very deep into a political environment of
personalities, job responsibilities, and organizational relationships
to ever re-connect people to the real truth. And in the process, it's
your butt on the line, your finances, and your life that is spent
fixing the situation.
Your identity is the database record. Ask someone who's been through an
identify theft experience what it takes to prove you're someone other
than what the computers say you are. My observation is that you are
allowed or defined to exist by existence of a birth certificate. You
prove identity as an American by virtue of the same paper, or perhaps
an alternate such as naturalization forms. In either case, these prove
that you exist as part of the United States. A second part of your
identity, how you exist, consists of all that you have been. Past tense
is important here. Whether it's a signature on a credit card or
biometric security access via retina scanning, all the technology is in
place to connect the flesh and bones at a given location and time to a
known history previously exhibited by that same flesh and bones. Most
pointedly, it does nothing to establish who you are. It establishes who you have been.
A socially visible example are the web-published sex offender data
bases. Based on the concept of forgiveness, I could make a could make a
case that there are times to "forget" the past. The Bible clearly says
that God, at times, "does not remember" historical sins. Yet when the
computer databases own the truth, and they analyze only history, you
are who you have ever been.
In a technical sense, the technology used to implement the sex offender
data bases prevented some reverse lookup capability that should have
prevented vigilante behavior or loss of local real-estate values. That
was before another entrepreneur bound the database to the Google.com
mapping capability. The combination of interpreting historical numbers
as a prediction of future events is a natural and prevalent trend. And
it is creating all sorts of unforeseen problems. To whit, some city
police forces are now taking heat for biasing police patrol activity
(shown on the maps) away from the major gang criminal activity (also
shown on the maps). Wonder why? Even police like to go home alive at
the end of the day. If you allow yourself to engage on observations
like this, it quickly makes you ponder the purpose of a police force.
Socialization of responsibilityThe proposed tax system levies the legal requirement of tax collection
on entities less flighty than an individual. It's true that larger
partnerships tend to be more compliant. For example, the military knows
this and implements a two-person concept on certain highly classified
accesses or activities. No one person is ever given unmonitored access.
For instance, nobody drives around by themselves with nuclear weapons.
No pilot has ever flown with a nuclear bomb, with full release
capability alone. In the financial realm, the IRS knows that companies
tend to respond better and be more compliant because they're easier to
drag into court - more accurately, that they have more to lose if they
don't show up in court, and they're easier to find. If the collection
effort is levied on a company, there will be tremendously less hassle
and loose ends.
And in a fully socialized society where you're defined by, and
processed by computer batch programs, my friend, you (the individual),
are a loose end.
You may contact me via the increa.com