The Technology of Tax Reform

So, I thought President Barack Obama's Second Inaugural Address was pretty awesome. The dude sure knows how to orate and rhetoric, and does a great job tying his speeches into the American rhetorical tradition. The actual political substance of the speech, meanwhile, was pretty unabashedly left-wing, including several sentences each devoted in wholly explicit terms to climate change and gay rights. This post, however, is about a curious little turn in the speech where the President listed a few policy challenges, including tax reform, and said that we must use new technologies to solve these problems. My first instinct was, huh? Tax reform doesn't need technology! It's just numbers, and those have existed for a mighty long time. A second's further thought brought to my mind the fact that there is a certain kind of technology that could be deployed in reforming the tax code, but has yet to be so used, namely calculus. In principle there's no reason why a tax code needs to be broken into discrete "brackets," rather than having some smooth curve describing the marginal rates as a function of income, which can then be integrated into the total tax bill for each income level. From a mathematician's perspective, that would be simpler than the current approach, which is an annoying piecewise-defined function.

Still, calculus is hardly new technology. But as my dad points out, its utility in reforming the tax code is dependent on the main new technology, the computer. Mathematically speaking, a smooth marginal tax curve would be simpler than discrete brackets, but especially since it probably wouldn't be a very pleasant function to integrate, actually calculating the tax burden on an individual given the tax curve would be a bit of a nightmare. Unless, that is, we have computers! Computers know how to integrate stuff really really easily. If the way it worked were just that a person's total income got adjusted with various deductions &c. to get the "adjusted gross income" and then those dollars were hit with the marginal rates from the tax curve, it would be absurdly easy for an ordinary person to type a certain AGI level into a computer and have it spit out a tax bill. What could be easier than that? This would not have been so easy in the pre-computer age, so yes, new technology is relevant for tax reform.

Of course, this was probably just an inadvertent juxtaposition of two things that don't really relate to one another. But I wonder: is Obama planning to smooth the tax code? If so, sounds good to me!