Posts Tagged 'IRS'

August 6, 2009

Punishing Success

Let’s say you worked for years to become a world class athlete. As a kid, you were in the gym while other athletes were at the movies. You were in the weight room on Saturday nights when no one else was there. You shunned pizza and soda in favor of grilled fish and fresh fruit. By the time Letterman hit the evening airwaves, you were well into restorative sleep. You were out the door for your morning runs while other athletes snoozed. As a result of all this, now you perform at an elite level and are very successful at your sport. Suddenly, you find that there are people who have a vested interest in helping you maximize your athletic potential. Your coaches, your managers, and companies who pay you to endorse their products all want to see you do your best. Why? Because doing your best helps them be more successful.

So, they provide you with all the things you need to maximize your potential. You get the best training gear and training regimens. You get the best nutrition. You get the right amount of rest. All these things help you maximize your potential. Thus the relationship is a nice symbiotic cycle – the more success you experience, the more success your coaches, managers, and endorsement companies experience. Win-win. Makes sense, right?

So, imagine the silliness if your coaches, managers, etc., made the decision that because you were so fortunate in your success that you had to “give back” almost half your resources to train the athletes who loafed, stayed out late, partied and gorged on pizza. Because you’re such a hard-working and smart athlete, you don’t need all those resources to participate adequately in your sport, they rationalize. Consequently, you don’t hit your potential, your coaches and managers don’t distinguish themselves, and endorsing companies don’t call you. You then feel that you’ve been punished for your hard work and success.

Sadly, much of our government policy falls under this flawed logic. The IRS just released their latest income tax stats for the year 2007. For that year the top 1% of earners paid 40.4% of all income taxes collected. We all know that right now we’re coming out of a recession and we really folks to invest in businesses and hire people to get the economy moving. So how do the 2007 numbers compare to, say, the 1980’s? During the ‘80’s, we managed to shake off the “stagflation” of the ‘70’s and get the economy rolling again. It was during this time that many technology juggernaut companies were spawned – Microsoft being a good example. So, how much of the income taxes in the ‘80’s were paid by the top 1% of earners? The average for the 10 years from 1980-1989 was 22.2%.

Let’s do some quick math. $1.116 trillion in income taxes was collected in 2007. Of that, $455.3 billion was paid by the top 1% of earners. If they paid 22.2% as in the ‘80’s, they would have paid $247.8 billion in taxes, and right now we’d have $207.5 billion MORE dollars invested in our economy. That would be quite a stimulus package! Our current policy punishes success and chokes off fuel from our economic engines while we’re trying to climb out of a worse recession than we had in the ‘70’s. Not smart.

Some may think that this would simply mean that our government deficit would be $207.5 billion higher. This is not the case at all. These folks that make up that top 1% didn’t get there by being lazy or not putting their money to work. I know some folks in that group, and they WANT to put their money to work! I know one gentleman who had to be told some legal docs for a deal could not be prepared over the weekend because Christmas was on that weekend. These folks are like the world class athlete I mentioned above – by and large they’re disciplined and hard-working. Their money will build new businesses and create more jobs, and the government will collect far more revenue from this new economic activity than it would give up in collections from these top 1% folks. Think about it – how many of us have ever been hired by a “poor” person? Instead of punishing economic success, we should encourage it!

Bottom line, if government policy were to make sense, it would encourage these folks to maximize their economic potential and find the correct balance of revenue to collect and yet still promote economic growth. What would we prefer? That the government collects 50% of $1 trillion or 30% of $2 trillion? Hint: 30% of $2 trillion is a WAY better deal.

At SoftLayer, we think very differently about things. We simply do not punish our customers for succeeding. We empower them to be more successful – why? Because if our customers succeed, we succeed. We get this.

Can we prove this? Perhaps a look at how customers vote with their feet is an indicator. For the past few months, SoftLayer has seen the lowest percentage of customers terminating business with us in our history. If we punished our customers for their success, they would go elsewhere.

March 12, 2008

Things I Learned at the Post Office

I send exactly one letter a year: a signature form to the IRS to say that yes, indeed, I have eFiled my taxes. Other than that, I use the Internet, and to a smaller part mobile phones, for all of my communications. It's faster, easier, and significantly cheaper.

Walking into the post office, I felt as my Mom must feel when she comes with me to Fry's Electronics. A million options, and not a single clue where to go. All I knew was that, using the US Postal Service, I had to convey this sheet of paper to another post office in Austin.

Some lessons I learned:

The IRS requires a signature. On paper. For filing your taxes online. Or a "super secure five digit pin number" (which I used, once, a year ago and cannot remember). Or my return amount from last year (which is currently stored on hard cellulose media in a backup (box) somewhere in my garage). So signature it is.

Letters require an envelope. Email does not. However, being a post office, this was easy to rectify. For $.25

Letters require postage. Not only did they charge me for the paper sleeve, but they also charged me for "postage." The postal worker handed me the envelope and the stamp. I put the stamp on the envelope and handed it back. He took a rubber stamp and defaced that $.41 square of paper. Why didn't he just save me the extra step?

The post office doesn't automatically affix a "FROM" field to the envelope. He then handed the letter back, gesturing to the top left corner. Apparently, I needed to write MY address there, in case they couldn't find the recipient. Right!

First-Class Mail doesn't actually mean First. In fact, Priority mail goes out before first class. And so does Express mail. In fact, there doesn't seem to be a "Class" of standard mail below first class, making it "Last Class" mail (there is Parcel Post and Media Mail and Bulk Mail, but these aren't standard on-the-price-board listed services). This is like the old joke about the Soviet Union reporting that their car made second place, and the American car made second-to-last, without mentioning that it was a two car race.

Surliness is one of the few free services provided by the Post Office. Along with dinginess and long lines. Then again the guy behind the counter didn't have to make such a show of his open disdain for my inability to "properly" affix postage.

Unlike Internet forms, real world forms have two sides. With a barely restrained sigh, the federal agent behind the counter handed back my form, and made a twirling motion with his finger, requesting that I put my return address on the back of that form. Didn't I already give them my return address on the letter?

After filling out the envelope (twice) AND a certificate (both sides), the federal agent then proceeded to place stickers and stamps all over my envelope. When he was done it had no less than 3 stickers and writing over the entire surface. He then handed me a paper with a convenient 20 digit number I could use to check on the progress of the letter. By calling a "1-800" number. With a phone. It cost me $7 to send a single sheet of paper with my signature on it a mere 200 miles.

As I walked out with the civil servant's stare burning into my back, I thought to myself...

...why couldn't I just have encrypted my tax forms with my private key? Wouldn't that have been easier? And more secure.

Apparently the Post Office, headed originally by Benjamin Franklin (also known for the glass harmonica and a carriage odometer, along with other trifling achievements) used to be the fastest, and dare I say sole way to communicate over long distances. How did they ever get anything done? Seems like an incredible hassle to me.

-Zoey

Categories: 
Subscribe to irs