taxes

Today, 6th of December the Republic of Finland celebrates its 92nd Independence day. The year 2009 has also market the 70th anniversary for the beginning of Winter War. Finland held firm against vastly superior numbers of the Soviet forces, causing them massive losses in their illegal attack against Finland.

Finnish Winter War soldier with a machine gun
CC Attribution: Matti Mattila@Flickr

Some of that fighting spirit still remains and has recently seen itself realized in the middle of this economic crunch - perhaps most notably in the increased effort and more positive attitude towards entrepreneurship and grass root sources of economic well-being for Finland.

Over the past months and weeks I have had many good conversations among friends, professionals and with people that care deeply about the state of this nation and its future. Those conversations have sparked a few radical and highly idealistic ideas I'll open up for discussions and debate here.

The problems

Problems are always a decent starting point. After all if there are no painful symptoms the cure is less likely to get developed. Finland today is experiencing at least these symptoms:

• Short-sighted politics is hindering true long term sustainable change and development.




• Politicians are always waiting for "the next elections" and frequently using that as an excuse for inaction. Most recently this precise excuse has been cited as a rationale to do nothing about innovation policy and esociety issues.




• Finland in 2009 seems to be a country of little strong opinion, little true action and truly getting things done. We seem to be about writing plans, memos and organizing committees that have very poor net impact on reality. Lots of movement and hazzle, but very little measured net change towards the better.




• There seems to be very little true transparency and accountability, especially in politics, but also in our courts and different areas of public service.




• Our politicians create more, and more complex, laws all the time; yet the problems they are aimed to fix seem to grown and linger in there. Doesn't this make the effect of laws quite questionable in the current system? What exactly are they good for if they don't solve the problems they were supposed to solve?




• Finland has a few taxes that arguably cost more to administer, oversee and inspect than they actually produce in tax revenue. Apart from being just plain stupid; this is also a problem that hinders growth and prosperity.




• There are additionally even more taxes that place such a heavy tax burden on various activities that it starts to limit overall growth; so instead of producing more tax revenue for the state (which should be the idea), they actually produce less.




• The sources that would create more wealth and prosperity; like growing companies, new ideas, innovation, entrepreneurship, are not currently truly supported and are not seen as champions of society; instead they are something that Finland in 2009 over-regulates, inspects, taxes to death, and apparently tries to make sure that no success would be possible.




• There are numerous areas of over-regulation where the jungle of rules and intervening by society is absurd and starts to sound "pretty Kafka".




• Is the role of government to maximize its involvement in everything? Stick its costly and official fingers in every pie it can find? Or should the role of government to let those societal elements more eager to grow, change, prosper and radiate well-being around them to do so freely? Stay out of their way and get involved in as little as possible?

Radical ideas

Idea Number 1

Let's get rid of using "the next elections" as an excuse forever. Here's how we can do it:


Finnish Parliament House.
CC Attribution: Miemo@Flickr

Currently Finland has 200 members in the parliament. They are elected every 4 years for an unlimited number of terms. Changing this naturally would require changing the constitution, but let's ignore that hurdle for now.

200 parliament members can stay. They get elected 100 members at a time every 5 years for a term of 10 years. Nobody can ever get elected for a second term. Ever. No exceptions. The first 100 to go would be selected by their parties (or alternatively: at random) after the constitutional change.

This would create a parliament that has a "junior" group and a "senior" group. The seniors will always head out permanently after their unique and one-time-only term of 10 years. There would be some serious circulation in key posts like Speaker of the parliament, chairmen of different committees etc.

Nobody could ever again use "the next elections are coming" as an excuse, because there would not be re-election, not for them anyways. Also in combination with this unique 10 year term each parliament member would be required to state their objectives and goals in getting things done for each year. This would mean answering: what positive things they want to get done for Finland? What kind of end result they desire to achieve that benefits the nation? Do note that "increasing taxes" is an invalid objective; as it doesn't necessarily lead to anything, and increased taxes can result in less tax-revenue (not more). These would be goals, desired outcomes and true end-objectives, not the means, mechanisms or petty ways of getting there. Strategy, not tactics. Vision, not micro-management.

They would have a scorecard and each year they would be evaluated by an independent party (not answerable to the parliament) on how they did. After the term of 10 years is up the permanently ousted politician would receive a permanent final evaluation on how successfully the objectives were completed in reality: and since this is a unique term, the politician would have a one time chance to get things done, and if that doesn't happen then its going to show on a permanent irrevocable record. Ineffective and useless politicians that get nothing done can currently just "weasel out" the backdoor and there's nothing to really hold them accountable in our society. This would force plenty of things to be transparent and the success of each parliament member would be on permanent public record.

Additionally the scorecards would exists for each political party: the successes and accomplishments of their members would be summed up, evaluated as a group, and published as a permanent public record. This would make the performance and ability to get things done transparent between parties; and I'm sure the most successful ones would increase their fan-base, while those who get nothing done year after year would be weeded out like the useless bladders of hot air that they are - and political groups that can actually contribute to the success of this nation would replace them.



Idea Number 2

Taxes should increase the size of "the pie" for us all. Optimize and maximize the whole; maximum prosperity, maximum well-being, maximum wealth, maximum happiness for us all. Taxes should not crunch and limit the size of "the pie", cut growth, increase complex administration at the price of everything else etc.

So why not instate an all-governing tax law that contains a mechanism that ensures successful taxation?

Here's how we could do it:

Removing any tax would require 50% simple majority in the parliament.

Establishing any new tax would require 2/3 majority.

Every expense, account, cost, etc that is spent by the government to administer, oversee, inspect, analyze, etc any tax would be mandatory to get accounted to every tax in our nation. This would include all imaginable costs: including the costs of the parliament creating a tax, down to the cost of maintaining statistical information related to a tax. All costs would have to be accounted and assigned to all taxes: so we would know at all times exactly how much each of our taxes costs to upkeep and how much tax-revenue it produces.

Creating this report of costs vs tax-revenue per tax would be run every quarter, or alternatively every 6 months. If any tax would be on the red (it costs more to maintain than it produces) for two periods it would automatically get cancelled and nullified forever. The costs associated with it would have to be assigned to burden other taxes; or the officials would need to get rid of them all together.

This way our society would never stubbornly upkeep irrational taxes that produce less than it costs to have them in the first place. Also a public high quality statistic on all taxes made in this manner would open up taxation to more political debate and the bad taxes that clearly don't work would get taken down pretty quick. Exposing the upkeep cost of each tax would also incentivize discovering more efficient ways to keep the system running.

Additional means to chop down bad taxation would include giving the president a strike-option-veto on tax laws. This would mean that the president could approve tax laws only partially. He/she would have the power to overstrike any useless text from the new tax law, and approve only what's left there. If the parliament would not like this, they would always be able to easily cancel the law (with 50% attending majority in a simple vote, on an ordinary day).



Idea Number 3

When something gets created as a law the politicians and officials have a clear objective in mind; "what's this law trying to solve?". When the process rolls onward is there a mechanism that would check in retrospect did the law actually yield the intended result? There isn't. No checks and balances, no followup. Just more laws piling up.

Each law should have an inbuilt set of metrics when it gets created. Surely each time our officials and politicians know for certain why they are creating the law in the first place, right? The objectives should be apparent in each case. Laws are typically there to protect society, citizens, to fix a problem, to accelerate or limit, etc.

Creating a set of metrics for laws should not be all that complicated. Following up on how did the law actually impact those metrics - that's very complicated. However gradually changing the entire system towards this kind of accountability should surface more reliable and realistic objective ways to make this kind of assessments. Perhaps we could indeed check if a law is leading to results it was intended to accomplish.

If a law would successfully reach less than 25% of it's metrics it would get automatically cancelled forever. Written into history as a failed law, and added into the public record of all the politicians who created it - linking the accountability for creating bad laws to the people that decided to pass them anyways. LexKarpela and LexNokia anyone? Who's accountable for those piles of manure?

If a law would fulfill more than 25% of it's metrics, but less than 75% it would automatically go for a second iteration round. The law would re-enter the parliament and it would be obligatory to fine-tune it to be better, and fulfill its set of metrics more successfully.

Also there could be a system that would followup the net effectiveness of laws all the time; and when the world changes (as it so often does, with absolute certainty), the laws that would start to loose their effectiveness would get flagged, become visible, and would get iterated with less resistance to change.

Trust me, Finland does not need laws that don't function as they are intended. Laws that don't produce the desired good outcome for us all. Laws that exists only to complicate, cause problems and slow us all down. There needs to be transparent accountability and scientific validation of the theory that creating laws actually matters and changes things towards the better. We have all the science to do this if we want to, its just a matter of willingness to be accountable and transparent.

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Getting rid of short-sighted politics always waiting for "the next elections". Automatically getting rid of taxes that produce negative results and of laws that don't work as intended would be great. It would open up society to highly develop in its ability to adapt, compete, and cope with the inevitable change. Perhaps even a society that cares more about optimizing the whole, reaching very beneficial goals and ideals - and cares less about the petty politics and things of small importance.

For example: it is far less important that a paper factory worker gets to keep his job stubbornly forever, no matter how much the world has changed around him - and far more important that he is allowed every fair change in society, gets to live a healthy fulfilling life with plenty of opportunities to do something else besides just slack around in a paper factory.

..Perhaps ideas are not quite dead yet. What do you think?

Happy Independence day Finland!