I interrupt this blogging of “Underfables” for an announcement and a modest proposal.

The announcement is:

**Today, November 20, 2011, is my 54th birthday.**

That means that, as of today, I have survived:

54*365 days + 13 leap-days =

**19,723 days**;which equals

19,723 * 24 =

**473,352 hours**473,352 * 60 =

**28,401,120 minutes**28,401,120 * 60 =

**1,704,067,200 seconds**.One point seven zero gigaseconds old! Time sure flies.

I am having a minimalist birthday today. I figure that I don’t have to

*do*anything to turn 54, other than survive the day, so I’m taking it easy. All I plan is to mail some letters and share a cake with wife and daughter. No big birthday party; I hate the stress. I’d rather treat a birthday as a milestone rather than as a deadline.About those letters; they contain small presents for friends. I figure that I’m old enough, and internally rich enough, to

*give*on my birthdays rather than*get.*It’s a matter of self-expression. The presents in question are small enough to mail, but original enough that I am sure that my friends have never seen the like in their lives. They’ll get “tribands”, made by linking three hairbands in a Borromian link. A triband is a curious item; I’ve seen them as topological diagrams but never before as a physical object to play with. They are fun toys, yet they also have unique practical uses. I’ll discuss them on this blog after finishing Underfables, once I figure out how to add pictures and video links.As further self-expression, I here give you, dear reader, the following Modest Proposal: the Logarithmically Flat Tax, a.k.a. Zeros Taxation.

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The distribution of incomes in America is a hybrid of Gaussian and power-law. For low to moderately-high incomes the distribution is nearly Gaussian; so it is as if people were adding and losing sums of income, at random. But the far right tail of the distribution is “fat” - that is, extremely high values occur more often than you’d expect. For the right tail the distribution resembles a power law; that is, the number of people with income X will be proportional to X^(-p), where p is the power. Here it is as if the extremely rich got that way by

*multiplying*and*dividing*their income by*factors*, at random, instead of*adding*and*subtracting terms*, at random. And this makes sense, given that the upper end of the economy is dominated by finance, where compound interest rules. The 99% adds and subtracts their money; the 1% multiplies and divides their money.I therefore propose the following hybrid tax code: for up to the 99th percentile the tax shall be flat proportional after deductions; for the top percentile the tax shall let the rich retain an after-tax income proportional to the 8/9th power of their pre-tax income.

Mathematically, the tax code is:

for X = income, and N = 99th percentile of income;

if X < N, then tax = k * (X - D), where k is the flat proportional tax rate and D is deductions;

if X > N, then tax = X - K * X^(8/9), where K is calculated to match the tax curves where they meet, at N.

Therefore K equals (1- k)*N^(1/9) - k*D*N^(-8/9) . You can also say that tax = X - ((1-k)N - kD)*(X/N)^(8/9) ; so that the 1% can in effect “multiplicatively deduct log(N) zeros”, and pay only one out of every nine zeros thereafter. It’s a

*logarithmically*flat tax.The dividing line between proportional and 8/9th power taxation is given by a percentile rather than a prestated amount, and hence is stable under inflation and other changes.

You can of course change 8/9ths for other powers.

Note that this leaves a taxpayer in the 99% an after-tax income of (1-k)*X + kD. For those with an income below D, this is a negative income tax; an incentive-preserving substitute for welfare, recommended by Milton Friedman. But also note that it leaves a taxpayer in the 1% an after-tax income of K * X^(8/9); their income rises by the 8/9th power. Thus a billionaire will make “only” K hundred million dollars.

I therefore call this a “zeros tax”; the government takes one out of every nine zeros.

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