Wednesday, April 27, 2016

Tax Code


  1. Preamble
  2. Income Tax
    1. Determinants
    2. Margins
    3. Deductions
    4. Earned Income Tax Credit
  3. Sales Tax
    1. Amounts
    2. Exemptions
  4. Carbon Tax
  5. Politics Tax
  6. Payroll Tax
  7. Inheritance Tax
  8. Corporate Income Tax
  9. Basic Income
  10. Process for Receiving Taxes
  11. Where the Money Goes
  12. Process for Making Tax laws
  13. Punishments for tax fraud
  14. Tax code Restrictions
  15. Defending the Progressive Income Tax
  16. Defending the lack of many popular deductions in the Income Tax
  17. Defending the inclusion of and changes to the Corporate Income Tax
  18. Defending a Progressive Capital Gains Tax
  19. When we run a surplus

Statement of purpose

The tax code is riddled with tax breaks that do not benefit the economy. The tax code is practically regressive, with an extremely low tax burden for the wealthy relative to both our history and other developed nations, and starting at a high rate for the middle class. The tax code should be improved to ensure it works in the best way possible. The goal for social programs is to tax the incomes with the lowest marginal propensity to consume to boost programs that provide opportunities to further their education and ensure all people are able to work which is the most effective way to boost GDP per capita and average quality of living.

Income Tax

Definitions:
  • Citizen: Someone who possesses American citizenship or American nationality.
  • Non-citizen: Someone who does not possess American citizenship or American nationality.
  • Global Income: The total income for the individual from all countries and all sources.
  • Domestic Income: The total amount of income made within the United States and its territories.

Effects:
  • American citizens will be taxed on their Global Income.
  • Non-citizens working in the United States on a Green card or work visa will be taxed on their Domestic Income.

Filing statuses
  • Individual File - An individual file individually.
  • Family - A married couple can file with their minor children on the same tax form or as individuals.
  • Dependent - A person under age 25 who makes less than the cost of living may file with their parent(s).

Determinants
Income tax will be determined by the sum of income from wages, stocks, bonds, interest, dividends, gambling, game show winnings, rental income, capital gains upon realization, and tips, after tax breaks. This includes all domestic and foreign income under these expenses. Income from S Corporations and LLCs may be treated as regular income, or may be paid through the corporation.

Margins
  1. People will pay the percent of their income equal to 0.5*((Income/(Number of household earners*cost of living))-subtractor)/SQRT(10+(Income/(Number of household earners*cost of living))^2) which will yield a smooth progressive income tax where everyone under $5000 will pay a negative income tax and everyone above $50000 will pay taxes. The 0.5 at the beginning is the maximum tax rate. The subtractor will be 6.
  2. The cost of living will be determined by the cost of transportation, food, utilities, and housing for different family sizes in their home region as determined by the IRS through a survey. Utilities is defined as average cost of water, electricity, and internet. This will be determined by the Bureau of the Census annually for every state and region. A citizen’s cost of living will be determined by their region that the Bureau of the Census will determine. Each region needs to have a similar cost of living and economy throughout. The cost of living paid for each household will be determined by the head of household, spouse, and number of minors residing in the same place.

Deductions
  1. The value of money spent on post-secondary education will be fully deducted from income. Money used for sending out scholarships that are dispersed will also be fully deducted until no income tax is owed. You do not have to be related to the person to deduct this and you can deduct your own education if it is on the path to a degree or certificate or necessary for work and required by an employer or the government for a license. Money offered in scholarships is included in this deduction. The amount spent on the education of other Citizens for post-secondary education is fully deductible.
  2. The value of money spent out of pocket on health care will be fully deducted from your income, up to the average per person cost of Medicare minus the amount paid by employers and government programs, and money can be earned through this credit if the value of health care exceeds the taxes owed before exemptions. Expenses on vitamins or vacations do not count. You can include any medical expense you pay for any person. Life insurance, babysitting, maternity clothes, nutritional supplements unless prescribed by a doctor, cosmetic surgery, toothpaste, teeth whitening, food, and weight-loss expenses are not deductible. This will be in place until there is a single-payer health care system.
  3. There will be a deduction equal to State, and local taxes paid.
  4. Foreign taxes will be fully deductible from the amount of money you are taxed.
  5. If you are stolen from the value of goods stolen may be deducted from your taxes. The same is true for property lost in a fire.
  6. The owner of a business may deduct business expenses that are moved to the business’ account. Business taxes are determined separately. Money put in for careers may be deducted. Money used for licenses is fully deductible.
  7. Union dues are deductible.
  8. You may deduct up to the cost of living for your household in charitable deductions. Charities that are deductible may not be involved in politics. A deductible non-religious charity must give at least 50% of its money to the cause. Religious organizations are deductible as long as at least 10% of their donations go to charity non-mission expenses (due to the nature of religious organizations). Deductible charities and religions may not spend more than 5 times the cost of living for the salary of any person. Deductible charities must make their financial records open for the public to view on the internet, which will be complete and include revenue and sources of revenue, and all expenses and where each expense goes. A charity or religion that fails to follow these rules will not be deductible and will be treated as a business.
  9. Taxes owed will be decreased by 1% for every member on the filing who votes.
  10. The amount invested into Individual Retirement Accounts (IRA) may not be withdrawn under any circumstance until the depositor turns 65 will not be considered income up to the cost of living. Amounts invested in IRAs up to 6% of income or 6% of 10 times the cost of living (whichever is lower) will be tax-deductible. They will be taxed as regular income when withdrawn. There may be no minimum withdrawal when the IRA reaches maturity. Employers may match employee minimum contributions, and employees may put more into the account in a year than their employer puts in at any time the employee chooses.

All deductible amounts will be added up and 10% will be given to the tax payer as part of their tax bill.

Earned Income Tax Credit
  1. The Earned Income Tax Credit will continue as it is.


Sales Tax

There will be a sales tax in the United States in the following margins. It will function as an income tax on businesses which is forwarded to customers in slightly higher rates.
  1. A 10% tax will be charged on the sales of cigarettes and cigars.
  2. A 2.5% tax will be charged on the sale of alcohol.
  3. A 20% tax will be charged on the sale of firearms.
  4. A 20% tax will be charged on the sale of ammunition for firearms.
  5. A 10% tax will be charged on the services of tanning salons.
  6. A 20% tax will be charged on the sale of any vehicle having less than 10 miles per gallon on the highway.
  7. A 15% tax will be charged on the sale of any vehicle having between 10 and 15 miles per gallon on the highway.
  8. A 12.5% tax will be charged on the sale of any vehicle having between 15.1 and 20 miles per gallon.
  9. A 10% tax will be charged on the sale of any vehicle having between 20.1 and 30 miles per gallon on the highway.
  10. A 5% tax will be charged on the sale of any vehicle having above 30.1 miles per gallon.
There will be no general sales tax because the sales tax is by nature regressive and regressive taxes have a higher multiplier than progressive taxes on GDP because they disproportionately affect the poor who need to be able to expand their wealth most of all.
There will be no Corporate Gross Income Tax.

Carbon Tax

There will be a tax of $43/tC ($43 per every metric ton of Carbon emitted) from every fuel source and every factory and every household. Carbon Taxes will be implemented at the point of combustion, so people and companies who use cars will pay the carbon tax at the pump, factories and power plants will be required to track their carbon emissions through the year.

The United States emitted 1.522 billion metric tons of CO2 from transportation in 2013, meaning this would have yielded around $45 billion of revenue if carbon emissions didn’t drop. If this meant that carbon emissions were reduced by 5% (just a random guess) than total revenue would have been around $42.75 billion of revenue from transportation alone.

Total CO2 emissions from the US in 2012 were 6.526 billion metric tons, and the amount of carbon emitted has been steady since the 1990s. If the carbon tax reduced emissions by 5%, we would receive $266.6 billion dollars of revenue.



Politics Tax

Every donation to a political campaign at any point of the year is subject to be taxed at the following rates per individual donor. For this purpose money lobbyists give to politicians is considered a campaign donation. It depends on how much the donor donates to politicians, the rate will be on the total amount of donations:
  • If the maximum amount a person donates up to half the cost of living in their home state they will pay 5% of their donations in tax.
  • If the maximum amount a person donates between 50% and 100% of the cost of living in their home state they will pay 15% of their donations in tax.
  • If the maximum amount a person donates between 100% and 250% of the cost of living in their home state they will pay 20% of their donations in tax.
  • If the maximum amount a person donates between 250% and 500% of the cost of living in their home state they will pay 25% of their donations in tax.
  • If the maximum amount a person donates between 500% and 750% of the cost of living in their home state they will pay 30% of their donations in tax.
  • If the maximum amount a person donates between 750% and 1000% of the cost of living in their home state they will pay 35% of their donations in tax.
  • If the maximum amount a person donates between 1000% and 1500% of the cost of living in their home state they will pay 40% of their donations in tax.
  • If the maximum amount a person donates between 1500% and 2000% of the cost of living in their home state they will pay 45% of their donations in tax.
  • If the maximum amount a person donates above 2000% of the cost of living in their home state they will pay 50% of their donations in tax.

Corporations, think tanks, PACs, SuperPACs, foreigners, and unions may not donate to political campaigns. There is no cap on the amount an American citizen may donate to campaigns they will vote on. Donating to a political candidate that you cannot vote for is a Class I Felony. A corporation that donates to a political campaign will have its Business license revoked and the entire Board of Directors, CEO, and other officers will all be guilty of a Class I Felony. If an individual makes a mistake of reporting their donation they will have 4 years to correct their mistake and pay the tax. If after 4 years the person still has not reported they will pay 10 times the tax they would have paid. A foreigner that donates to an American politician will be barred from entering the United States for life and their American assets will be seized by the government.

Inheritance Tax

Inheritances will be taxed at a progressive rate per recipient. Spouses are exempt.
  1. All Inheritance under 50 times the cost of living will not be taxed.
  2. Inheritances between 50 times the cost of living and 100 times the costs of living will be taxed at 20%.
  3. Inheritances between 100 times the cost of living and 250 times the costs of living will be taxed at 30%.
  4. Inheritances between 250 times the cost of living and 500 times the costs of living will be taxed at 40%.
  5. Inheritances above 500 times the cost of living will be taxed at 50%.

Corporate Income Tax

Corporations have two options for how they will be taxed:
Option 1 for C Corporations, LLCs, LLLPs, and Series LLCs is to have all taxable income as defined below will be paid for by the corporation.

Option 2 for S Corporations, LLCs, LLLPs, and Series LLCs is to have all taxable income sent to the stockholders.

The equation to determine the taxable income is as follows:
Corporations will be taxed at a progressive rate based on their net income calculated as follows:
  1. A= Total Revenue
  2. B= Employee income with varying rates, compensation in cash, IRAs, medical benefits will all count towards these categories.
    1. X: Employees that make below 100% of the living hourly wage will have their income taxed at 100%.
    2. Y: Employees that make at least 100% and below 250% of the living hourly wage will have 100% of their total income deducted from the corporation's taxes.
    3. Z: Employees that make at least 250% and below 5000% of the living hourly wage will have 125% of their total income deducted from the corporation's taxes.
    4. Employees that make at least 5000% of the living hourly wage will have no deduction on their income.
  3. C=Total sum of cash spent on capital Investment in buildings, manufacturing, and other physical assets, advertising,.
  4. D=Amount of money paid to foreigners at rates below the Federal Minimum Wage adjusted for purchasing power parity in that country.
  5. E=Total State and foreign taxes
  6. P=Political Donations
  7. F=Charitable Donations

R = Tax Rate
B=X-Y-1.25Z
A+X-Y-1.25Z-C+D-E
R(A-B-C+D-E+P)-F equals Taxes owed. If the answer is negative, no money will be given.

Tax*(Total Revenue-Wages-Investment+Below wages-Taxes+Political Donations)-Charity = Taxes owed

Living Hourly Wage is defined as the amount of money needed to be earned per hour to make the cost of living in one year working 1920 hours in one year. (40 hours per week for 48 weeks)

The tax rates are as follows:
  1. 5% on taxable income for companies that give all of their employees and contractors at least 5 weeks of paid vacation time and unlimited sick leave.
  2. 10% on taxable income for companies that give all of their employees and contractors from 4 weeks but less than 5 weeks of paid vacation time and unlimited sick leave.
  3. 15% on taxable income for companies that give all of their employees and contractors from 3 weeks but less than 4 weeks of paid vacation time and unlimited sick leave.
  4. 20% on taxable income for companies that give all of their employees and contractors from 2 weeks but less than 3 weeks of paid vacation time and unlimited sick leave.
  5. 25% on taxable income for companies that give all of their employees and contractors from 1 week but less than 2 weeks of paid vacation time and unlimited sick leave.
  6. 30% on taxable income for companies that give all of their employees and contractors less than 1 week of paid vacation time and unlimited sick leave.
  7. 35% on taxable income for companies that do not give all of their employees and contractors unlimited sick leave.

Definition of Charitable Donations:
  • Donations that go towards financial assistance, providing medical, scientific, or educational value towards an individual will be considered a charitable donation and be completely tax deductible.

Basic Income

Every family will receive $5,000 per person in Basic Income (to be annually adjusted for inflation). For minors half of their income will go to the parents and half will be put into a new Basic Income Trust Fund which the minor will get when they turn 18 where it will get interest as government bonds until that point in time.

Where the Money Goes

  1. 50% of all surplus revenue of the Government of the United States will go into a fund for spending in years where a deficit is run. This will be held by the Federal Reserve for future use. This fund may not be tapped without an Executive Order or Act of Congress when spending is greater than income. This money may not be used in any year where Spending is equal to or less than revenue.

Process for Making Tax Laws

The Process for making a tax law code change lies in the power of Congress. The Internal Revenue Service, Courts, and President may make no change without the approval of a simple majority of both houses of Congress.

Punishments for Tax Fraud

Any American citizen convicted of lying the IRS on their income will have committed a Class I felony and lose the right to vote for the rest of their life. They will lose the right to run for office. They will be incarcerated for 10 years in a Federal Prison with no bail and charged ten times the amount that they owed and didn’t pay. Citizens have one year to correct mistakes.

A business that cheats on taxes will be fined one hundred times the amount of taxes owed from previous years. Companies have one year to correct mistakes without incurring fines.

Cost of Living

The cost of living will be calculated by Metropolitan/Micropolitan Statistical Areas as defined by the Census Bureau.

Defending the Progressive Capital Gains Tax

I already know the least popular part of taxing capital gains as regular income is going to be the claim that I am hurting investors. There is some merit to this in the immediate term, but it only looks at the individualistic short-term side of the picture. Citizens will claim I need to tax capital gains at a lower rate than regular income, that capital gains keep the economy running, that taxing capital gains as regular income introduces double taxation, but there are some problems with this. Most arguments come from this far-right think tank’s article on why they claim to oppose a progressive capital gains tax: http://reason.com/archives/2013/01/06/why-double-taxation-must-cease

  1. The biggest problem they are wrong about is that the Utilitarian capital gain tax does not introduce double taxation. The Capital Gains tax is only on the amount the investment made, which means that despite what many will claim, it is only getting taxed once, upon withdrawal.
  2. Another thing, is that you are only taxed once you pull the money out, if you leave the money in a stock for over a year you will only pay taxes the year you pull your money out. You don’t get taxed every year on your investments, unless you are constantly reinvesting. http://www.irs.gov/uac/Ten-Important-Facts-About-Capital-Gains-and-Losses
  3. Taxing capital gains as regular income will give the government enough revenue to fix the debt without touching spending. 10% of our government spending in Fiscal Year 2012 went to the debt, and that money should be going to the American Citizens in the form of health care and education.

These types of groups write sensationalist loaded language that is designed to make Citizens who already agree with them to be outraged (and frankly, I have occasionally been the victim of some left-wing groups doing the same tactic) and should be ashamed of themselves.

Taxing capital gains as a progressive tax is just fair and actually makes good economic sense. If someone invests their money early and keeps it in for decades they could have billions of dollars, like pretty much everyone on the Forbes 400 list. If Capital Gains are taxed at a fixed rate and you have a billion dollars in the stock market and the market collapses and you pull everything out along with your billionaire peers the market will collapse further and companies will have less capital to invest with, which will put them at odds between the continued growth of the company through assets and employees, or giving their investors their annual/quarterly dividend and increase to their stock, and we all know which usually takes priority. To stabilize the stock market we need to give an incentive for these mega-investors to keep their money in for the long term so that companies can use their money efficiently, downturns can be short, and unemployment can be lower than otherwise which will preserve our economy’s demand curve. By preventing large market collapses it will help Citizens who have their money in the market from losing all of their gains, and companies will continue to have capital to invest and grow, and hire more Citizens which will raise the demand curve, decrease unemployment, and make a stronger economy. This is why a progressive income tax that treats capital gains as regular income is just healthy economics for America and the world.

Will a progressive capital gains tax make a substantial difference? In America there are about 250,000,000 adults, and lets conservatively assume that one percent of these Citizens make over a million dollars a year. That equates to $2,500,000,000,000 of income per year, or 17% of our GDP. Under the current tax structure, the government will make $500 billion from that income, but under the Utilitarian tax code the government will make at least $625 billion instead. For Citizens in the top 400 richest Americans, if we assume they make at least $100 million per year, that is a lower limit of $40 billion of annual income. This currently gets taxed at 20% when they take it out (since most of it is in capital gains) which is $8 billion of income for the government. With the Utilitarian tax code, they will pay an effective rate of 69%, which means the government will make $27.6 billion instead. While 69% seems really high, they are still keeping $31 million of after-tax income, and by taking their money out of the stock market over a long period of time they can easily lower the tax burden, so no one will really pay 69% because they will remove their money from the stock market over a long period of time. But the most important part is that this will punish Citizens from removing all of their money from the stock market at once which hurts the economy, and will create revenue for the government during future recessions to put the economy back on course with smaller deficits in the bad times, and the government will not need to run deficits in the good times under such a system. This will mean less frequent and less severe recessions as part of the market cycle, which is good for everyone from the factory worker who won’t get fired to the CEO who won’t see his company’s market cap decrease significantly. On the other hand, the current tax structure doesn’t punish Citizens for pulling out all their money at once which creates recessions by making the stock market more volatile when many investors act at once which can occur when stocks act erratically.

Another closely related issue with the corporate world is how much Citizens should be paid. www.ethisphere.org is a collection of stocks that beats the S&P 500 every single year in growth, and are selected not for their stock returns (which are considerable) but for their morality. By paying their workers more every year than their counterparts they have lower turnover, lower training costs, lower hiring costs, and their employees make fewer errors which cost any company money, giving these companies money to either grow, and/or pay their investors more money than their minimum-wage and/or Chinese slave driving competitors. (http://www.aljazeera.com/programmes/slaverya21stcenturyevil/2011/10/2011101091153782814.html) By paying Citizens more money this helps the corporation immediately by getting and keeping the best workers in the market and making them valued which makes a difference. In the long term at the societal level it raises the demand curve for goods and services which means that more Citizens can afford the goods the corporation makes which increases their demand and means that a stable relationship between company owners, employee, investor, and consumer can develop. This is just good economics from every perspective for the reasons I outline above. My tax code will help move us toward such a world. As Henry Ford said, “There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.
Read more quotes from the inventor of automated production at http://www.brainyquote.com/quotes/authors/h/henry_ford.html#UsAPu4ARukU4mAvm.99

Defending the Lack of Many Popular Deductions in the Income Tax

There are hundreds of deductions in the United States Tax Code, from the beloved Home Mortgage Interest Deduction, to the hobby deduction (no joke), to short-selling stocks, to 401k fees, office rent, business insurance, dues to business organizations (as an individual), travel expenses, and most of these are impossible to accurately defend. We should keep deductions that help our economy as a whole and eliminate the ones that hurt us.

The Home Mortgage Interest Deduction makes the government lose billions of dollars a year. It give consumers little reason to shop for a lower interest rate in the marketplace, and with no cap makes it extremely regressive. Citizens who need the most help get the smallest deduction, Citizens who need no help get the largest deduction. It doesn’t benefit society. Home ownership over apartment ownership does not need an extra incentive, as inexpensive apartments can easily cost $500 per month, while a mortgage for a larger house will be less before the tax deduction. Also, the common perception that the United States has a higher home ownership rate than outside of the country is completely false as can be seen here: http://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate

Clearly this deduction fails to make a significant difference in home ownership, doesn’t actually help the principal of the mortgage, and only eliminates the incentive for consumers to shop for a lower interest rate making an annual bailout of banks. This does not function as a tax cut. The only real beneficiary are the banks who can charge higher rates of interest.

Losses from ponzi-schemes are deductible. We shouldn’t be deducting things from poor investment choices which decreases the need for responsibility and due diligence and does not benefit the country. This is a completely different argument from national health care because making sure that everyone has health care increases the competition of the American worker which benefits the common good. People do not choose to get ill, people choose to give their money to a scammer. Ponzi schemes, gambling deductions, and sky high mortgage interest payments do not benefit Americans who are not part of such schemes.

We currently allow some deductions for Citizens who buy bonds.

Defending the Corporate Income Taxes changes

The current Corporate Income Tax system is perverse. The most popular argument for a corporate income tax is that it is a way to tax the rich. This is just plain wrong. When a company is deciding its prices it puts the corporate income tax into its calculations for how high to set the prices, and the prices are inflated so the company makes the amount of money it wants regardless of what the corporate income tax is, sure there is competition but that doesn’t come into account as much because consumers will pay the tax no matter where they bring their business. Also, many companies make their expenses work to get enough deductions so that they don’t have to pay anything in taxes. Clearly, the modern corporate income tax doesn’t work.

It has been widely commented by economists on how it is not ideal on how companies are taxed for bringing foreign-earned cash back home to the United States. There are two ways to look at this, first of all they are investing their money in foreign countries, but since the products are generating cash abroad it means that they are selling items abroad. If we have companies potentially exporting items to the United States we want them to be able to bring the cash back home to invest domestically. The current corporate tax code makes such a move detrimental to the company, but with the current tax code they will get tax benefits for bringing money home and creating domestic jobs. We need to encourage companies to grow jobs here at home which is why this part of the corporate tax (along with most of it) has been removed.

We will modify the Corporate Income tax to encourage companies to pay their employees more to increase the aggregate demand curve of the economy which is necessary for the economy to function.

Defending the Negative Income Tax and UBI

This tax code proposes a massive transfer of income from the richest of the country to the poorest through a negative income tax and Universal Basic Income. This is done for multiples reasons, but one of the most important is people with less income are more likely to spend it. This helps stimulate the economy. It also has a political component because people who feel like they have more of the pie are more likely to vote which is what the majority of political science research demonstrates, which will improve our nation’s political well-being.

Providing a general level of wellbeing will help significantly alleviate poverty and stimulate impoverished communities. It will reduce inequality which is tied to gun deaths and other social ills. Instead of spending money on implementation this is a more effective way to get people out of poverty.

Defending the Corporate Income Tax

Every part of the Corporate Income Tax is designed to do specific things. The first thing which is to encourage corporations of all sizes to pay people more than the cost of living in states is designed so that the working poor will see bigger paychecks from their employer so they won’t need as much welfare from the government at all levels. This subsidy encourages this transfer of income to workers helps to reduce income inequality.
the second most important thing is all investments corporations make will be deducted to encourage them to save and increase the amount of economic capital they build. This will have the direct impact of increasing America’s savings rate which increases our long-term potential growth.

Effect of a balanced budget

This will be the automatic process for when the budget is balanced to help boost GDP growth.
  1. We will increase the subtractor in the event of a balanced budget which has the dual effect of increasing the number of people who get money back in their taxes and decreases taxation for all.
  2. Half of the surplus will be allocated to public schools and sent to them to be used as local school administrators decide. The remaining half will be sent directly back to the people in the form of a check.

In the case of a surplus the money will first pay off the debt early, if there is no debt, it will be sent back to the Citizens in the form of a check proportional to the amount of tax Citizens paid. If the government receives a surplus for two years in a row and the debt is completely paid off then the lowest tax bracket will be eliminated. If the government has a surplus after eliminating the lowest tax bracket the new lowest tax bracket will be eliminated the following year. If the government runs a deficit after eliminating tax brackets the highest bracket eliminated will be reinstated the following year. Congress may adjust the lowest bracket to balance the budget, but income under the cost of living may never be taxed. Congress may also add tax brackets above the highest existing tax bracket to balance the budget, which shouldn’t be necessary.


Tuesday, April 12, 2016

Unpaid internships

If I were to walk into a store and take something without a compensating the person I would be stealing the item from that person. There is little debate about this issue, and the vast majority of people believe it to be wrong. Someone is for the poorer, in terms of the time, money, and resources they spent and to have a system where people do this without ever being compensated will not work in the long run.

On the other hand, if I were to hire someone and agree that they will get paid in "experience" many people will say that this is fair and the person who is getting paid in experience is young/female/black. The thing about getting paid in experience is you can't walk up to a grocery store and say "I would like to pay you with 50 experiens which is the equivalent of $50." You can't pay your rent in experience and you can't pay for gas with experience. Economists have a saying that nothing in life is free. But this is exactly what is happening with the internship economy. This ties into a wider developing cultural phenomenon where the social contract is degrading when so many extremely wealthy people don't want to pay for what they get. If I were to walk into a store and say that I was just going to take my food but the farmer would get paid in experience people would say I was stealing. However, if I hired someone to do a job for me and tell them I would get paid in experience at this massive Fortune 500 corporation they would say that is fair. There is no real difference between claiming that the farmer will get paid in experience and claiming the recent college graduate swimming in debt is getting paid in experience in their internship. In economics the factors of production are land, labor, capital, and entrepreneurship. Each of these has value, and we need to pay for labor just like we would pay for the other three of the factors of production. We need to make it illegal for a for-profit corporation to hire people to work for them in internships and restrict such work to non-profits alone.

Another important issue that is tied to this is the destruction of the public commons. We have significantly reduced the amount of money going into research and development every year moving towards a a charity model. Scientists today have more sporadic and less funding than they used to have and the amount of I public grants available has diminished. We don't have grants for long-term research that can be easily renewed and private charity has not made such investments part of the economy. This wastes valuable time for scientists who spend their time writing grant proposals as opposed to doing research and expanding our knowledge about the world. This is a symptom of people having an unrealistic assumption that things should be free, that people should not be compensated for their work, and if they are compensated are at a level that is below subsistence. The same thought process that leads to the unpaid internship. What is even more is that I have found the people who are most behind the destruction of science funding in our country are the people who get most agitated about the increase of China's economy and the massive scientific development they have done due to their investment in research and infrastructure. The hypocrisy is sickening. We need to move to an economy where we value scientific research and can invest more because people with illnesses can't wait forever for us to learn how to cure these diseases. The other problem is there are so many projects needing funding that if every disease had a private charity people wouldn't know where to start and we might actually find a decrease in private charity in scientific research given the number of charities needed to fund every project.