Pay for Infra Improvements with the FHAT Tax

I’m writing today about “Our Nation’s Neglected Infrastructure, Part II” (May/June 2021). Thank you for publishing this important report. I would add this: How to pay for it?

Short answer: A tax increase (surtax) equal $1 per day per U. S. median income household for the next 20 years would pay for more than $2 trillion of infrastructure.

How is that possible?

  1. One dollar per day is $365 per year.
  2. Federal income tax for the median U.S. household was $4,320 in 2018.
  3. $365 is about 8.45% of $4,320.
  4. Total 2018 individual income taxes were about $1.7 trillion.
  5. An 8.45% tax increase (surtax) on $1.7 trillion produces $143 billion for the Fund for Highways and Trains. Call it the FHAT Tax, since the fat cats would pay most of it.
  6. This $143 billion per year would pay principal and interest (at 2.5%, about ¼ percentage points above the current 20-year Treasury bond rate) on about $2.2 trillion of 20-year Treasury bonds.

That’s a lot of infrastructure. And a lot of jobs.

The infrastructure improvements should last 50 years. The concept is similar to using a mortgage to pay for the house I built over 50 years ago, long since paid for, and still in good condition.

Bill Howard, MAAA, FSA
Nellysford, Va.

Yet Another Fallacy to Add to the List

One would think that Carlos Fuentes’ catalog of 26 logical fallacies (“Irrationally Yours,” March/April 2021) would exhaust this subject, but alas there is at least one omission—the fallacy of composition, attributing to the whole the properties of the parts. This fallacy crops up frequently in public policy debates.

For example, nobody would deny that the portion of the population with a college degree is better off economically than the portion without a college degree. However, the claim that, if the entire population had a college degree, everyone would reap the economic benefits that currently accompany a college degree does not follow logically; rather, it is an example of the fallacy of composition. This does not mean the claim is necessarily false either, just that it requires other support. However, such support may be difficult to come by, because history shows that a steady long-term improvement in educational attainment across the population has not yielded any decrease in economic inequality.

I hasten to add that there are noneconomic benefits to a college education which must be considered as well.

Eric Klieber, MAAA, FSA, EA
Cleveland Heights, Ohio

One Actuary’s Approach to Digital Backup Systems

The article “Digital Decluttering” (January/February 2021) caught my attention. As a self-employed actuary, backup has been a major concern from my earliest days. Of course, losing client data due to a computer issue would not produce good referrals.

During my years, I examined many backup systems, all had several shortcomings—which I overcame with my home-cooked approach.

My requirements were not only that my data be backed up, but also that a copy be capable of being kept off-site, up to date and, most important, be capable of having my practice back up and running immediately in the event of a catastrophe.

I have had several catastrophes—generally hard disk failures and even a computer that died due to a “hiccup” in the electrical supply.

I survived them all. I would have also survived a physical loss of the computer, because the hard disk is not kept with the PC itself. That also helps preserve confidentiality.

My approach is to keep and use all client and personal data on an external hard disk. That hard disk has all new files regularly copied to several other external hard disks. These are exact copies—no special software, no compression utilities.

The result is that any one of the backup disks—yes, I am paranoid and have several!—can be immediately used if I have the required software on any other computer. It is really “plug and play”!

Hard disk failures are child’s play. Even a total PC failure, like the electrical hiccup I experienced, requires little more than a new computer and the software I was using. In an emergency, I can use another person’s computer with no risk to confidentiality.

Incidentally, my proprietary software is on the external disk.

Les Lohmann,

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