OnPoint by Keith Ng

61

Why does the top 10% paying more tax? (An interactive story)

I don't understand why National's is trying to get everyone to want tax cuts. And I don't understand how he can get away with this bullshit "12% of households pay 76% of net taxes" line.

"Net taxes" is not a real thing. These are the official tax statistics published by the IRD. "Net taxes" is not among them, nor should it be, because it's estimate of a bunch of arbitrary measures, put together for entirely political ends.

So, I've put together the IRD tax statistics from 2003-12 into this interactive data visualisation, to look at whether the top 10% pay a disproportionate amount of tax, and why.

65

Budget 2014: Yeah okay.

Visualisation is here!

It's a very political budget designed to woo Labour voters - but it should, because the headline policy is actually quite good. I mean, who can complain about extending free primary health care and paid parental leave? It's a great way to spend $500m.

The big worry though, should be in Health. Ryall claims that health spending has reached "a record $15.6b". That's up about 5.4% from last year in real terms... except that $490m of that is refinancing costs (here and here). The trend for actual health spending is much more problematic - it's holding static for the forecast period, and once demographic changes and inflation is taken into account, it's actually falling by nearly 15% in real terms.

That probably won't *actually* happen. More money will be spent on health before we get to that point, but it's a reminder that health is a huge gaping maw that will swallow up a lot money - in case you were thinking about tax cuts already.

Speaking of tax cuts - jesus, are you guys for real? So I've had my head stuck in code all week (er, month), and haven't been paying attention, but it's become clear that the hints about tax cuts were dropped to remind the Gallery of their one true love: Budget items which translate directly into "How Much $$$ Will You Receive" headlines. And the bulges in the Gallery's pants were already starting to show in the Budget lock-up, which bodes poorly for the election. FFS GUYS, STOP BEING SO EASY TO MANIPULATE.

The other clear political message was that $1.5b of new spending was the *only* responsible amount to spend, and that if Labour/Greens promised more than $1.5b of spending, the terrible wrath of interest rates will fall upon us all. I'm taking this with a small pinch of salt.

Ultimately, I think this budget is fine, and National really is doing a reasonable job of managing the finances. I expressed doubts a few budgets ago them pushing the cuts to future governments, but here we are, they've actually worn the worst of the cuts. On the other hand, Bill English takes an awful lot of credit for the economic weather, and blames Labour for the same. We haven't had amazing growth because of National's amazeballs management of the economy - the economy doesn't magically sprout flowers because we hit a surplus target. We simply rebounded from EQNZ and the global economy recovered from the GFC.

More on this next week.

For bonus points: The Porcupine visualisation isn't quite ready yet, but all the data is there if you want to explore for yourself.

Sound of Thunder

My grandfather, in his teens, almost starved to death. His father did starve to death. Before my great-grandfather died, he told my grandfather to leave his two infant sisters behind. My grandfather buried him by himself, and three days later, the elder of his two sisters died. He left the younger sister with a relative, and she too starved soon after.

This is not something I particularly wanted to write about. My first memory of my grandparents' place is of a nice apartment on a leafy street in Hong Kong. That was the world I was born into. That was The World. People starved in Africa, but that's okay, because that's a different world.

My grandfather died when I was four. I wasn't told this story until I was well into my 20s. It's a strange thing to find out that the world as I knew it had barely existed for a decade when I was born. And that my family came from a different world, with experiences that I couldn't even begin to imagine.

But having understood how much the world can change in two generations, I don't understand how people can believe that their world will never change. I don't understand how people can look at the world which the IPCC describes, mouth the words that "climate change is a very serious issue" and simply assume that it would be the same world of flat whites and iPhones that their children inherits. I don't understand how people can accept science describing a world with food and water insecurity, with freak heat waves and droughts and hurricanes, and just believe that their world will continue as is.

Your children may not enjoy a world of growth and prosperity. Your grandchildren may not live in a world of safety and security. Your great-grandchildren may not have three meals a day.

Sometimes I wonder what my great-grandfather's dying thought was. He was, at one point, an engineer of sorts. He built fish (or maybe shrimp?) traps for the village. From what I gather, it was a system of dams which caught stuff when the tide went in and out. We all think like engineers in our family, so maybe he thought about what went wrong, what he could've done differently.

He understood the catastrophe that was coming when the Japanese invaded, and then when China descended into civil war. He tried to prepare. He had, from what I understand, had taro milled and stashed away for a rainy day. But he got sick, and by the time that rainy day came, the food he had stashed had spoiled or been stolen.

Maybe he thought about what he could've done differently. Or maybe his last thought was about how utterly and catastrophically he had failed his children.

That was 70 years ago, and not very far away.

68

The Big Guns: Truecrypt and Tails

Truecrypt

One of the simplest ways to encrypt stuff is with Truecrypt. It runs on Windows, Macs and Linux. It requires no installation, so you can run it off a thumbdrive. You can use it to create an encrypted container file, or to encrypt an entire drive.

Encryption containers are quite handy. When decrypted, they work just like a normal drive. But once you lock it, the whole drive disappears and becomes an encrypted file which can't be read without the password. Apart from that, it's like any other file - you can copy it wherever, put it on a USB stick, or even put it on Dropbox so that it syncs between your computers.

You can also encrypt entire drives. The whole drive will look like random data, and be unreadable without the password. Of course, anyone looking at the drive will see that it contains random data, and conclude that it must be an encrypted drive. This comes back to the problem I mentioned last time - that you can be compelled to give up your password, so what's the point of encryption?

This is where Truecrypt works its magic. You can create a hidden volume with Truecrypt - that is, create a hidden encrypted drive *inside* another encrypted drive. A drive with hidden encryption (i.e. Two layers, one hidden beneath the other) looks exactly the same as a drive with normal encryption (i.e. One layer). It's easy to prove that there is an encrypted layer, and you can be compelled to give up *a* password - but it is impossible to prove the existence of the second layer, so they can't compel you to give up the password to it.

This is, of course, some tricky shit. If you're going to go down this path, you really need to read the full documentation.

Tails

Encryption is maths. You can't hack maths, but you can hack computers. Rather than trying to break your encryption lock, it's much more likely that any adversary will just try to steal your key by compromising your computer. There's also a decent chance that your computer is compromised not because you're a target, but just because you clicked on the wrong thing at some point in the past.

One catch-all solution is to bypass your computer operating system altogether. The A in TAILS stand for "amnesiac". The whole operating system boots from the USB drive and straight onto your RAM. Nothing is saved - this means that you can click on all the viruses and trojans in the world, but when you reboot, you start with a clean system again.

Tails and Truecrypt combined is a very powerful combination. Your data is encrypted by Truecrypt, and your password only ever goes between you and the temporary operating system, which ceases to exist when you turn the computer off. The only way, in this system, to crack your data is to plant a physical bug in your computer, to install a camera over your keyboard, or to beat/coerce the password out of you.

Tails also comes packaged with Tor Browser, which uses Tor to redirect your traffic and mask where its coming from. It also comes with its own PGP tools, which you can use for encryption/decryption on the fly. Truecrypt is turned off by default, but if you want to use it, you can just type in "truecrypt" on boot (or carry the file in the drive containing Tails).

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I think that's it for now. Feel free to post links to your favourite tools in the discussion below. Keep in mind that the focus here is on practical solutions for users with minimal expertise fighting real world, resource constrained adversaries. So let's not go overboard eh.

In other news, the Lavabit story is out. And jesus. It's a depressing read. If you think the state shouldn't be omniscient, please help the cause by donating to his defence fund. If you liked my security stuff so far and/or found it useful, please do me a favour by donate to his defence fund, so I can feel a little less nauseous about where we're headed.

14

Legal Context

Before we get onto Truecrypt, Tor and Tails, let's look at the legal context for using those things. Many thanks to Steven Price and John Edwards for their help and advice on this section.

The main protection for journalists comes from s68 of the Evidence Act, which says that journalists and their employers cannot be compelled to give evidence, answer questions or produce documents which would reveal the identity of confidential sources, unless:

A judge decides that the public interest in naming the source outweighs the potential harm to the source and the public interest in keeping sources confidential

Note that s68 of the Evidence Act is quite limited:

  • It does not cover third-parties (such as cellphone or email providers), only journalists and their employers
  • It does not cover cases which doesn't involve confidential sources (though s69 provides more general protection for confidential information)

When journalistic privilege might apply, Police have to give the media outlet a reasonable opportunity to claim privilege. It is therefore much easier for investigators to target known service providers (i.e. Phone numbers and emails associated with the journalist) rather than try to seize information directly from a journalist.

 

Surveillance vs Search

Data in transit (e.g. Phone calls, internet traffic) can only be legally captured with a surveillance warrant, which can only be obtained for offences which are punishable by sentences of 7 years or more, or for offences related to restricted weapons.

Data at rest (e.g. Text messages, logs of phone calls, anything on your computer) can be obtained with a search warrant or production order, which can be obtained for any imprisonable offence.

By definition, it is only possible to retrospectively obtain data at rest. This means if an investigation is only likely to occur after a story becomes public, only data at rest will be available.

As an example, in the Bradley Ambrose (“Tea Pot Tapes”) case, even if the Police were interested in ongoing communications, the offence he was being investigated for did not qualify for a surveillance warrant; even if they could get a surveillance warrant, it would've been impossible for them to retroactively capture the period they were interested in. They were, however, able to obtain his texts and call records directly from his phone provider.

 

Norwich Pharmacal Orders

While private individuals can't get warrants, they can apply for a Norwich Pharmacal Order. These are pre-trial or interim orders against a third party, which can be used to reveal the identity of a person to allow legal action to proceed.

For example, a plaintiff might file papers against an unknown person in court, then apply for an NPO against a third party (e.g. An ISP or telco) for information that would reveal that person's identity. That third party would have a legal obligation to provide that information (or be in contempt of court), and they would not be able to claim privilege, since they would not necessarily know there was a journalist-source relationship there.

 

Encryption Passwords

Harddisk encyption such as the operating system's default encryption would protect you against hackers and thieves, but it may not help you against law enforcement.

Under s178 of the Search & Survelliance Act, anyone who:

Fails without reasonable excuse to assist a person exercising a search power under section 130(1) when requested to do so (relates to searches of computer systems or data storage devices - a person may be required to assist with access to data).

..will be committing an offence, and can face up to 3 months of imprisonment.

Nor would the right against self-incrimination help you or your source. Self-incrimination doesn't protect against search and seizure, and the Police Search Manual specifically states:

A specified person may not be required to give any information tending to incriminate themselves. However, this does not prevent you from requiring them to provide information or assistance that is reasonable and necessary to allow you to access data held in, or accessible from, a computer system or other data storage device that contains or may contain information tending to incriminate the person.

This means that if they are able to seize your computers, they'll also be able to force you to give up the password, on threat of 3 months imprisonment. Unless, somehow... more on this next time.

 

TL;DNR

  • Journalists and their employers are protected by the Evidence Act.
  • The minute data goes to a third-party (such as your ISP or telco) it's not protected.
  • Sources aren't protected.
  • Search warrants are easier to obtain than surveillance warrants.
  • Private individuals (including companies) can use Norwich Pharmacal Orders to root out sources.
  • Normal encryption doesn't help, as you can be legally compelled to give up the password.