Some commons trusts will generate income from the sale of usage permits.
Many others will need income to acquire property rights, restore degraded
habitat, or give children start-up capital. It’s therefore essential
to encourage a multiplicity of revenue sources. The best way to do this is
through a federal commons tax credit.
When I was in the solar energy business during the 1970s, our customers
benefited from a combination of federal and state solar tax credits. As I
frequently explained then, a tax credit isn’t the same as a tax deduction — it’s
bigger. A deduction is subtracted from the amount of income subject to tax;
if your marginal tax rate is 30 percent, a tax deduction saves you thirty
cents on the dollar. By contrast, a tax credit is subtracted from the amount
of taxes you pay, regardless of your tax bracket. If you owe taxes, it always
saves you one hundred cents on the dollar.
The premise behind a commons tax credit is that wealthy Americans owe more
to the commons than they currently pay to the government in taxes. That being
so, a commons tax credit would work like this. The federal government would
raise the uppermost tax bracket by a few percentage points. At the
same time, it would give affected taxpayers a choice: pay the extra money
to the government,
or contribute it to one or more qualified commons trusts. If people do the
latter, they get a 100 percent tax credit, thereby avoiding additional taxes.
The message to the wealthy thus is: You have to give back more. Whether you
give it to the IRS or directly to the commons is up to you. If you want to
eliminate the government middleman, that’s fine.
What qualifies as a commons trust? It’s a trust that either benefits
all citizens more or less equally or collects money to restore an endangered
commons. Social Security, the American Permanent Fund, the Children’s
Opportunity Trust, and most land and watershed
trusts, would qualify. By contrast, a normal
Contributions to normal charities would remain deductible from taxable income,
but not from taxes owed. ... read
the whole chapter