Under the Protection of Government
Louis Post: Outlines of Louis F. Post's
Lectures,
with Illustrative Notes and Charts (1894) — Appendix: FAQ
Q54. Is it right that the owners of land should pay all the taxes for the
support of public institutions, while the owners of commodities go untaxed?
A. Yes. Public institutions increase the value of land but not of commodities.
Read notes 14 and 18. ... read the book
Nic Tideman: A Bill of Economic Rights
and Obligations
Article 3: All persons, in all generations, have equal rights to natural
opportunities, such as the use of land, natural resources, and the frequency
spectrum. Therefore Congress shall place levies on states to equalize among
states the per capita annual value of access to natural opportunities, and
to compensate for the harmful effects of activities in states on other states
and on future generations. State legislatures shall place corresponding levies
on their subdivisions.
Article 4: Congress may place levies on states
to collect from states a portion of the benefits they receive from national
defense, national systems of infrastructure, research of national significance,
or any private activity that has widespread public benefits. State legislatures
may place corresponding levies on their subdivisions.
Peter Barnes: Capitalism
3.0 — Chapter 5: Reinventing the Commons (pages 65-78)
Common wealth is like the dark matter of the economic universe — it’s
everywhere, but we don’t see it. One reason we don’t see it is
that much of it is, literally, invisible. Who can spot the air, an aquifer,
or the social trust that underlies financial markets? The more relevant reason
is our own blindness: the only economic matter we notice is the kind that
glistens with dollar signs. We ignore common wealth because it lacks price
tags and property rights.
I first began to appreciate common wealth when Working Assets launched its
socially screened money market fund. My job was to write advertisements that
spurred people to send us large sums of money. Our promise was that we’d
make this money grow, without investing in really bad companies, and send
it back — including the growth, but minus our management fee — any
time the investor requested. It struck me as quite remarkable that people
who didn’t know us from a hole in the wall would send us substantial
portions of their savings. Why, I wondered, did they trust us?
The answer, of course, was that they didn’t trust us, they trusted
the system in which we operated. They trusted that we’d prudently manage
their savings not because we’d personally earned their confidence,
but because they knew that if we didn’t, the Securities and Exchange
Commission or some district attorney would bust us. Beyond that, they trusted
that the corporations we invested in were honest in computing their incomes
and reliable in meeting their obligations. That trust, and the larger system
it’s based on, were built over generations, and we had nothing to do
with it. In short, although Working Assets provided a service people willingly
paid for, we also profited from a larger system we’d simply inherited.
I got another whiff of common wealth when Working Assets considered going
public — that is, selling stock to strangers through an initial public
offering. Our investment banker informed us that, simply by going public,
we’d increase the value of our stock by 30 percent. He called this
magic a liquidity premium. What he meant was that stock that can be sold
in a market of millions is worth more than stock that has almost no market
at all. This extra value would come not from anything we did, but from the
socially created bonus of liquidity. We’d be reaping what others sowed.
(In the end, we didn’t go public because we didn’t want to be
subjected to Wall Street’s calculus.)
Trust and liquidity, I eventually realized, are just two small rivulets
in an enormous river of common wealth that encompasses nature, community,
and culture. Nature’s gifts are all those wondrous things, living and
nonliving, that we inherit from the creation. Community includes the myriad
threads, tangible and intangible, that connect us to other humans efficiently.
Culture embodies our vast store of science, inventions, and art. ... read
the whole chapter
Peter Barnes: Capitalism
3.0 — Chapter 7: Universal Birthrights (pages 101-116)
Dividends from Common Assets
A cushion of reliable income is a wonderful thing. It can be saved for rainy
days or used to pursue happiness on sunny days. It can encourage people to
take risks, care for friends and relatives, or volunteer for community service.
For low-income families, it can pay for basic necessities.
Conversely, the absence of reliable income is a terrible thing. It heightens
anxiety and fear. It diminishes our ability to cope with crises and transitions.
It traps many families on the knife’s edge of poverty, and makes it
harder for the poor to rise.
So why don’t we, as Monopoly does, pay everyone some regular income — not
through redistribution of income, but through predistribution of common property?
One state — Alaska — already does this. As noted earlier, the
Alaska Permanent Fund uses revenue from state oil leases to invest in stocks,
bonds, and similar assets, and from those investments pays yearly dividends
to every resident. Alaska’s model can be extended to any state or nation,
whether or not they have oil. We could, for instance, have an American Permanent
Fund that pays equal dividends to long-term residents of all 50 states. The
reason is, we jointly own many valuable assets.
Recall our discussion about common property trusts. These trusts could crank
down pollution and earn money from selling ever-scarcer pollution permits.
The scarcer the permits get, the higher their prices would go. Less pollution
would equal more revenue. Over time, trillions of dollars could flow into
an American Permanent Fund.
What could we do with that common income? In Alaska the deal with oil revenue
is 75 percent to government and 25 percent to citizens. For an American Permanent
Fund, I’d favor a 50/50 split, because paying dividends to citizens
is so important. Also, when scarce ecosystems are priced above zero, the
cost of living will go up and people will need compensation; this wasn’t,
and isn’t, the case in Alaska. I’d also favor earmarking the
government’s dollars for specific public goods, rather than tossing
them into the general treasury. This not only ensures identifiable public
benefits; it also creates constituencies who’ll defend the revenue
sharing system.
Waste absorption isn’t the only common resource an American Permanent
Fund could tap. Consider also, the substantial contribution society makes
to stock market values. As noted earlier, private corporations can inflate
their value dramatically by selling shares on a regulated stock exchange.
The extra value derives from the enlarged market of investors who can now
buy the corporation’s shares. Given a total stock market valuation
of about $15 trillion, this socially created liquidity premium is worth roughly
$5 trillion.
At the moment, this $5 trillion gift flows mostly to the 5 percent of the
population that own more than half the private wealth. But if we wanted to,
we could spread it around. We could do that by charging corporations for
using the public trading system, just as investment bankers do. (For those
of you who haven’t been involved in a public stock offering, investment
bankers are like fancy doormen to a free palace. While the public charges
almost nothing to use the capital markets, investment bankers exact hefty
fees.)
The public’s fee could be in cash or stock. Let’s say we required
publicly traded companies to deposit 1 percent of their shares each year
in the American Permanent Fund for ten years — reaching a total of
10 percent of their shares. This would be our price not just for using a
regulated stock exchange, but also for all the other privileges (limited
liability, perpetual life, copyrights and patents, and so on) that we currently
bestow on private corporations for free.
In due time, the American Permanent Fund would have a diversified portfolio
worth several trillion dollars. Like its Alaskan counterpart, it would pay
equal yearly dividends to everyone. As the stock market rose and fell, so
would everyone’s dividend checks. A rising tide would lift all boats.
America would truly be an “ownership society.” ... read
the whole chapter
Peter Barnes: Capitalism
3.0 — Chapter 8: Sharing Culture (pages 117-134)
One can imagine a culture in which free concerts in parks, poets in schools
and libraries, independent theaters and filmmakers, and murals and sculptures
by local artists in public spaces thrive alongside corporate entertainment.
There’s no lack of artists who’d participate in such a culture,
or of nonartists who’d appreciate it. The problem is how to pay for
it.
What we need is a parallel economy for noncorporate art. Fortunately, models
of such an economy exist. For example, there’s the San Francisco Grants
for the Arts program, funded from a tax on hotel rooms. Since 1961, the program
has distributed over $145 million to hundreds of nonprofit cultural organizations.
It’s a prime reason the city pulses with free concerts, murals, film
festivals, and theater in the park.
Then there’s the Music Performance Trust Fund, set up in 1948. To
settle a dispute with the musicians’ union, the recording industry
agreed to pay a small royalty from recording sales into a fund supporting
live concerts in parks, schools, and other public venues. The fund was, and
continues to be, administered by an independent trustee. In 2004 it sponsored
over eleven thousand free concerts throughout the United States and Canada.
Thanks to this system, sales of corporate-owned music support the living
culture on which the recording industry ultimately depends.
These models could be scaled up. As a revenue source, consider what companies
like Disney get with their copyrights. They get ninety-five-year protection
for their movies, they get those FBI warnings on our DVDs, they get the U.S.
government extending intellectual property rights worldwide, and they get
police busting street vendors for selling “pirated” DVDs. That
kind of protection is worth big bucks. Yet the companies’ price tag
for it is exactly zero. (They do pay taxes, but so does everybody else.)
What if, instead of supplying copyright protection for free, we
charged a royalty on sales of electronically reproduced music, films, and
video games?
This could be supplemented by charging broadcasters for their exclusive licenses,
and advertisers for their invasions of our brains (see the following section).
The resulting billions could be distributed, through a National Arts Trust,
to local arts councils, which in turn would support community arts institutions
and artists. Under this system, corporations would give back to a commons
they now take from for free. More art would be live and local, and more artists
would be employed. We’d have corporate and authentic culture at the
same time. ...
The airwaves, also known as the broadcast spectrum, are a gift of nature
that modern technology has turned into a valuable resource. As a medium for
sharing information and ideas, airwaves have enormous advantages over paper
and wires. The problem in the early days was that signals often interfered
with one another. If two nearby transmitters used the same or adjacent frequencies,
a radio listener would hear two sound streams simultaneously. America’s
approach to this problem (though not Britain’s or Canada’s) was
to give free exclusive local frequencies to private broadcasters, subject
to periodic hearings and renewal.
The quid pro quo for this gift, according to the Communications Act of 1934,
was that broadcasters would serve “the public interest, convenience,
and necessity” — whatever that might mean. The airwaves themselves
would remain, in theory, public property, with the Federal Communications
Commission (again in theory) acting as trustee. ... read
the whole chapter
Peter Barnes: Capitalism
3.0 — Chapter 9: Building the Commons Sector (pages 135-154)
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 charity would not.
Contributions to normal charities would remain deductible from taxable income,
but not from taxes owed. ... read
the whole chapter
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