I probably sound like a broken record. But we should be considering a simple difficult to evade turnover tax on the net. The bit tax.
CYBERTAX.... After Faraday discovered the basic principle of electricity (electromagnetic induction in 1831), a sceptical politician asked him what it (electricity) was good for. Faraday responded with the following: "Sir, I do not know what it is good for. But of one thing I am quite certain, some day you will tax it." A BIT OF REASON OR A BIT RIDICULOUS ? Welcome to the cybertax home page available via the MERIT <http://www.merit.unimaas.nl> (Maastricht Economic Research Institute on Innovation and Technology) web site. The idea of taxing information was first proposed by Arthur Cordell in his 1994 Club of Rome report. It was further developed in a number of papers by Cordell and Ran T. Ide, in 1995. The idea has become of interest to individual state policy makers in the US over the past two years. In Europe, the High Level Expert Group on the Social Aspects of the Information Society has called for reflection and research on alternative taxation systems. The bit tax could be such an alternative, although its exact nature and implementation requires further research; see the Policy Report (pdf <http://meritbbs.unimaas.nl/publications/2-hleg.pdf> ). Such a tax, the group suggests, may be a feasible tool for governments to consider in an increasingly information-based world in which value is generated through systems and global networks, instead of through clearly identifiable material production and exchange. In the United States no topic typifies information overload, hype, and opinion more than Internet taxation. To help cut through the clutter, Vertex <http://www.vertexinc.com/taxcybrary20/CyberTax_Channel/taxchannel_70.html> presents the CyberTax Channel, featuring state-by-state summaries and a table of current tax laws and pending legislation. Luc Soete, chairman of the High Level Expert Group and director of MERIT and Bas ter Weel have further elaborated on the idea suggesting research and an improved understanding of the taxation issues related to electronic commerce in their paper Cybertax (published in Futures). Huub Meijers <http://www.merit.unimaas.nl/about/profile.php?id=39> has also been involved in a project for the European Commission concerning the Socio-Economic Impact of Advanced Communications (FAIR), in which he focussed on the fiscal impacts of advanced communication technologies. His final report is called Fiscal Impacts of the Growing Use of Advanced Communication Technologies and Services: a Quantitative Analysis. (pdf <http://meritbbs.unimaas.nl/Huub/work/fairwp34/ectax.pdf> ) Contents of the Cybertax Homepage . A Literature List with several interesting approaches to taxing the Internet in particular and information in general; and some interesting links to other pages. . What is really the problem? An eroding tax base! Read Luc Soete's reaction to the European Commission's Bit Tax Proposal Analysis and IBM's response to the bit tax proposal . Arguments for taxing cyberspace: One problem with tracing "intangible goods" sold via the Internet, such as an electronic newspaper or a software programme, is that the marginal cost of providing an extra unit is close to zero. Since no additional inputs are required, tax authorities can no longer cross check a firm's units of inputs with its claimed units of output. . And finally some positive and negative aspects about taxing cyberspace: Comments. For comments and further information you can mail to Bas ter Weel <mailto:[email protected]> Back to the MERIT <http://www.merit.unimaas.nl> Homepage From: [email protected] [mailto:[email protected]] On Behalf Of Keith Hudson Sent: Friday, July 20, 2012 5:20 AM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION Subject: [Futurework] The richest man in the world was an exception! The only sensible form of taxation would be a proportionate tax on the property each of us displays to the public to show the status we claim or, if a notch or two higher, the status we aspire to. Also, because all of us, with very few exceptions, voluntarily buy the most expensive clothes, or car(s) or home(s) we can afford at any particular time, it would be impossible to evade. Even those whose incomes are a total cypher to the taxation authorities but who live in grand houses in beautiful locations and drive expensive cars, and are suspected by the police of being master criminals (at least 200 in England alone, for example), are quite as normal as the rest of us in wanting to display the social status they consider themselves to disserve. Because the public as a whole defines the culture in which we live, and because each of our possessions on public display has a specific value according to the value system of that culture, then a 'public-visibility' tax is by far and away the fairest, too. It is the most 'democratic' if you wish. This form of taxation goes back a very long way. In the original so-called democracy of ancient Athens, citizens contributed taxes to build monuments or acqueducts or to go to war according to the number of slaves they possessed and be seen working the vineyards or toiling in their galley-ships and workshops. It's no longer the case. We now have a system in which the rich and powerful, using clever lawyers and accountants, drive a coach and horses through the statutory tax system which catches most of us. At some threshold income level an inverse square law applies -- the more your income, the less proportionate tax you pay. The same system is actually nonsensical at bottom because 999 people out of 1,000 don't realise that, under existing tax law, they're expected to keep paper documentation of every permanent item they buy. If they ever come to sell the item at a profit then they must also obtain further documentation and declare the balance to the authorities who will promptly apply a tax. Something similar was actually carried out in parts of Medieval Europe when the local Bishop's tax assessor would enter your house unannounced and count the ornaments on your shelves or the pots and pans in your kitchen. Today, this implied obligation is largely overlooked. Many comfortably-off people buy and sell antique furniture and silverware which can realise substantial profits with no more than a handshake and raw cash to signify the transfer. More recently, however, the taxation authorities, at least in England, have become worried by the much larger number of people who have taken to buying and selling many more modest items through eBay using PayPal. Working from home, many make quite a tidy income from this, and certainly don't reveal it for taxation purposes. Because the ingress of PayPal's currency into a person's account is via electronically recordable money on a credit or debit card there is, in theory, a way in which the authorities could get at an individual's income. But this would be an enormous task and take governments' computer systems to whole new levels of ineptitude. But what about smart new money via smartphones? This intrigues me. It's already the case that a smartphone can be used to pay for an item in a shop by merely passing it over the barcode of the item. What when smartphones will be able to transfer money between themselves? Several more primitive person-to-person transfer systems were tried 20 years ago but the trials didn't reach threshold or there was some technical inadequacy. However it's now well within reach. In this way a great deal of business could be done, and profits made, without the authorities knowing. Will the authorities clamp down on this? Will they be able to? It's doubtful. Using a deep enough level of encryption, and once started with sufficient investment capital, then there is no more likelihood of governments being able to prevent a new invisible currency coming into existence than they have at present in extinguishing the hard drugs industry (in realistic terms, never -- as long as hard drugs are illegal). It may well be the case that various mafiosa chiefs (among whom there is often mutual honour and assistance) could actually be the very individuals who would initiate a secret new currency, starting between themselves at high level and then pushing it downwards among their lesser distributors. From there, there is no reason why the new currency shouldn't percolate more widely. How could this be done? Quite simply. Start the same sort of bank that got the industrial revolution going in England. If the new secret currency was known, and trusted by its users, to be always redeemable by current orthodox money at convenient locations then it would certainly become popular in due course because it wouldn't be taxable by the authorities. Individuals would keep 'two books' as it were -- the orthodox money on which he is taxed and the additional money which, once redeemed, could be spent without the authorities knowing anything about its origins. Who could tell how large such a new currency could grow, or how much taxation would be lost? And where could the initial 100% bank reserve of orthodox money come from? The mafioso bosses would certainly be a good source. One such, recently arrested in Mexico, had $200 million in cash in his house. This would probably be insufficient investment to set aside as a secret bank's reserves. But there are plenty more master criminals in the world and, for status reasons, they'll all be contactable with one another in exactly the same way as legitimate business people compare and contrast their statuses at various events such as at the annual jamboree at Davos. There's only one way that a tax-avoidable currency system could be prevented (disincentivized) in the era of the smartphone and onwards, and this is by way of a tax on one's 'public possessions'. I recommend this as something to be thought about. The number of extremely rich people who live in ordinary houses and drive bangers, such as Warren Buffet, are very rare indeed. But, just to give another exception to the rule I'll mention John Ellerman who was, at around 1900, probably the richest man in the world for a period when he owned half the coal mines of England, hundreds of breweries, thousands of other businesses and half the commercial shipping fleet of the world. He would have given the Morgans or the Rockefellers a good run for their money. He lived even more ordinarily than Buffet, in a semi-detached house in the seaside town of Worthing. His neighbours hadn't the faintest idea that he wasn't other than a City of London clerk who took the train every day. But the Buffets and Ellermans of this world are rare birds indeed. Your local master-criminal will have one of the most attractive (and most taxable!) houses in the neighbourhood. Keith Hudson, Saltford, England http://allisstatus.wordpress.com <http://allisstatus.wordpress.com/>
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