The world's economies have a problem: work is losing value, employment is precarious, and poverty and unemployment is on the rise. This trend is set to accelerate, as technology’s ability to automate jobs out of existence expands. The tools that we use to keep our economies strong are failing, and it's hard to be hopeful for the prospects of future generations. This is all happening during a time when humanity is more productive and capable than it has ever been in the past. This is not a coincidence. Our economies have a flaw. They don't deal well with things that earn money for their owners, and the rate at which we are creating those things is accelerating.
If we want to bring prosperity back to our economies, we need a new tool, and the tool I think does the job best is what I call the Economic Participation Property Tax. This would be a tax paid by any property that is allowed to interact with, and extract value from an economy. Taxed items would include any patents, copyrighted content, or automation equipment, regardless of the location of it or it's owner. The tax could be entirely optional, but if you don't pay, you lose the ability to make money from owning the property from the economy that issued the tax.
This tax would remove part of the profit that these types of things make for their owners. How much to recapture would be a balancing act. Remove too much profit, and businesses won't have any motivation to serve your market. Remove too little, and your country suffers. Taxing foreign institutions would likely be controversial and may require altering trade deals, but without this, property taxes would be a competitive disadvantage and global competition will continue to force us to choose between driving jobs and business away, or letting our economies be drained by the wealthy. The further we progress technologically, the worse our economies will perform and the harder life will become for those who work for a living.
Instead, we should stop basing taxes on where things are and instead, base them on where they earn their money from. This would remove the motivation for companies to geographically move production to dodge taxes allowing them to instead focus on locating wherever the workforce is most appropriate. Additionally, by shifting the tax burden away from income and workers, you remove a huge obstacle to specialization, and enrich your population driving up efficiency, purchasing power, and demand.
The dynamics of this type of a tax are clearly different from any of the mechanisms we currently use to rebalance our economies, and these tools would be invaluable in solving some of the worlds most stubborn economic problems (Greece, India, China.) It should even allow third world countries to who adopt it to bring modern efficiency and persistent rapid economic growth spreading stability and prosperity to places where, even with all the advancement modern economies can bring, they have failed to thrive due to extractive foreign trade. It would dramatically change many markets, encouraging competition in places where it otherwise wouldn't exist by driving up costs for incumbent businesses. Eventually, as automation levels rise to allow it, it would also make for an appropriate mechanism for funding a basic income system.
The cost of this change would be large, and mostly borne by investors. This is inevitable, as much of the value of investments exists because of their ability to extract money from the rest of us based on ownership. The alternative is continually languishing economies which aren't particularly friendly to investors either, so while losses will be initially large, and investors cut of prosperity will remain permanently smaller, they will be getting a smaller cut of a larger healthier, less risky pie.
Instead, we should stop basing taxes on where things are and instead, base them on where they earn their money from. This would remove the motivation for companies to geographically move production to dodge taxes allowing them to instead focus on locating wherever the workforce is most appropriate. Additionally, by shifting the tax burden away from income and workers, you remove a huge obstacle to specialization, and enrich your population driving up efficiency, purchasing power, and demand.
The dynamics of this type of a tax are clearly different from any of the mechanisms we currently use to rebalance our economies, and these tools would be invaluable in solving some of the worlds most stubborn economic problems (Greece, India, China.) It should even allow third world countries to who adopt it to bring modern efficiency and persistent rapid economic growth spreading stability and prosperity to places where, even with all the advancement modern economies can bring, they have failed to thrive due to extractive foreign trade. It would dramatically change many markets, encouraging competition in places where it otherwise wouldn't exist by driving up costs for incumbent businesses. Eventually, as automation levels rise to allow it, it would also make for an appropriate mechanism for funding a basic income system.
The cost of this change would be large, and mostly borne by investors. This is inevitable, as much of the value of investments exists because of their ability to extract money from the rest of us based on ownership. The alternative is continually languishing economies which aren't particularly friendly to investors either, so while losses will be initially large, and investors cut of prosperity will remain permanently smaller, they will be getting a smaller cut of a larger healthier, less risky pie.
This change would require assessing the value of everything to be taxed, and pro-rating that based on where it earns money from, which would be a lot of work, but if we can assess and tax nearly every home in world, we can do this, and as we begin to enter the era of full automation where customers consume products without any human labor required, I feel like the question isn't if we will implement this, but how bad will we let things get before we do.
