4.3 System of Taxation; Minimum Basic Income; Incentives for and Limitations on Economic Activities  last revised/edited 3/2014

4.3.1 Historical considerations and developments
4.3.2 System of taxation; minimal basic income
4.3.3 Sales taxes, value added taxes
4.3.4 Determination of disincentive taxation and restriction of products and services
4.3.5 Property and other taxation
4.3.6 Private versus public and international property
4.3.7 Basic government responsibilities

4.3.1 Historical considerations and developments

In primitive societies, people hunted, fished, and polluted without consideration for others. Many animal species were hunted to extinction. Jared Diamond listed many large animal species that disappeared shortly after homo sapiens invaded a continent, some 40,000 years ago in New Guinea and Australia, 12,000-11,000 B.C.A. in America (Guns, Germs, and Steel, 1997). Later, herding and grazing often damaged ecosystems. Agricultural techniques were developed and used, including cutting and burning forests, without consideration of long-term impact on the environment.

Some societies learned to live with respect of nature and establishing sustainable ways of hunting, fishing, grazing, and planting, causing minimal pollution and long-term damage to ecosystems. In Western and central Europe, a new sustainable system of land use was established after much land was deforested. Some areas did not recover from the deforestation in previous centuries. In many civilizations, there were and still are communally used resources, for instance alpine meadows for summer grazing, public forests in which gathering of wild berries and mushrooms is legal. However, in much of the world, non-sustainable practices continue, and population growth combined with modern technologies lead to a threat of worldwide rapid climate changes of catastrophic proportions, changes that are far too fast for natural processes of adaptation.

Today’s economic, and legal systems assume private ownership of most tangible objects including land and mineral resources contained in the land. Use of space to send electromagnetic waves has been privatized with governments largely giving domains to broadcasters and other communications companies at nominal charges. Most people have no access to the use of land and have to buy any product that could be gathered, hunted, or cultivated in fields and gardens.

The atmosphere, rivers, lakes and the sea are not privately owned but people and their industries have been polluting them without consideration of others, animals, and future generations. Some legislations forced individuals and corporations to follow many rules on dealing with pollutants, however the disrespect for individual humans, nature, and future generations continues: it has been institutionalized.

Proposals for reducing greenhouse gases include selling “rights” to pollute in measured quantities. A much easier way of dealing with the issue is directly taxing any undesirable activities that affect others, gradually increasing taxation, until it is no longer economically feasible to pollute in a major way.

4.3.2 System of taxation; minimal basic income

The proposed system of taxation is designed to be pragmatic and easily instituted. It encourages for the civilization beneficial economic activities while discouraging excesses and deleterious activities.

Taxation supports government spending and a minimum basic incomes, designed to give all people a safety net and a humane existence without trying to level incomes and living standards throughout a country.

The main forms of taxation are sales taxes, luxury and ‘dyseconomy’ taxes, and property taxes. ‘Dyseconomy’ (dys- meaning bad, painful) refers to negative effects of economic activities, such as health hazards, pollution, green house gases, etc. Luxury and dyseconomy taxes discourage the use of certain products, services and production processes. There are no taxes on earned income.

The proposed minimum basic income which is paid to all citizens. This may be considered return of sales taxes for basic consumption and, for people with very low income, a negative income tax.

The minimum basic income is adapted to local economic conditions. It varies between regions and is adjusted periodically as prices of essential goods fluctuate. New immigrants and people who move receive a gradually decreasing portion of this basic income from the district they left while the portion from the new district of residence gradually increases. Just after the move, they may receive one half of the previous, one half of the new minimum basic income1. The minimum basic income may be issued in coupons or special accounts, limiting its use to goods and services without luxury or dyseconomy taxation. Local governments may require that individuals who are not interested in commercial work, in order to receive the basic minimum income, do some communal work and/or participate in education, unless they work on their own, e.g. taking care of children and elderly, or producing art work with some public value.

4.3.3 Sales taxes, value added taxes

Sales taxes are raised on all new consumer goods, tools for repairs and replacement parts, and some services, but not on commercial raw materials and equipment that is used in industries and agriculture. Products are not taxed another time if sold used. Repair services are not taxed, but new parts and tools that are used for repairs are.

Generally, sales taxes are paid by manufacturers (not by wholesale distributors, retailers, and consumers), or when imported into the country. If products cannot be sold by the retailer, for instance, if food is donated or spoils, retailers may qualify for refunds of already paid taxes. If products have to be sold below wholesale prices because the store is overstocked and/or the product became obsolete, the retailer may also qualify for refunds of overpaid sales taxes. Imported used goods are taxed like new goods (corresponding to their estimated value at the time they are imported).

‘Value added taxes’ (or ‘value improvement taxes’) are partial sales taxes raised on products produced or assembled from goods that were already taxed, for example restaurant food, remodeling contract work, and custom residential construction.

Sales taxes for different categories of goods and services vary greatly. For example, advertising may be highly taxed, whereas most human services may be free of taxation. Virtually all goods, including food items, are taxed at least at a basic rate to discourage waste; the minimum basic income represents in part return of taxes for basic consumption. There are basic sales taxes that may be adjusted by local governments according to government spending needs. Additional, higher, taxation is designed to influence consumption patterns and economic development.

Dyseconomy and luxury sales taxes are raised on goods and services that are judged undesirable because they are dangerous, unhealthy, polluting, damaging ecosystems, wasteful, ugly, noisy, ethically objectionable, etc. Examples include fossil fuels that cause green house gases, noisy and polluting motor boats, dangerous vehicles, unhealthy foods, and highly abusable products. Dyseconomy or luxury taxes may be raised on video games and toys that researchers consider unhealthy, requiring unethical thinking and/or excessively wasting people’s potentials to learn skills and to emotionally grow.

Luxuries which are wasteful and/or ecologically objectionable are taxed because luxuries are readily perceived to represent a standard or necessity. Lacking what appears essential leads to discontent. Particularly children whose families live materially far below average often consider poverty shameful.

4.3.4 Determination of disincentive taxation and restriction of products and services

Dyseconomy and luxury taxes are determined by democratically established committees. These may consist partly of a representative sample of the population, partly  of specialists who are appointment by elected officials. Scientific data and ethical implications are analyzed and considered.

Levels of taxation are similar in most regions; however, local governments have the right to adjust luxury and dyseconomy taxation in accordance with local values, culture and preferences. People of some areas may encourage building aerial lifts that make mountain tops accessible to handicapped persons, others may consider lifts too ugly and disturbing to natural environments. However, traditions, fads and cult activities involving tattooing, scarification and cutting, including some plastic surgeries, are considered and regulated as human rights’ issues rather than a matter of local culture. High dyseconomy and luxury taxes may be abruptly introduced, when a problem is recognized, or gradually raised, giving industries and consumers time to adapt.

Dyseconomy taxes may also take the form of pollution taxes:  equipment and factories may be directly taxed for measured pollutants, such as emission of toxic particles and green house gases, giving industries an incentive to develop cleaner products and cleaner production processes. Noise pollution is also considered. Vehicles, devices and equipment shown to be particularly polluting may be charged taxes per miles driven or hours used.

Rarely, federal and local governments may offer incentive tax relief. For example, governments may allow locally handmade musical instruments with high cultural value to be sold without sales taxes. Particularly healthy foods may be offered with less than usual or no sales taxes if used for human consumption.

Some products and services may be restricted in their distribution or outlawed. Directing any advertisements towards minors is prohibited, and advertisements are not allowed in programs and gathering places of minors. Products with significant ‘dyseconomy taxes,’ including potentially addicting products, cannot be advertised and may not be sold to minors. Unsolicited advertisements and descriptions of such products are limited; published announcements and descriptions must be objective and in small print. Distribution of entertainment products and services may be very limited or forbidden if they involve or portray severe aggression and/or sexual behaviors that include children, degradation of people, and/or sadistic acts. Even parents must not expose minors to such products. Many types of weapons and video games may be outlawed or highly restricted in their distribution.

For instance, about the today widely ignored detrimental effects of playing violent video games Leonard Sax describes in Boys Adrift, 2006, page 67ff, that, according to researchers at Yale University, playing violent video games such as Doom causes young men to have a more violent self-image and to behave more violently; and a comprehensive review of the research on video games demonstrated that playing violent video games leads directly “to aggressive behavior, aggressive cognition, aggressive affect, and cardiovascular arousal and to decreases of helping behaviors.” Furthermore, research indicates that the linkage between the video games and the boys’ antisocial behaviors is unequivocally cause-and-effect; the end result is that boys who play these games are more likely to engage in “serious, real-world types of aggression”; and the more carefully the researchers control for all the variables, the larger the effect size, suggesting that previous studies “underestimate the true magnitude of observed deleterious effects on behavior, cognition and affect.” Besides the issue of antisocial and violent behavior Sax also described the detrimental effects of many or most videogames often leading boys and young men to withdraw from the real world, real interactions, work, etc.

4.3.5 Property and other taxation

High property taxes on arable land are designed to keep the value of land virtually zero and to stop land speculation or absentee land ownership (tenant farming). Land ownership is like having an indefinite lease with special rights.

There are property taxes on certain durable goods. Houses and vehicles are taxed as these require valuable land and burden the environment.

Individuals who are not involved with an enterprise should not own stock in it: such stock ownership may be outlawed or effectively discouraged through high taxation. Foreign investments are similarly taxed or outlawed.

Large inheritances and large gifts to individuals are highly taxed, but taxation is less if heirs are partly or fully orphaned minors. Gifts to a needy kin or friend may be channeled through a charitable organization if the individual is considered qualified for charity. Large refers to the assets received by each heir rather than the total assets left by the deceased. However, heirs that are distant to the deceased have lower limits for untaxed inheritance or gifts. Local governments may work out how to determine untaxed amounts for different relationships. Needs of the receiver may also factor into formulas. Transfer of wealth through generations in wealthy families is discouraged so that children of poor and wealthy families have similar opportunities and children of wealthy families have incentives to get an education and seek meaningful work. Legislation encourages gifts to charities and distribution of estates among heirs of multiple generations. Older adult descendants may get some additional retirement assets, younger adults are helped in paying for housing and child rearing, and minors may receive savings for their early adult years.

4.3.6 Private versus public and international property

Land and the sea are not considered private property. A title to farm land essentially represents a stewardship or a permanent lease with rights to build, farm, irrigate, etc. The land owner has no property rights to ground and surface water, mineral resources, or archeological discoveries. All titles to land are subject to regulations and may not allow building in certain places, cutting trees, or draining water ways. For example, projects that significantly change ecosystems and/or may destroy the habitat of endangered species need governmental review. Irrigation rights have to be worked out by government sponsored cooperatives or regulations. Similar systems apply to fishing rights.

All building land is zoned and building permits follow communal development plans. Local plans may require that buildings are solar oriented and roofs are covered with solar panels that serve as roofing material. In metropolitan areas, area and regional governments supervise zoning and zoning restrictions.

Products of the sea and mineral resources should be considered international property, regulated and/or managed by international bodies. Important archeological discoveries may become property of the international community, administered by universities. Land use of historically and archaeologically important places is to be supervised by governments through public universities.

Whether any artistically or scientifically valuable object should be public property or publicly accessible is an issue to be addressed by committees that include representatives of universities and democratic governments. Privately collecting archeological and artistic objects should be discouraged unless a researcher or enthusiastic nonprofessional wishes to establish a private museum; privately owned samples may be catalogued and made available for research or traveling exhibitions. Profits from the sale of art objects and collector items that significantly appreciated may be highly taxed.

4.3.7 Basic government responsibilities

Efficient collection of most taxes may be organized by a federal government agency  that works closely with the central bank, but much of the revenues are to be immediately returned to local governments; most government functions are decentralized and executed by local enterprises. Formulas determine how tax income is distributed between community, area, and regional governments. These formulas consider inhabitants, by governments monitored earned income of their citizens, and other relevant factors. The federal part of tax revenues is deposited in the central federal bank which supports the government itself, minimum basic income, temporary or permanent disability, parental, retirement and other direct payments to individuals2, and federal government expenditures, including interregional infrastructure, highly specialized health care services, universities, etc.

Governments should agree on some redistribution of tax income in accordance with needs within a country, and there is redistribution by way of minimum basic incomes, distribution of assets among development banks, and disaster relief.

Federal and area governments, in coordination with universities, develop plans to improve infrastructure, protection of inhabited and natural lands, and creation or restoration of nature parks. Costs of these projects do not consider the wealth of an area and may be a form of redistribution between areas.

Local and federal governments may also issue development grants for poor areas outside the country. These may be organized, coordinated, and mediated by non-governmental organizations and/or branches of the UN. Actual execution of projects should be accomplished by local populations whenever feasible.

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1  The purpose of this proposal is to give people an incentive to move from expensive, densely populated areas, to poorer regions: *if still receiving a relatively high basic income after a move to a poor region, the living standard relatively rises for the time of transition. Vice versa, there is a significant disincentive for people to move from poor rural to most expensive metropolitan areas.
2 It is important that payments to individuals, such as maternity and parental leave, disability income, etc. are federal responsibilities. If employers have to pay for sick and parental leave, there is an incentive to not hire young women an workers with health problems; disability payments also must be federal since some non mountainous areas with good climate may attract people with chronic illnesses and disabilities.

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