The first, is that the use of certain resources is not compensated for by the user. The obvious example is depletion of non-renewable natural resources. The other side of the coin is the ability to pollute without paying for the costs to the global ecology. These two are the "externalities" that many ecological economists have been talking about for the past few decades. It is true that until recently their ideas didn't get much notice, this has started to change (slightly).
The second, is the need of governments to finance operations by raising revenue. From an abstract point of view it doesn't much matter how this is accomplished. Some societies tax labor, some tax purchases, some tax profits, some tax fixed assets (like real estate), most tax all of them to some degree. If taxes on a sector make the costs go up then what that sector will demand in terms of fees gets increased to compensate.
To make a somewhat artificial example: taxes on earnings go up, making it harder for workers to support themselves, so they demand high wages. The higher wages cause the firms to raise prices thus putting the final cost on consumers. If instead the taxes on labor were kept low and the tax was imposed as a VAT then the effect on the final price would be the same.
Third, taxes are used to control social policy. Governments believe that it is easier to influence behavior via the pocketbook then via other means. So if it felt wise to discourage alcohol or cigarette use then put a tax on them. If it is felt desirable to increase drilling off shore then give a tax credit for the activity. This technique is open to abuse and is frequently abused as a result. The changes to the tax laws are easily buried in arcane legislation and the quid pro quos to the legislators are hard to discover. Ideally in a democracy such special purpose policies wouldn't exist, but no one even contemplates such a world.
Right now the tax policies which favor the super wealthy are causing a distortion in social policies and this has led to a revival of discussions of Populism. But, correcting the most outrageous offenses won't solve the underlying problems of society. As long as the goals of industrialized society are focused on a capitalist/consumerist model taxes will continue to be used for social policy purposes. Policies not Politics ---- Daily Landscape
I will respond to your points in the order you raise them.
Regarding pollution, the earth has some carrying capacity for absorbing pollution. If I pollute the air in pursuit of my own gain I exercise a privilege in that I use the air in a manner that prohibits you from using it (or requires you to use it in a diminished capacity). That is a privilege of limited duration and payment should go to the injured parties for the duration of the loss. For non-renewables, such as oil. the privilege is of unlimited duration. Admitedly, valuation of this privilege is difficult because the wronged parties are not here to bargain for themselves, but I will go out on a limb for my great-grandchildren and say that oil is grotesquely underpriced. If the worst case scenarios about global warming are correct then our generation is executing the ultimate privilege by denying life completely to all future generations beyond the not too distant future.
Regarding your second point, I note that the very existence of government is a privilege. Through the bargain of government we empower the occupiers of government privileges to exercise great power over our lives. We have every right to demand reciprocity in the form of periodic elections, and standards of behavior different from the citizens at large. Regarding your revenue point:
...From an abstract point of view it doesn't much matter how this is accomplished....
I could not disagree more completely. Taxes on privileges do not make the "sector prices go up." The privilege holder will not be able to charge more. This is a crucial point regarding privileges. Charging for privileges in no way alters any supply/demand relationship. That is precisely the economic efficiency argument for taxing privileges. The moral argument is that government must not favor some at the expense of others. Part of the beauty of a grand tax shift onto privileges is that the most economically efficient policy is also the most moral. One of the most vile poisons (of the many vile poisons) spewed by the right is the notion that economic justice and equality must be sacrificed for economic efficiency. It is one of the most brutal lies ever successfully propogated. It is one of my personal goals in life to crush it.
Your third paragraph touches on an important point that would be worthy of a complete diary. Some taxes such as income taxes and VAT do (if properly structured) tend to collect considerable privilege income but they do so quite ineffectively. The original American income tax was, for practical purposes, a tax on economic rent. But it has been debased over time such that is is now becoming a tax on wages. But to your point there is a complex interplay in how taxes are shifted, but only when they fall on labor or productive capital (not privileges).
Regarding your last point, my view is that "sin" taxes fit very neatly within the framework of privilege. If someone is to smoke then they are depriving others of use of the adjacent air. Payment is in order. In a civilized society people have to take care of each other when sick, and smokers are going to get sick with greater frequency than non-smokers with grinding mathematical certainty. Paymemt is in order.
Drinking often involves some suspension of normal civic/social responsibilities, which is to say that others (non-drinkers) pick up the slack. Reciprocal payment is in order in proportion to the level of loss in responsibility. If we all get drunk together we have a uniquely burdensome loss of responsibility that reasonably might require an even greater reciprocal charge to pay for the predictable costs incurred.
(I actually do like to party-hearty despite the dry description above....just sayin')
If you want to relly put the super rich (allmost all from privilege) on their heels, just start taxing their privileges directly. At that point you will have their undivided attention.
This is the case with privilege, you are mixing together special rights which are granted undemocratically with simple use.
In the case of government (at least a democratic one) the presumption is that it acts on behalf of the people (or at least a majority). That this turns out not to be entirely true in practice does not change the theoretical ideal. Now if you want to argue that this ideal can never be realized in practice so that we really should adopt another form of government I'm open to fresh ideas.
As to using taxes to control unwanted behavior, there is nothing special about alcohol or tobacco. The fact that they produce bad side effects is incidental. We could just as easily impose a meat tax since it is associated with heart disease and requires an excessive amount of resources to produce compared to eating plant materials ourselves. That one is taxed and not the other is a function of our Puritanical social underpinnings.
I'm afraid that much of your objection to privilege is based upon a similar moral stance. This is admirable, and I agree with it, but it can't be the basis for public policy - the moral axioms differ from society to society. We need a more "objective" measure to decide when someone is getting more of their fair share of the pie.
John Rawls tried to do this with regard to legal standing. After a lifetime of work his ideas really just boil down to the golden rule, not a bad principle, but not very original.
Many societies have had little in the way of privilege. Look at the subsistence tribal societies for example. People owned little more than their clothing, tools and shelter. The concept of having an excess to hoard made no sense and the land was not something that was "owned" at all.
I'm going to go out on a limb and say the reason for the rise of greed is because people aren't assured that they will be taken care of by society. That is the social services for health care, child care and old age care are not assured. If they were would there be any need to save for retirement?
Sorry to ramble on, but what needs to be clarified is: is this instance of government just failing us or is the basic organization inherently defective? Policies not Politics ---- Daily Landscape
is this instance of government just failing us or is the basic organization inherently defective?
It would be extremely worthwhile at some point to bring together all the discussions we have had on Open Capital, Cooperatives, Self-Organizing Systems, fiat money, privilege, Peak Oil (even copyright!) etc etc into some kind of platform for change. All these regularly occuring subjects seem to me, at least, closely connected windows looking in at the same problems. You can't be me, I'm taken
the most economically efficient policy is also the most moral
This is a close analogy to the proposition I am putting forward in relation to the new partnership-based new legal and financial structure or "enterprise model" (based upon new legal "wrappers" such as UK LLP's and US LLC's) now emerging.
It is no coincidence that these structures are Islamically sound at a very deep level.
I believe that like all emergent phenomena this "Open" Corporate is emerging (the number of UK LLP's has more than doubled in 2 years) because it is superior to existing company forms and therefore those enterprises which do not use it will be at a disadvantage to those who do.
The generic use of such non-hierarchical and networked structures will IMHO lead to new possibilities in terms of risk and revenue sharing which put into practice new "privilege rental" capture possibilities.
Land value rental may come about since the "Land Partnership" model I advocate comprises BOTH an optimal form of Equity Release AND an optimal form of REIT and it is simple for a Community then to agree to include a land rental element in addition to the rental of the capital invested in the land.
See
http://www.opencapital.net/papers/Zakcoownership.doc
Corporate taxation of "profits" becomes irrelevant because LLC's and LLP's are tax transparent or "pass through". But I would add that the privilege of Limitation of Liability should nevertheless be taxed by applying a levy on GROSS corporate income at the clearing level.
This in turn becomes possible because generic clearing - not requiring banks as credit/payment intermediaries - allows simple application of a levy or tithe at the clearing level.
So we collect a $20/barrel levy on all oil sales, pool it and use it to invest in renewables globally with an "energy dividend" to all.
And so on.
It is the existence of new consensual "Open Corporate" legal protocols which enable everything else, I believe.
But to get this message across, the right language - the "narrative" - is crucial, and here I like to refer to "asset-based" financing (through investment via non-toxic legal wrappers - NOT corporations) as an alternative to "deficit-based" but "asset-backed" (eg mortgages).
Sign me up with this idea but I think you are missing a "0". Americans need $250/barrel oil to get through our skulls that we have to change. I know my people.
Maybe after Bush bombs Iran in April... "It's the statue, man, The Statue."
