The Platinum Tax-payer card

We people pay money.

1. We people pay money if we are forced to do so. We pay our taxes, we pay fees.
2. We people pay money for items we need. We pay for food, we pay for cloths, we pay for housing. 
3. We people pay money for items we like. We pay for a new TV, a smart phone, going to a restaurant, going on vacations.
4. We people pay money to show off our status, or to feign a status. We buy brand name clothing, brand name cars and travel to hip locations. Sometimes we do that because we enjoy the holiday destination or we like the feel of a certain shoe or the look of a certain T-shirt, but often we do it to pretend. 

Whether it's poor people, average people or rich people, there is no difference in that behavior. Except maybe, that rich people are more avaricious, because that's one ingredient to becoming rich in the first place --- apart from inheriting wealth.

Taxes

For a wealthy Person there is no immediate gain in paying taxes. They gain more if all the other citizens pay their dues and s/he does not. Someone with a lot of money has also more possibilities to avoid paying taxes. Just pay a little to an advisor who knows how to circumvent taxes and jump through loopholes to drastically reduce the large tax payment. 

People have to WANT to pay taxes

That sounds ridiculous, because who ever wants to pay taxes. I personally understand the need for me to pay taxes and the need for everyone to pay taxes. Still the deduction of the taxes from my salary hurts a bit.
Of all the reasons to pay money we only exploit the reason number 1). We are forced.

We probably will never like paying taxes for we don't get the immediate return of investment we get if we buy new shoes.

But what if we exploited reason 4)? What if paying taxes meant that people could show off their status?

The platinum tax-payer-card

The pay-more-premium based on this premise is all around us. We can see it with credit cards, we can see it with the "miles" in flying. It is nothing new to provide a bit of status which makes people feel more special to those who pay a lot with their credit cards. They get "gold member cards" or "platinum cards" and they are happy to pay more, just so that other people can see that card and can assume wealth and status. For all the "Senators" with loads of miles can just skip the long lines of common people waiting to be checked and go through the special entrance where they are patted down a little bit less humiliating and then sit down in the VIP lounge where they are invited to pay double prices just to sit in the fake leather chairs and to feel special. 

I propose to create a very visible tax payer status. Someone who pays 1 Million Euros or Dollars in taxes a year should be given the opportunity to show this to all the people around her/him. If it's more than 10 Million the sign should be more special. And for someone who paid 100 Million Dollars of taxes in his lifetime there could be the platinum tax payer card.

Invite them to a very special dinner to those who reached the status this year the first time or again. Give them a valuable pin reflecting his contributions. Provide them with incentives honoring their contribution for society.

And then ask everyone who claims to be rich: "Hey, aren't you supposed to be rich? Didn't you claim to have a status? If so, why don't you have at least gold-tax-payer-status?" and "hey look over there, he's a platinum-tax-payer. Whoooa!" Everyone can see it at the big charity event, because the bit tax payer got his pin and his card.

This --- at least that's my thinking --- provides an incentive to wealthy people to not dodge their tax payments because of peer pressure within the group of wealthy people.





The platinum tax-payer card by Peter Speckmayer is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Weakness

Weak !
(CC BY-SA 3.0 by PatriciaR , referenced here)

Nobody wants to be the weakling. Even less so the people in powerful positions. They feel comfortable with their perception that they can move initiatives, laws, policies and - of course - block them.

Powerful Positions of Big Companies

Positions hold by big multinational corporations are powerful positions, because those companies, and in some cases rich individuals, have the money to back these positions up with PR, limitless litigation, buying politicians, buying laws and whatever further unlawful extensions of their company toolbox.

These positions are most often oriented solely on the short term profits of the company and of their leaders. Hence if those positions align with human rights, sustainability, protection of biodiversity, climate change, etc. it is only because of lucky coincidence.

Interaction with Politicians

More often these big players want to preserve their unsustainable business model and trample over people and nature to maintain their way. Politicians who help to implement and preserve these positions and put them into law get rewarded with money from the companies, either to be used for their personal well being or to cement their power position in the political landscape.

Weak

These politicians will now mirror the wish list of the company which pays for them in the political arena. Being backed up by large amounts of money and a machinery which can crush everyone who dares to step in their way those politicians feel powerful. What they don't realize is, that they are actually quite weak. They are just a tiny  gear. They are used. They only walk the way of the least resistance. 

Tell them!

Maybe we should tell them more clearly. They are weaklings. The people admired in history are not those who went the easy way, but those who went the hard way. The people admired in history are not those who were focused on increasing their personal profit and personal wealth, but those who risked their personal interests to achieve freedom for the people who achieved the well being of the people and  who achieved a better protection of the nature. These people (sometimes politicians) were strong. 

The others are weaklings. They flow with the stream, Let's tell them that!

You are very welcome to leave your comments! Let me know what you think.


Weakness by Peter Speckmayer is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

Good taxes

(public domain)

Working for the society

People in some jobs do good and important things for society. And people in other jobs clearly don't. Sounds pretty obvious.

I'd like to give some examples of jobs of which I think, that they are good good for society: nurse, teacher, medic, sewerman, fireman, ...

As discussed already in a recent blog post, the amount of money people earn mostly depends on their proximity to the source. The source being the flow of money. People who work in the financial industry can deviate a lot of money into their own pockets, and because they can, they do. Nurses on the other hand---to name a specific example---are far away from the source and thus are not able to deviate money into their pockets. Hence, they have to live of the leftovers trickling down.

I consider this as a problem for society. But there are ways out.

Ways out

IMO, there are basically two solutions to this problem:

1. Regulate the wages of the people
2. Regulate the taxes people have to pay

Regulating the wages directly would deprive the employers of the possibility to provide reward those who do good work. Since I think, that rewarding good work is a necessary ingredient to get good work done, I therefor don't like the this option.

The second option is the regulation of taxes. This is already somehow implemented in progressive tax systems where the tax rate rises progressivly with the income. Whilst this provides a redistribution of some of the wealth in the society, it treats the nurse equal to the stock market broker. The broker just earns so much more, that even with a progressive taxation he still goes home with so much more.

What income taxes should depend on

My proposal is, that taxes should not only depend on the income, but as well on the type of job which is done and its value for the society. I imagine different tax rates depending on both, on the income and on the type of job. Maybe it should be even depend on the work the company does as well.

It is of course difficult to set for each type of work the value the society gains, and probably nobody wants to give that power to a small group of politicians. Especially as today's politians don't seem to be too resistant to lobbying or even being bought completely.

But there is one entity in each nation which could have the power. It's the people. I imagine one default progressive tax by for all jobs. But all citizens can then up- and down-vote for the taxes for a specific type of job in a specific salary band. The votes of all the people and those who didn't vote is then taken. The tax for a bankster earning 10 Million Euros a year could then be set to maybe 99% by the people, if they got the feeling, that banksters don't do any good for the society. On the other hand, the fireman who saves lifes or the staff of a retirement home, who earns much less might be awarded with only 10% taxes, or maybe even 0%, who knows what people think is a fair value.

I think, this could be a really fair system. It would provide an incentive for people to work in jobs where they would help the society instead of in jobs which are just there to rip off a large share of money from the financial stream for their own profit. We are the society after all, that's why we should aim for improving our all wellbeing, ... not only mine or yours or his.

Technicalities

Of course, there are some technicalities to be solved, such as which groups of jobs are there and which job belongs to which of the groups. There is as well the issue, that some bankster might try to redefine his job description from "managing a large equity fund and firing people at will" to "cooks food for the poor". Certainly this is not desired and has to be avoided.

Ideally voting would be over the internet, but it has to be ensured, that as well computer illiterate persons can have their say. How should the calculation being done? In what time-spans the tax rate should be held constant after a change; a week, a month, a year, not at all? Hence, there are technicalities, but hey, technicalities have to be solved each and every day. I don't see any reason why such a system couldn't be implemented.

(CC BY-SA)

(public domain)

You are very welcome to leave your comments! Let me know what you think.


Good taxes by Peter Speckmayer is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

Demand ! the responsibility

Money (Source: Wikipedia, public domain)

What defines how much people earn?

Why do some people earn the worth of a luxury yacht per month,
whilst others barely can buy enough food for their family?



Let's first point out some things which are *not* the reasons for earning a lot:

• working hard
• working a lot
• doing stuff which is valuable for the society

Of course, working hard and working a lot might be a necessary ingredient for some career paths where large paychecks can be picked up, but it certainly is not a garantee. There are many people which do work hard and a lot, but earn too little to live and too much to die. If doing stuff which is valuable for the society would make you earn more, nurses, teachers, social workers, etc. would earn loads of money. But they don't.

A good education backed up with a university degree will probably increase your income compared to people doing similar things as you but who don't have that degrees. Education is a factor, probably an important one to decide in which salary band you will move around. But education is not the dominating factor which determines if you are going to earn well or if you are really earning a lot.

The dominating factors

Be close to the source

What seems to be the dominating factor on income is the closeness to the source. And the source is the stream of money. People in financial "industry"---as if this kind of work had ever deserved the denomination industry---earn on average much much more than the rest of the population. It's because they are close to the stream of money and have the possibility to deviate a fraction of this stream into their pockets. But it is not just like "hey, they are doing a good job and that's why they get their big bonuses". As it has been again demonstrated in the recent crisis, when the big financial companies win, they win, and they pay the big bonuses. When they loose, they convince the politicians to pay them their losses with tax payers money. And since they were so efficient in getting the tax payers money, the bonuses are as high as ever. The mantra of investment banks etc. could be something like: "If we win, we win big and you get nothing. If we loose, you loose big because you pay our losses such that we win again". Either way, they win and you (hello fellow tax payer) and I, we loose. If these companies would have held responsible for their losses, maybe they would be a little bit more careful the next time. But since everything went so smooth for them, they will go along as they came along so far. What could have done in the mortgage crisis for instance: Instead of rescuing the banks and handing them over unlimited amounts of money, one could have used the same amount of money or even less to rescue the people with the mortgages. But of course, the mortgage payers---although many---don't have their well payed lobby groups ready to influence the decision making in politics.


Be a manager

Then there is a further important factor for earning more than others which is, having a management position. The higher up in the company's hierarchy the more money the manager gets. Finally your pockets will be filled with even more money if the company is really large (we're talking here about several thousand employees). Bosses of these companies really get paid a lot. One could suspect, that they are overpaid. Don't get me wrong. The positions of the leaders are important ones. A company without leaders would resemble more a couple of chicken in their hen house. I agree as well, that a leader should be payed better given her/his responsibilities. But there remains the obvious question: are they really able to add so much value to the company with their work, that they would earn these many million dollars per year?

It's sometimes argued, that by paying these bosses a lot one gives credit to their responsibilities. But at the end what we can observe, when it comes to responding to these responsibilities---when a boss had failed dramatically---he (it's usually a male) gets the golden parachute easing up his life. And most of the time---if he likes to---he gets soon the chance to drive another company into the abyss. And if this is not enough, another one will follow. The heavy weighing responsibility will finally be carried by the fellow workers with the small pay. In the best case their wages get decreased, but more often the workers are simply just laid off.

Behave well

To have companies which behave well , we have to make the leaders responsible for their decisions, not only the companies as a whole (e.g. pharmacy trials on Nigerian children). If an oil company destroys a region in the Niger Delta (just to provide a random example) just to get out the crude oil, or if an oil company spills large quantities of oil to the Gulf of Mexico (just another random example), who is held accountable for that? Most of the time it is no one. Maybe sometimes the company is held responsible. They then have to pay an amount of money which is just a fraction of their quarterly profit and a fraction of the profits they gained from exploiting (and destroying) this region. What happens to the executives who are responsible for the mess? They go on. Nothing happens to them.

If we want to see responsible behavior from companies, we have to hold the people in the company responsible for their decisions and actions---foremost the bosses. It's them who have the responsibility and the power to decide how the company should handle the issues and who have the wages which correspond to this responsibility. They have to be sued personally for their decisions.


Make them respond them to their responsibilities!

Once this is done reliably, the CEOs of the big multinationals will think more carefully before harming environment or people. Companies which don't rely upon destroying nature or exploiting people are in disadvantage. Once the other options are not any longer available, the playfield is leveled for the good of the society.

We ! have to demand the responsibility , because no one else will do it for us



You are very welcome to leave your comments! Let me know what you think.


Demand ! the responsibility by Peter Speckmayer is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

Protecting the earth's natural resources

CC-BY_SA 3.0, by Makemake at de.wikipedia

 

The price defines the worth - You may not like it, but it is a fact.

I'm not completely happy with the political and economical system of the world. Of course, there is not one system, there are many. But there is a dominating common denominator which is: money buys you influence, and influence in turn provides you with money.

And those who do have money (the big one) and influence (the big one) do everything to keep it that way. Unfortunately, one way to earn money is by exploiting nature at all cost. Namely at the cost of nature itself. This can be seen most prominently in the oil industry where the easy oil fields are already harvested. The higher cost in getting the oil makes oil more expensive which in turn is taken as an opportunity to raise the margins and thus the profits. Those higher profits make the exploitation of sites economically profitable which some years ago would just have been silly to exploit. Examples for these include extracting bitumen from tar sands in Alaska or drilling for oil at thousands of meters below the ocean surface close to the Brazilian coast line. Whilst drilling deep below in the sea there is a large risk of producing a hardly controllable leak which then pollutes all the sensible ecosystems in deep sea and at the coast close by excavating loads of tar sand just leaves by default already a big mess. Mind, that for the extraction of 2.9 liters of refined oil from tar sands one liter of oil energy equivalent has to be used. For easier exploitable oil fields in the past these ratio has been 25. Ten years ago you still could get 15. And now compare that to the lousy 2.9. Let's call it 3. This is just ridiculous. Another alternative for oil industry is to go where still some easy accessible oil is left, for instance in the Niger delta. There, the people in power give a damn if nature is destroyed as long as some millions are paid to their bank accounts.

And what's the cost? It's destruction of nature.

What can be done to preserve the important ecosystems all over the world? 

One could argue, that the whole political and economical system has to be changed. But is that a realistic approach? I'd say no. Changing the whole system is not easy to achieve. And if the whole system is changed history shows, that this is almost never without a boatload of violence. An often the outcome is not better than the state before the revolutionary events.And a profound change takes a lot of time.
Hence, instead of trying to go for the one big change, I'd propose to chuck down the way from now to the objective in as many small chunks as possible and do them one by one. This has the advantages, that smaller steps are easily executed and the resistance against each one of them is easier to overcome than the resistance against the one big silver bullet leap. And a further advantage is, that we might not know the best steps right away, but we will know more about which step to take right along the path.

What are the smallest steps to be taken to get a maximum of preservation of nature?

(small meaning: no immediate big system changers)

In the introduction I wrote, that the price defines the worth of something, and later I wrote, that I'd like to go for the smallest steps with the largest impacts first. The smallest steps are steps which stay within the economical and political system.

This step could be: Attach a price to natural resources.

So far, harming nature is in most cases essentially free. Of course, there are some regulations in place, but if the big Oil company comes by and wants to exploit oil somewhere, all the regulations are soon forgotten. The politicians who ditch the regulations are then getting paid the propaganda for the next election. A real win win situation, if you don't consider the people, if you don't consider *us* people.

Sparing for the moment the question of how a true value can be defined for a natural resource we can think of what would be triggered if exploiting nature would not be free and how it could be enforced. When there is a value associated to the resource and there is a price derived from the value, who should pay it? I think it's twofold: All countries should pay for the preservation of all natural resources. While all pay, more money goes to the countries with more and/or more important resources. Ideally preserving nature should provide the country with more money than if nature is destroyed as a byproduct of exploitation.

Of course, paying the country does not necessarily mean, that there is the exploitation stopped or reduced. The corrupt ruler/politician in that region still will make his private income-balance and maybe find, that the several million Dollars on his Swiss bank account stemming from the oil company is more for himself, than the many more million Dollars on the countries accounts (especially if the usage of the money for preserving nature is controlled transparently).

Hence, there has to be another contributor to the payments apart from countries (=tax payers). It's the oil companies and all the other companies who want to exploit nature. They should have to pay for each tree they cut and for each square meter of soil they dig out, contaminate, drive over or build something on. At the end it is the earth of all the people living on it. If someone would like to dig a hole in your garden, you'd probably make him pay. Why should it be different somewhere else on earth.

Making companies pay for exploiting nature adds actually no additional cost if the whole system is regarded. Because the cost for repairing nature afterwards (if it can be done) is there either way. Now, this cost is just exclusively carried by Mrs. and Mr. tax payer.

Issues

If it would be all that easy it might have been done so already. Questions which have to be tackled are:

• How can the value of a certain region be defined?
• How can the payments be agreed on world wide?
• How can the payments be enforced world wide?
• How can the preservation of nature be controlled and enforced in all the regions?

But hey, there are always issues around. Independently of what you are doing, you have to overcome some problems. These issues can be overcome as well.

What is the goal of all this?

I believe, that there are alternatives to our current dependency of fossil fuels. While these alternatives (solar energy, wind energy, biofuel [to a limited extend], etc.) nature would be preserved much better by still enabling a life style for the people which is similar to today's life style (in the western world). I even believe, that they are more convenient and cheaper for us on the long run. They are just not in place yet, because moving away from an established system (oil, coal, gas) needs always an initial additional force. And attributing the costs of environmental damage caused by the extraction and the use of fossil fuels to them would balance the cost. This would then favor the change. 

The change from exploiting nature brutally to exploiting nature sustainably will happen. There is frankly no way around this. The faster we do the transition, the better for earth and humanity.



You are very welcome to leave your comments! Let me know what you think.


Protecting the earth's natural resources by Peter Speckmayer is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

Total Surveillance for the Win!

Total surveillance! But for whom?

CC-BY-2.0 by Steve Jurvetson

People connect!

People connect! : This was always the case, but in the last decade or two the nature of the connections changed. In the pre-internet times, people could connect with their neighbors, with their fellow workers and when they traveled. All these connections were prone to break down when the distance grew larger again (i.e. when the traveler went home again). Some few pen-pals wrote large letters to give the "friend" on the other side of the world a status update, but let's face it: Only a handful of people did such things. 

Now, in the era of the internet, email, friendster, yahoo, smart phones, google, myspace, facebook, etc. people connect differently. They connect more. Not each of the connection is served with multi-page-letters every two weeks, but many people regularly get small information pieces about the others (if they mean to share them). Even if there is someone who does not write any status updates s/he will still be connected at least somehow.

Before the internet, people were like single bees. With the internet, people became to know their hive. New pattern of group (hive) behavior emerged from this. New power was given by the people to the people. You can see this in action when a poor soul accidentally invites the whole FB world for a birthday-party and---not the whole world, but still---30,000 FB-"friends" join the party, leaving the area devastated. That's for the bad, but there is also this big game changing power. Just by being connected, peoples forced their governments/regimes to leave office. Sometimes more violently, sometimes less. A huge power, isn't it?

Huge power!

And huge power asks for huge control. Not necessarily true though, but there are some big stakes "at risk". Namely those of the few persons who are in charge. While in times of pens and paper (i.e. pre-internet and pre-email and pre-FB) a politician could make secret deals with his friends and be fairly sure to keep it in-transparent enough to not get sued, it became less easy nowadays. The incriminating pile of paper could easily be stowed away in some closet or even be destroyed. The traces in the web though are not as easily being stored in a safe locker. Especially for politicians who did not grow up with all the new technology and don't grasp all the ways the information flows.
Only about maybe a decade and a half ago it was a lot of work to gather many people together. You had to phone them, write them or physically talk to them. Now you can write an email or a facebook message to hundreds or even thousands of people in literally five seconds. You can organize crowds within minutes.

This is scary to all those who---some years ago---were the only ones who had the power to make big gatherings happen. Today creating big events got more democratized. This does not mean, that those from the old school are now unable to create a big event with many people attending. No, It just means, they got serious competition. And if you are trying to preserve your power the democratized gatherings might be what you don't need---just look at the recent events in Arabia.

The temptation to impose all kinds of controls on all of these channels of information flow is big: on facebook messages, on SMS, on emails, on your internet connections, on the web sites you visit. Few politicians would have dared to put security personnel in place who search everyone entering a bus or an underground just because s/he could maybe carry around some illicit stuff. For the internet exactly this---searching everyone---seems to be a viable and justified approach for some politicians. It is NOT!

The big damage

The big damage is not done by the people. I argue, that the big damage is done by corruption in the political cast. Politicians' decisions may move millions or even billions of Euros from the tax payer to someone. One politician at the right position can make more damage to the country than 100 taxpayers will earn in their lifetime. And you bet that the decisions of politicians are not always to the benefit of the people, but often to the benefit of their family, their friends or people within the sphere of the party. Politicians are those who write laws and pass laws. Wealthy companies and individuals have the means to pay a lobbyist to get a certain law pushed, or even pay politicians directly to obtain certain voting behavior in the parliament. This produces laws which don't serve the people, but rather harm them.

Total surveillance

Here comes the total surveillance into play. Whilst politicians would like to watch each of the citizens closely for any wrongdoing or even for completely legal things which might be against the politicians personal interests, there is  a use case where surveillance would come in handy. It is the surveillance of the politicians themselves.

I'd like, that every politician (representative in the parliament and above) is obliged to:

• use only email addresses which are controlled and saved for potential prosecution.
• use only tapped phones where all calls are recorded and saved for potential prosecution.
• always suse a GPS locator to get a complete trace of his movements
• record all events and whom they are talking to.
• possibly record everything they say

Of course, these data should be kept secret by default. But in case of suspicion of corruption the files could be opened up and checked for evidence.

This targeted surveillance would reduce drastically corruption by politicians and provide citizens with laws which fit better to their needs.


The phrase which politicians usually use to justify ever stronger surveillance measures is: "If you don't have anything to hide, there should not be any problem with the imposed measures".
This sentence can be used now to justify the complete control over politicians. I think we can safely assume, that they don't have anything to hide (/irony), hence they shouldn't be worried about such drastic measures. It would be put in place just to find the few black sheep.

You are very welcome to leave your comments! Let me know what you think. 



Total surveillance for the win! by Peter Speckmayer is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

Tax Transactions!

Ditch ideology: a more technical viewpoint of taxing financial transactions

Introduction

First of all, although this is only the third line of this post, I already I lied once. It's just not possible to ditch the ideology part of questions concerning taxation. But it's still possible to add a technical viewpoint to it which is not derived from common business thinking. Not derived from common business thinking---I'm repeating that, because that's important.

Why?

[ideology warning]

The objectives of business on a global scale are skewed (You can feel, that we're here wandering around in the ideology terrain) and thus the outcome of a business thinking centered view is bound to be skewed as well. Skewed means: Whilst business should serve humans, it's humans serving business. And whilst business should provide welfare to the masses, it's the masses which through business provides the big money to some few. In developed countries, the differences between the rich and the poor are usually less dramatic, but there are still some people earning in a year what other people could not earn in a lifetime. This occurs, because people getting a lot out of the system usually are closer to defining how much they themselves and all the others should earn. Because we are greedy, the ones who have the power to give themselves a lot and others a little most of the time do so.

Taxes

It is sad to see a part of the hard-worked-for-money being taken away already before it appears on the bank account. But I admit: Taxes are necessary.

But, whilst taxes are necessary, there is a big handle in there to steer how business behaves. Taxes increase the cost of something. And this something can be chosen. Currently---especially in Europe---the one thing which is taxed the most is workforce. In a sense, a company gets punished for each of its employees. The more employees, the larger the punishment. This is of course an incentive to reduce the workforce and increase the amount of work for the remaining employees. Is that the effect we really want to achieve? Another important tax is the tax which is payed on buying things. This is not so bad. The more money you have, the more money you can/will spend, the more taxes you will pay. As long as no-one with a lot of money can avoid to pay this tax it is quite social, in a sense that those who have more pay more.  Other taxes focus on the wealth of the persons. But at the end nearly anything which can be taxed will be taxed. In this domain, politicians are very very indeed very creative.

The Aim

Before discussing what could be taxed, what should be taxed and what should rather not be taxed it is useful to define the goals which should be reached by these taxes.

The first goal of every tax is, to move a lot of money from the tax payers to the government. Many discussions are centered around the amount of money the state should take or should not take, but this is not the point I want to discuss here. And then there is the hope that the government will spend the money A) wisely and B) for the citizens. This is as well a different question.

There are some properties of taxes which I consider good ones and important ones.

• A good tax makes you pay for doing things which differ from the objectives of the society

• A good tax makes you pay for not protecting the environment (This could be seen as part of the first point if one of the societies targets is the protection of the environment)

• A good tax prevents you from getting overly rich while others get overly poor.

• You cannot escape a good tax which is designed to target you (e.g. you cannot flee from paying the tax by formally moving to a tax harbor).

I take it as given, that preserving the environment is, above being beneficial for the environment as well beneficial for the society. Hence, my favorite tax is the one on energy from non-sustainable sources (e.g. gasoline). It's easy to apply, and hits the nail right on its head. The more you damage the environment, the more you pay. Tit for tat.

My other favorite tax would be a transaction tax (also known as Tobin tax). I would not exempt anything. Plain 0.1% tax on every movement of money. While people paying their rent and buying their food wouldn't feel it at all, it would certainly hurt millisecond traders and other people who get wealthy from just moving around money from A to B as fast as they can and as often as they can. But I don't want to argue in favor of such a tax only because of my "wealthier should support the poorer" thinking. I want to bring in a more technical argument. It boils down to stability. In millisecond trading in the financial market, computer algorithms decide on buying and selling. Those algorithms are involved and complicated and are certainly non-linear. Whilst one algorithm already is complicated and its behavior is difficult to predict (although they are designed to make money, it's not what will happen all the time) there are many of those algorithms working for different companies at the same time. The authors of one algorithm don't know what features are implemented in the algorithms of the competitors although he surely tries to anticipate that. This leaves plenty of possibilities for feedback loops and thus unstable behavior. Think of one algorithm selling in panic mode, because some market markers touch the sensitive spot of the algorithm. Other algorithms recognize, that there is someone around selling like mad and start selling themselves. The market breaks down within a few trade cycles. And since all happens within milliseconds the stock index goes awry before anyone can hit a red button for full stop. There are rough cut offs in place which close the trading of the stocks of a company if the changes of value are too large, but this is just a safety net which has been put into place to save the rest of the market. This is not really a solution.

Absorb the shocks

As it works now, the stock market is kind of like a car without with a suspension consisting only of springs and missing the shock absorbers:
bad shock absorbers, broken shock absorbers

But since there are no limits on the stock markets comparable to the laws of physics which cars have to obey to (e.g. energy conservation), the algorithms can push themselves up and down mutually. Then it looks even more like that:
feed back loop

What does such a shock absorber do?

It adds friction to the system and thus reduces the energy which is stored in the springs at a bump. By removing energy from the system (dissipating the energy as heat) car will not jump up that high and will not go down so low. The car will have a better contact to the ground and the journey in the car will be more controlled and safer. The harder the shock, the more energy will be dissipated.


In my opinion, a transaction tax would be such a shock absorber, removing "energy" from the financial market system. The traders would have to think beforehand if their movement of money would be worth it---the anticipated win would have to be larger than the loss due to the tax. Some transactions would not be done and for all others a tax would be payed to the benefit of the people and the society.

As a car runs much more stable with shock absorbers, so would the stock market. Longer term investments would be favored over short term trading. Traders and their bosses would probably earn less---which I consider to be a good thing. Taxes on workforce could be reduced by the amount of taxes which is generated from a transaction tax and thus penalize less the companies employing more people (I admit, this is not very realistic).

The only losers would be those who earn a large bunch of the money in the stock (options, futures) market gamble now. They certainly would earn less (but still get stinkingly rich). Those are the ones who do control a lot of money now and everyone knows: money makes politics. Hence it is not easy to overcome their blockade. But we have to try until we get there.



You are very welcome to leave your comments! Let me know what you think.


Tax Transactions! by Peter Speckmayer is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.