Tag: Taxation

CCCLX – The Commons, Feudalism, and Psychogeography

Property Taxes as a subject lies tangent to so many interesting areas. So let’s build a model here and include as much of it as we can.

We have to start with a country. Let’s call it Scootland, which is an island nation. It is proximate to Hambonia, Orthonesia, and Zippia–in case I need other examples.

Scootland is a Kingdom, with King Scoot on the Throne. This is basic context, we are going to turn now to the bottomest level and work up and see how that looks.

There are three kinds of land areas in Scootland. There’s the Cities, which are marked by high populations, dense construction, lots of economic activity and domestic and international trade. There’s the Rurlands (I don’t know a better term for Rural areas that is as succinct as the word City), which are marked by low, dispersed populations, agrarian economies and domestic trade. Lastly, there’s the Commons–undeveloped land that is rich in natural resources but the development of which includes certain challenges, challenges which include the development costs, clearing the land, accessing the natural resources; but some geographical challenges, like deserts or mountains or other obstacles. The Commons are available but in some cases not easy to develop.

The people of Scootland have birthright citizenship, but Scootland as a Kingdom follows a feudal model. Scootland is divided into Duchies which are administered by Dukes, Counties which are administered by Counts, and Baronies which are administered by Barons. Any political division smaller than a Barony is organized locally and follows locally defined rules. Each level of the Feudal system owes a duty of fealty to the level above, and a duty of custodial care to the subjects below. To be clear, Dukes and Counts do not have nothing to do, they each have a demesne to personally administer, but the rest of the territory is delegated to a subordinate noble.

Each Duchy includes all three types of land areas: City, Rurland, and Common, in varying proportion.

Question 1: Can we enclose the Commons?

The proposal I have seen approaches this topic a different way, so let’s provide some background. The Commons, you have heard from the oft-invoked “Tragedy of the Commons”. The Tragedy of the commons is the idea that there is unowned communal property and if everyone exploits it in self interest then the commons is degraded and unproductive for everyone involved. Enclosing the commons involves essentially ending the concept of the commons. It is no longer communal property and so can no longer be exploited for self interest. The commons becomes assigned. The proposal linked above effectuates this assignment by the use of corporate style shares. It gives the public responsibility for and custodianship of the commons, which incentivizes it’s careful use.

Scootland is a Kingdom, and the whole realm is the personal demesne of the King, delegated in part to the Duchies and other feudal hierarchs. Because the whole realm is subject to the King, there’s no need to enclose the Commons, it is already assigned–assigned to the Sovereign. The sovereign can delegate the commons to a subject for any reason, but there is no need for a special mechanism. Kristor’s proposal leverages Corporate structures, but as I pointed out to David the Barbarian in a comment on my previous article, the language of Shares implies a level of authority and control greater than mere ownership. The analogy is that if you own 51% of the shares of a company, you own the company; if you own 51% of the land area of the Kingdom, you are still subject to the Sovereign.

Question 2: How does the Sovereign provide for the needs of the Kingdom?

Taxes. There are two kinds of tax. The first tax is a Land tax, apportioned at some number of Scootbucks per Acre. It is the same for all land, regardless of type, productivity, level of improvement. The tax represents a rent–an acknowledgement that this land is delegated to me via ownership from the King. However, the Land Tax disproportionately affects the residents of the Rurlands, because their homesteads and farms are on the main a greater area than any given property in the Cities. This is offset by a flat Sales tax. The Sales tax applies the same rate to all sales transactions. This means that a property owner in a City will have one acre but build a 10 story apartment building. This owner will pay very little in Land Tax, but operating an apartment building is expensive work and so will pay proportionately more in Sales taxes on all of his transactions. A homesteader in the Rurlands will pay far more in Land Tax, but as a homesteader will be very self sufficient and need to pay very little in Sales Tax. These two taxes should be balanced against each other.

These two taxes provide a steady stream of income to the King, who can then use them to manage the budget, provide public projects, and have a standing army.

Question 3: What about local taxes from the Feudal Hierarchy?

All taxes would be collected at the most local level, and passed up the chain, each level taking a bite of the apple to fund their administrative budgets. A Baron would collect taxes directly, and pass some proportion (the majority) up to the Count, who would take some and pass some proportion (the majority) up to the Duke, who would take some and pass some proportion (the majority) up to the King. Everyone gets a cut, but always the lions share goes to the King.

Question 4: Why is a Feudal Hierarchy necessary?

Because the chain of authority is clearer and the responsibility for the deeds (or misdeeds) of government is more apparent. This is the benefit of a King, and so it makes sense that Delegations from the King would follow the same model.

What’s that word “Psychogeography”?

I read an article on Substack that introduced me to the concept and I immediately saw a connection to these ideas of Commons and Feudalism. It’ll be a bit of a walk, so bear with me. The article quotes this, in answer to the question “Why does no one ever notice [that Glasgow is a magnificent city]?”

‘Because nobody imagines living here…think of Florence, Paris, London, New York. Nobody visiting them for the first time is a stranger because he’s already visited them in paintings, novels, history books and films. But if a city hasn’t been used by an artist not even the inhabitants live there imaginatively.’

The key idea I want to take away here is “living there imaginatively”. This idea is tangent to but not the same as patriotism. The peasant, noble, and sovereign all must equally love the land and imagine themselves creating it into the best version of the country they love. The nation everyone loves lives in the collective imagination of the people; it is distinct from the nation everyone sees and the collective imagination blinds people to the reality they see. Because they see potential, even through the actual.

The Sovereign must love his country and imaginatively occupy it and see the consequences of his actions as taking reality closer to the beautiful imaginings. The Nobles and the peasants must do the same. That also ensures the effective exploitation of the commons.

So how do you incentivize this imaginative occupation of the kingdom? In one sense, by rituals and culture; in another sense by social checks and balances (social, not governmental); in a final sense by faith in God and an understanding that the beauty, goodness, and truth of the kingdom comes from God–it is borrowed, which makes us take better care of it.

Question 5: What are social checks and balances?

These are the social customs that control behavior. We’ve talked about how “politeness” precedes law, and this idea of social checks and balances taps into that. Social mores ensure stability between subjects and neighbors, but it is threats of conflict and tension that help ensure the Sovereign behaves properly and the people stay in line. The Sovereign has the advantage of authority, the people have the advantage of numbers. The Sovereign wants to keep the people happy, and if the Sovereign behaves badly then the people will be angry and want to hold the Sovereign accountable. If the people are behaving out of line then the Sovereign ought to bring a just and moderate exercise of authority to bear and restore order. It is a challenging balance but essential for an orderly society. It begins with a common understanding of social mores.

Question 6: Doesn’t all this sound pretty idealistic?

Yes, absolutely. Reality includes lots of variables and human behavior is very unpredictable. Controlling for multigenerational nobility and transfers of power, controlling for the political inclinations of humans and the quest for power, it is all very difficult. These do not represent a complete model for society, nor does it represent a proposal for our present society. The idea of all this is to explore the intersection of different ideas we have developed and to see how they work together. We aren’t developing a policy proposal, but a coherent model for how such a thing could work.

I’m going to leave this off here, because this is an expansive article that covers a lot of ground. Let me know what you think! I’m enjoying developing these thought experiments.

AMDG

(m) – Property Taxes “AHA!” Moment

The income floor of a household (or, the minimum rent for a tenant) is mortgage + property taxes. You can get away without having utilities, even though life wouldn’t be very comfortable; but you would get kicked out of the house if you don’t pay your mortgage and I am sure they would come after you if you didn’t pay your property taxes.

“Housing inequality” is the idea that houses are not available for the poorest. That is because property taxes represent an ever increasing waterline. Even a fixed rate mortgage can be outpaced by assessed value property taxes, since property taxes only go up, because our administrators view it as a bag of infinite money.

If you want to see housing costs go down overnight, and you want to see more creative solutions to “housing inequality”, then abolish the assessed-value property tax.

(Yes, there would be other consequences and other effects, it’s a complicated topic. Don’t craft policy based on a blogger’s quick-take. Fortunately I don’t think any policy-makers read this blog.)

AMDG

CCCLVIII – Zippy on Property Taxes and Currency

I was reading Zippy again, here comes trouble. I stumbled upon some comments of his in the wild on other sites and just really admire the clarity and force of his arguments. Now that I grok his points, his arguments are very frustrating to witness. He is saying things very clearly and it is literally only the blindfolds of his interlocutors that prevent them from understanding him. He was extremely patient at answering respectful questions and extremely diligent at ending the conversation the second it turned south.

So, one thing led to another and I end up at this article by Zippy that touches on Property Taxes and all my old gears started spooling up again.

This article is going to be a stab at restating Zippy’s argument in a way that I can understand so that when I try to fit my ideas of currency into it, I am speaking from an intelligible place.

“Usury is rent charged for something which does not actually exist. Thus usury is unjust: it is (…) a something-for-nothing taking from the borrower.”

“The value imputed for the property tax rests on the mere potentiality of selling the property for its assessed value. There isn’t any actual sale for actual dollars; there is merely a potential sale which does not in fact occur.”

“If it is intrinsically unjust to charge rent for something which doesn’t actually exist, it is also intrinsically unjust to tax what does not actually exist.”

These are the key premises according to Zippy.

There are some assumptions:

  • Currency as tax vouchers
    • This is the best explanation of the tax vouchers thesis I’ve seen from him so far: Currency has value as a means of exchange because it can be used to pay taxes.
      • I don’t agree with this because it feels tautological. I will revisit it in a subsequent post if I don’t touch on it here.
  • Property taxes are a tax on the potential sale.
    • I think there is an argument to be made that property tax is rent for use of sovereign land, and the assessed value is just a macguffin for calculating that. Zippy’s approach might be realist in that sense but I think it accidentally uses the wrong part of the transaction as the fulcrum for realist analysis.

Lets start digging into this with our ideas.

Currency and Taxation Revisited

I don’t like the tax vouchers idea because it is tautological. Currency has value because the sovereign accepts it as payment of taxes. It reduces the function of the sovereign to that of a tax administrator, and it presumes that currency is freely in circulation and the sovereign could accept empty cans of cola in payment but it chooses to accept greenbacks.

Currency is more complicated than that because only the sovereign can issue it, the medium of the currency itself doesn’t have to have any value whatsoever, and the exchange rate for real property changes based on the amount in circulation. Note that the issuance, valuation, and exchange of currency has nothing to do with taxation. Taxation is a separate function of the sovereign, and by no means the only function of the sovereign.

Taxation is a lawful function of the sovereign, and takes the form of a levy of property kind of like the draft is a levy of personnel. The specific mechanism of taxation can be just or unjust, but in principle taxation is allowed to the sovereign.

The easiest to understand and most just form of taxation is a direct levy. The sovereign says “I need One Billion scootbucks for some public good” and sends the bill down the chain such that every citizen of Scootland gets their portion of the billion scootbuck levy.

Progressive taxation changes the amount of the levy for each person based on their accumulated property. A person with more property has to pay a higher levy. A person with less property has to pay a lower levy.

Sales taxes are intelligible because they are a standing levy on economic activity. If taxation is “returning to Caesar that which is Caesar” then it is analogous to “pouring one out” for the boys–sacrificing the first part of a drink or a meal in homage to God or ones friends of fond memory. Sales tax is saying the first part of your economic activity should be to give a token to the Sovereign and the rest is barter between willing parties. Sales taxes are inherently progressive because people with more property have more means for transacting and so naturally transact more and pay more as a proportion of their income to the sovereign.

Income taxes are complicated, but it is similar to the Sales tax in that you are paying the first part of your economic activity to the sovereign. I receive a wage of SB100 and pay SB1 in homage to the sovereign so I take home SB99. Sales and Income taxes avoid the levy system and allow the sovereign to have a standing order of property from the people, in the form of default tokens received from economic activity.

This brings us to property taxes. Zippy’s thesis that property tax is a tax on a potential sale doesn’t make sense to me, because it’s not economic activity. It’s a tax on the property itself, as the name implies. As I suggest above, property tax could be construed as rent for use of a portion of the sovereign land. But if that were true, everyone’s property tax bill would be identical per unit of that land. What makes property taxes confusing is that they are based on the improved value of that land–improvements which the sovereign had no hand in other than to authorize via the delegated authority to acquire property that is currency. I would argue that the thing that makes property taxes unjust is the reliance on the improved value. It would be OK if property tax was merely a charge for use of property. This has negative economic consequences, sure, but at least if everyone had the same tax per acre then it would be intelligible and “equal”. Charging for the improved value penalizes improvements, and provides an economic disincentive. It is unjust the same way a progressive levy is unjust, because it penalizes people for the arbitrary reason of having property and not for the intelligible reason of using property.

Of course, the use of property does not automatically make a tax just, just that it does a better job of treating all subjects to the sovereign as equal in his paternal eyes. The benefit offered to the poor is taken away by the injustice done to the rich.

So, to quote the inimitable Zippy:

“Thoughts?”

AMDG

EDIT:

AHA! I feel very affirmed, I followed some links to the previous article and ended up at the Orthosphere. Zippy says in a comment there:

Again, precisely what is at issue is if it is possible for the sovereign to commit theft against his subjects (whether he labels it a “tax” or not), and under precisely what conditions.

Someone might contend that it is not — that all ownership is merely delegation of sovereign authority rather than a distinct authority in its own right under the natural law. But playing games with labels (“tax”) and declaring taxation licit is just a pointless nominalist rhetorical gambit which attempts to avoid what is at issue rather than addressing it.

My theory of currency is derivative of this: Currency represents future property, so it is a stand in for ownership until the unit of currency can be traded for a unit of real property. The delegated authority follows. Zippy is aware of this logical conclusion but did not follow it through to the currency used to acquire property. I don’t know why.

I’ll count this as a win though, it is nice to see I am not treading any new ground just discovering old ground that is so well worn as to be unrecognizable!

CCLXXXVI – Currency and Taxation

Let’s return to the ideas surrounding currency, sovereignty, and taxation. I believe Taxation was one of the open questions from my last thought-sprint on the topic, but I had to step away for a while to let the seeds of thought germinate and allow the spiritual focus of this blog some elbow-room. So lets see what thoughts remain after some time away!

The question at hand is what is taxation. Zippy, again, referred to currency as Tax vouchers because he didn’t have a model of currency or taxation that fit closely. For his purposes it worked, because he framed a lot of his thinking in terms of contracts and titles to real property. I feel fairly confident in my description of currency as delegated authority of the sovereign, so that influences what taxation is.

In one of my articles, I take this glancing blow at answering the question: Sacrifice (or, Worship generally) is the practice of giving back to God the things that are Gods, so taxation is giving back to Caesar the things that are Caesars. But why do we owe anything to Caesar at all?

First, we have to accept that taxation is a morally permissible act, and indeed one aspect of the sovereign duty to care for his subjects. The basic idea is that when the sovereign has some goal to be undertaken for the good of the state and his subjects–be it war, infrastructure, bureaucratic reform, anything–it requires people and resources to accomplish. A Draft is a sovereign levy of personnel; a tax is a sovereign levy of property. A tax is a sovereign levy of actual property–any currency received is provided in lieu of the property needed by the sovereign. Sometimes it might be food, so the sovereign requisitions grain. Absent grain, some amount of dollars will do. This is because dollars represent future property which can be purchased with the sovereigns authority to provide for necessities.

In a previous draft of this article, at this point I went in to talk about all the different kinds of tax systems–but I think that is a moot point. The underlying principle of taxation is sound. How taxation is implemented might be just or unjust in type, amount, or character. In democracies, taxation tends to be unjust because of the inherent flaws in absence of a true sovereign.

If we accept the premise that all ownership is derived from the Sovereign, then really all taxation is, is recalling property which was delegated to the people from the sovereign in the first place. And the people have a duty to provide it, the same way there is a duty to comply with a draft if one is implemented.

“But Scoot, what about private property? Isn’t that Natural Law?”

You’re right–private ownership is an element of natural law. But this concept of taxation doesn’t abrogate that. Private ownership is a kind of authority and that authority flows from God through the sovereign to you. That shovel is yours, you and the shovel are the King’s, the King and all his subjects are God’s. No other person can eliminate your claim on that shovel, but the King can requisition it for a higher purpose to which you owe a duty out of filial love if not obedience.

I think that is the last point which remains to be made clear, and I might write about in more detail later on, disambiguating ownership, authority, and sovereignty.

AMDG