Common Ownership Self-Assessed Tax

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Julien Carbonnell:

"COST "is a new property system, in which every citizen and especially corporation would self-assess the value of assets they possess, pay a roughly 7% tax on these values and be required to sell the assets to anyone willing to purchase them at this self-assessed price (no speculation, no auction nor overbid).

This tax would raise enough revenue to eliminate other taxes on capital (such as on inheritance, corporations, capital gains, property and so forth) significantly reduce income taxes and pay down much of public debt, while at the same time funding a large social dividend or funding critical public infrastructure. Beyond these economic benefits, a COST would create a healthier relationship to property, teaching us to detach from our material possessions and stop trying to exploit one another in commercial transactions, instead seeking to increase the value of common wealth and strengthening the bonds of community. All major private wealth (every factory, patent or plot of land) would be constantly for sale at a fair price and most of the value of these properties would be paid out equally to all citizens as a social dividend. With most value of assets accruing to the public, every asset would become cheaper to (partially) own, democratizing the control of assets and offering everyone new opportunities to start businesses or households."



Author n.a.:

"We refer to this tax as a “common ownership self- assessed tax” (COST) on wealth. The COST on wealth is also the cost of (holding) wealth. “Common ownership” refers to the way in which the tax modifies traditional private property. The two most important “sticks” in the bundle of rights that compose private property are the “right to use” and the “right to exclude.”

With a COST, both rights are partly transferred from the possessor to the public at large.

First, take the right to use. In the popular image of private property, all benefits from use accrue to the owner. Under a COST, on the other hand, a fraction of this use value is revealed and transferred to the public through the tax; the higher the tax, the greater the fraction of use value transferred.

Second, and of far greater significance, consider the right to exclude. In the private property system, the owner keeps her property — which means keeping other people off her property—until she voluntarily sells it or gives it away (with some marginal exceptions). With a COST, the “owner” does not enjoy this right to exclude vis- à- vis anyone who offers to buy at the self- assessed price. In fact, any member of the public may exclude the current owner in exchange for this price. The lower the price, therefore, the greater is the extent to which the exclusion right is held by the public at large rather than the “owner.” The price falls as the tax rises, so raising the COST also gradually shifts the exclusion right to the public at large, any member of whom can pay a price to claim the property. We can conceptualize a COST as sharing ownership between society and the possessor. Possessors become lessees from society. Their lease terminates when a higher- value user appears, whereupon the lease is automatically transferred to that user. Yet this is not central planning. The government does not set prices, allocate resources, or assign people jobs. Indeed, as we will argue below, the government’s role would be more limited than it is today because there would be no need for discretionary interventions, like eminent domain or public ownership of property in the conventional sense, to solve holdout and other monopoly-related problems. There would also be much less need for distortionary and discretionary government taxes to raise revenue for the state. Furthermore, control of everything would be radically decentralized; a COST thus combines extreme decentralization of power with partial socialization of ownership, showing that they are, perhaps surprisingly, two sides of the same coin. Far from creating a form of centralized planning, the COST creates a new kind of market—a flexible market in uses, to replace the old market based on permanent ownership."