Sunday, April 27, 2008

Future of taxes

The advent of a post-scarcity material goods economy could revolutionize more than just material goods.

Taxes based on income, consumption (sales tax) and property would make little sense in a world where people have a minimal need to work and can build and recycle buildings and objects at will, perhaps including land.

Need for taxes does not evaporate
An alternative means of taxation would need to be established. The amount and type of public services demanded would be shifting too in this future environment, but it is likely that some degree of public services would be needed at least in the short term which would require tax revenues.

Basis for taxation is a fairly easily resolved problem, at least in terms of methodology although perhaps not implementation. The easiest tax solution would be to return to the poll tax, a fixed fee for each adult. Of course this might only be a stopgap measure until any possibility of multiple electronic copies and physical embodiments of people/intelligences became real.

World financial system
A big portion of the world financial system is also collateral-based. There are $14.0 trillion in outstanding mortgages in the U.S. (Sep 2007) perhaps lower by a half trillion per the subprime crisis, about the same as the annual $13.9 trillion GDP (2007), but less than the $25 trillion NYSE market capitalization (2006).

The market capitalization of listed companies is based on perceptions of their future prospects. Companies will have been in on the shift and indeed creating the shift to a post-scarcity material goods economy and are likely to have been adjusting along the way. The mortgage industry, 80% of whose value depends on houses and buildings as collateral (20% on land values) would have to change quite a bit.

Future strategies for the mortgage industry
Once the mortgage industry even starts to suspect a possible endgame of real estate structures being worthless since they can be generated at will, it should start bringing loan terms way in, no more long-dated 30 year mortgages but much shorter periods of 5 or 10 years with periodic re-evaluations and other reset stipulations.

The visionaries will short or get out of the mortgage business and mortgage stocks and bonds, but there does not seem to be a way out of 80-100% unrecoverable value slippage. During the period of anticipating the post-scarcity material goods economy, the value of houses and existing mortgages could decrease, requiring revaluations by mortgage companies and realistically some sort of government assistance or bailout. It would not make sense to hold borrowers nationwide responsible for loans whose values have dramatically declined. The housing futures market would grow in use as a tool for all parties, homeowners, borrowers, lenders and speculators, to manage their exposure.


samantha said...

I fail to see why a post-scarcity world would need taxes. What "services" would be of necessity exclusively provided by governments? The people would lack for nothing materially. There is no obvious need for a government "safety net".

What would this tax be denominated in? I doubt that fiat currency will survive post-scarcity. I also doubt the State itself will survive when the people can effectively tell it to take a hike and need nothing from it that I see.

Of course I question whether "public services" even today are really a "service" or mostly a horrendously expensive and inefficient way to provide services that could be provided as well or better privately in cases they are actually desired by their purported beneficiaries.

LaBlogga said...

Hi Samantha,

Thanks for the comment. There may be any range of public services provided at both the local community level and the nation state/supranational level. Some examples are security (physical, electronic; self and property-related), authentication, record-keeping, IP registration, policy and general coordination.

Currency or some other fungible means of exchange will probably persist and presumably be the denomination of any taxes or public monies.

There is more regarding "Why Nothing Really Changes in a Post-Scarcity Economy" here.

Meanwhile, we can enjoy our current (relatively cheaply priced compared to many countries) public disservices.