It's a slightly silly example, but Nordic Folkracing has successfully used a similar rule for decades. It's supposed to be a cheap form of motor racing, but that's naturally difficult to enforce; the enforcement mechanism is that anyone has the right to buy any competitor's car for a fixed price. The equilibrium is that most competitors build the cheapest car possible to avoid the risk of being forced to sell their car, which is precisely as intended.

In the case of a Harberger copyright tax, there's an obvious equilibrium - anyone who seriously values their copyright has a strong incentive to err on the side of caution and pay taxes based on a high valuation, while lots of copyrights with negligible value are voluntarily abandoned due to the costs of both the tax and the administrative burden. The difficult cases in the middle would primarily affect speculators with large portfolios of copyrights of questionable value, which is an entirely desirable outcome. We could still drive socially desirable outcomes with very low taxation rates, because a very large proportion of copyrighted works have essentially zero commercial value.

Creating a streamlined registration, valuation and purchasing platform is entirely within the wit of man.

https://en.wikipedia.org/wiki/Folkrace

I'm pretty sure most artists will hate your guts if you force them to admit the real commercial value of their work.

There's an even simpler reason to be skeptical: They're complicated, and people don't understand complicated things, so they'll never happen.

Most people don't even correctly understand how progressive taxation works, so anything more complicated than that is dead on arrival.

I think this is right. There's the political aspect -- it's hard to convince people of something's merits if it is too complicated. There's also the democratic aspect -- people must, to the greatest extent possible, understand the core functions of their government. It's easy to ignore simplicity in the drive for efficiency.

One can go too far the other way, though. Sometimes problems are both too big to ignore and don't have known, simple, efficient, and effective solutions. It's also easy to ignore efficiency or effectiveness in a drive for simplicity, and end up either not solving the problem or solving it at too great a cost.

I think the appeal is that it sounds simple -- you say "I bought my house for $1M, and I don't want to move, so I set the value at $2M, so I have to spend $20,000/yr to keep it, or someone can give me $2M and take the house."

That's the sort of thing that sounds very unappealing to the average voter. "I have to pay property tax on substantially more than it's worth and keep raising it on a regular basis, otherwise some property speculator might make me homeless" is much easier to understand than notional efficiency benefits.

Same goes for the Harberger tax on copyright, which is basically "only people and corporations who are already rich deserve to extract market value from their creations"

It really reads like a fun thought experiment which in practice is really impractical for real-world use cases.

"I can make your life miserable and I have enough money to do so" is something that can happen in the real world and that the average person doesn't want to happen. Tthe Statute of Anne was created b/c previously printers could essentially publish any work that wasn't already in publication by another house... which is in some ways closer to a Harberger tax situation, but was widely hated by everyone who wasn't one of the publishers who monopolized access to the printing presses.

I think that drastically underestimates the (american, at least) knee jerk opposition to taxes, discomfort with novelty, and fear of having to move. Why would anyone go from a place where they pay a flat percentage of the assessed value to this new framework?

Ask what this looks like a solution to.

Scenario: Your local town assessor hates $ethnic_minority and starts assessing everything in $minority_neighborhood at 5x its former value so that they get taxed to death.

Scenario: Your local town assessor hates rich people and starts assessing everything in $wealthy_neighborhood at 5x its former value so that they get taxed to death.

Scenario: Libertarian demagogue mayor decides to eliminate income and sale taxes, and this is his proposal to fund what few public services will remain (at a very low rate). It works, but having virtually no public services remaining has predictable effects and gets him thrown out of office. Rather than rebuild the old system (and start an interminable fight over the specifics in the legislature) the decision is made by the next administration to simply adjust the rate on the new one upwards by a thousand percent.

I'm not saying these are credible scenarios, but treat this like a novel where you've written the last chapter; What is the most plausible way that a polity got from here to there? It's a more circumstantial way of thinking - "How might this occur?" than planning hypotheticals, which work more like "How will I achieve this next year in our current universe using my own actions".

For the love of market efficiency!

realistically there should just be some kind of homestead exemption for one primary residence. several states already have such a system, where you get reduced or frozen property taxes, and protection during bankruptcy.

might be that the more onerous a taxation system, the more likely society will implode.

the stamp act, the townshend act, the boston tea party, etc...

might be "tax what you want less of" could be... citizens.

The Boston Tea Party was because the British made tea cheaper which undercut tea smugglers.

If anything, product dumping (which happened to improve the lives of tea consumers, but hurt smugglers) was the motivation, not taxation. In that case.

Oh, yes, because the tax code is simple.

The tax system for the average American is, frankly, simple (or simple enough).

You pay a flat percent of most purchases as a sales tax. It varies by geography, but most people spend their day to day life in a single place (their home town).

You pay a flat percent of your home as a property tax. Most people who own property don't move, so while it varies regionally, you don't have to think about any but yours.

You pay a percent of your salary as income tax (it's technically progressive, but i don't think most Americans really think about this conceptually outside of tax filing). Your employer takes out this for you, and then once a year you fill out some forms that seem scary, but for the average American are actually somewhat straight forward. The government writes you a check back if you over paid.

Then everyone talks about all the loopholes and stuff that rich people and businesses get. Most Americans never touch 99% of any of that, and just think it's a way for the rich to get richer. Some people talk about charity tax deductions, but most people don't know how that works, but also wouldn't really benefit from this. Similarly there is the vague idea of business write-offs that no one really understands nor needs to know about.

This is an amazingly simplistic view of what actually happens when doing taxes for everyone I have ever met. The number of deductions you need to consider and figure out if you qualify for, even for someone fresh out of college, can be overwhelming. Heck, anyone with a child may has tons of "is this deductible" expenses, above and beyond any child tax credits (which they may or may not qualify for).

I'm outside the "average" nowadays, but I've been paying someone to do my taxes for me for decades because I don't have the mental bandwidth to figure out all the things that could save me money on my taxes. All the way back to when I was earning well below the poverty line (though I paid someone less back then).

Do most people actually qualify for any meaningful deductions? Does a married couple, say, two minimum wage workers, both on W2, really qualify for any meaningful deductions? The median American household earns about 60k a year in income.

Most people should probably take the standard deduction, and not try to itemize their taxes? Most deductions require you to actually spend a certain amount of money to save anything, and the standard deduction is like 30k.

There are millions of permutations of different deductions, and that makes taxes seem scary, and society talks a ton about all these different rules, but I’m pretty confident that the average W2 American stays well within the happy-path of “employer takes a percentage of your income, and you ack that in April”

In the last decade there's the rise of all the online tax prep software (that isn't run by Intuit) which just ... asks you questions.

That's it, that's the hack that solves the problem of all the weird deductions - reducing it to word problems that you can answer - there's definitely a few dozen of them though.

I don't think that "can be reduced to a questionnaire" is an effective indicator of simplicity. The IRS forms themselves are essentially word problems.

The DeepMind personality cloner just asks questions. It is definitely not simple.

It's about as simple as it can get, plain questions - "Do you own a boat or did you buy one this year?"

At some point there is irreducible complexity, but most tax questions are of this nature for all normal people - a huge portion of people could file a form 1040ez and be done with it.

Another problem in my mind is most creators could not afford the taxes for a high enough valuation (early on at least), but investment groups like blackrock could buy up all the copyrights/patents on the cheap. It also does not prevent the Disney scenario when a copyright is absurdly profitable. They could pay the tax indefinitely.

This really assumes that money is more important that creative works (or art, heaven forbid) and that less well-off creators should only exist to serve the market.

If someone just wants to create something they like, and then own what they created, a big corp or rich jerk could easily bankrupt them through the tax/force them to sell it off.

Some things don't need to exist in the context of a market and markets are often less efficient than folks seem to assume.

> Another problem in my mind is most creators could not afford the taxes for a high enough valuation

If you own 80% of something worth $1B - you have $800M. If you can't sell $2M at your preferred price to pay your taxes, then it's not worth $1B, and you wouldn't have to pay that much tax anyway.

> If you can't sell $2M at your preferred price to pay your taxes

But the whole point is that you don't _want_ to sell it. And it's entirely possible to own something that is work more than 20x (given a 5% tax rate) than you currently have in accessible cash.

For example, assume you write a story and MegaCorp decides they want to make a movie of it. Right now, they need to pay you to license it. With the Harberger tax scheme, they can force you to sell it to them; because you don't currently have the money to pay taxes on what it's worth to them.

Banks exist. Get a loan.

Well, for copyright, I always thought there should be two kinds:

1. Private — untaxed, lasts for 14 years (or until the death of the last author), goes into Public Domain. No need for registration; and,

2. Public — any work (before it's expired) an be transferred to a Public work. At that point some sort of Harberger tax scheme would kick in.

Obviously, picking a number like "14" distorts the market — works that take off after 14 years are going to be undervalued, which sucks. OTOH, the point of copyright is that the opposite distortion — free-for-all — is considered bad.

Plus valuations change over time. In 1997, a valuation of $5m for the first Harry Potter book would've seemed excessive and the author would've probably had trouble paying taxes on it. But even with that valuation, someone could've made billions by snatching it away once Pottermania started (I suppose you could let authors update value on a daily basis but that seems like an insane amount of overhead)

If you read about Harberger taxes in Heinlein, you should know that there's been a lot of work done since then; notably by Posner and Weyl in 2018, but also by Robin Hanson: https://www.overcomingbias.com/p/for-stability-rentshtml

> Pricing things is super hard

Not applicable to copyright, but perhaps something analogous would arise if there were a market for it: Real estate agents have to estimate the value of a home to the market all the time, and have some simple heuristics with a fairly reliable error rate. Use those, plus an extra percentage for whatever the additional value is to you of sentimental attachment, of not dealing with the hassle of moving, etc.

You could also buy "harberger insurance" which would cover the additional cost of rebuying your asset, in exchange for premiums that depended on how much the insurer thought you were underpricing your asset.

Real estate has facts and opinions: the size of the land and where it is; how much the land nearby sold for; last price paid for this land; condition of the buildings.

Copyright only has opinions and history, and for the vast majority of IP, the history is "nobody has ever paid for this".

But the real killer for this proposal is that it creates a new mechanism for rich people or corporations to take work away from others. If the market is not serving the needs of the people at large, the people at large will and should alter or abolish the market.

> the real killer for this proposal is that it creates a new mechanism for rich people or corporations to take work away from others.

There's two ways you could mean this: 1. A rich guy really likes your IP, for personal reasons; he's willing to pay a bunch of money for the rights to it.

2. A rich guy making business decisions thinks he can profit at someone's expense from owning large swathes of IP; he swoops in and buys it all up, to the detriment of the public.

Case #1 could absolutely happen under the harberger IP scheme. If Elon Musk decides he likes your cartoon, he can buy it at your declared price, and say it's his, and everyone will say "yes, Elon, that is yours." But Elon Musk already does that every day; he's constantly cropping the watermark off some cartoon or other and posting it on X, and everyone says "yes, Elon, that is yours." The only difference under the harberger IP scheme is that the artist actually gets his declared value for the cartoon from Elon.

Case #2 is what the harberger IP scheme is designed to facilitate, but it's not taking work away from others--it's buying the products that others have created, at the price at which the owner is willing to sell. This is what professional artists want. There's nothing here that would allow rich people or corporations to profit in some way that normal people cannot.

The most glaring problem with taxes of this form in the system we have today is that there is no way to price it that does not either price regular people out of the system or allow all regular people's assets that fall under this scheme to be purchased for (relative) peanuts by the superwealthy and megacorporations.

That is to say, the prices you'd have to set to prevent very wealthy bad actors from just buying up everything and holding everyone hostage to it are so high that regular people would never be able to sustain them. And once they have obtained all the Stuff, even if they can't change the rules to make it so they no longer have to pay, they only have to keep the Harberger prices high for a fairly short time for the rents they charge us to bleed us dry enough that we have no chance of buying any of it back.

> That is to say, the prices you'd have to set to prevent very wealthy bad actors from just buying up everything and holding everyone hostage to it are so high that regular people would never be able to sustain them.

I think you're saying that, under a harberger taxation scheme, if your asset's (let's say it's a house) fair market value is $500k, you wouldn't be able to afford the taxes if you declared its value at $750k to make sure you wouldn't have to move unless someone (e.g. Blackrock) paid you enough to deal with that hassle.

But there's no reason to expect the prices on an extra 50% above market value to be ruinous, unless the harberger tax is set to near the full rental price of the asset, e.g. harberger-enabled Georgism.

And if the harberger tax is set to the full rental price of the asset, then Blackrock cannot make tons of money by buying the asset and renting it back to you; they will have all the rental income taxed away. It would lose them money every day they held onto it, and commonly-proposed harberger amendments like requiring the buyer to pay on their initially declared value for at least a year would quickly turn their ledgers into Redrock.

>if you undervalue a thing to pay lower taxes then you risk losing it at that price. This sounds incredibly simple...

That doesn't sound so simple to me, everything has to be for sale all the time and\or you over pay on your taxes. Value your vehicle at market rate to pay the "right" taxes, anybody in the market for a vehicle can come buy yours at $1 over market rate if they want to. (It costs 2$ to drive to the closest one being sold at market rate, so it makes economic sense.) The only way to even partially defend yourself is to value your property way over market rate and pay taxes higher than the market value would suggest. Basically you have to value your stuff at market rate plus how much I would be annoyed to loose said item.

Piss off a billionaire? Guess who is never going to live indoors again.

You also have the silly situation where everything I own is worth more to me than it is worth - otherwise I'd have not bought it.

And even if my car is worth $5k, not having to sell it and buy another one (even if I can find it) is worth a premium.

It's likely that something like Harberger taxes could work in certain situations, but not normal people ones.

This is actually the solution, not the problem. You seem to be assuming that the "correct" amount of tax to pay is the amount which is based on the market value of your asset. But the correct amount of tax is actually the amount which is based on the asset's value, to you. This keeps Blackrock from swooping in and buying up everything you own, since it's only worth market value to them.

It also doesn't make the tax onerous; a revenue-neutral switch from our current taxation scheme to harberger taxes would be revenue-neutral, whether it was based on market value or personal value.

I disagree that the tax isn't onerous, but mostly from an administrative overhead perspective.

Like many people I'm taxed at source with minimal options to change my tax bill. I pay the going rate, as per the rules. Putting the obligation on me to do a bunch of work and worry about correctness would be a huge source of frustration and unhappiness.

If you're in the US, and you do the slightest bit of investing, your income tax is enormously complicated in comparison to a harberger tax, and fraught with potential penalties for gettting any of the numbers wrong. For a harberger tax, you only have to come up with 1 number, and you're the only one who decides whether that number was right or wrong.

If you mess up an income tax, it's easy to get your house taken away and auctioned, with $0 of the proceeds going to you. If you mess up a harberger tax, you get all the proceeds from the sale at a price which you literally just said you'd be happy to sell for.

The frustration and uncertainty isn't nothing; but I think if you were on the harberger system your whole life, and someone asked you if you wanted to switch away from it to the current US tax system, you'd laugh in their face.

Blackrock would definitely never swoop up a whole class of assets and then something to inflate the prices. /s

But wouldn't the billionaire only be able to do that by continually overpaying for all your assets? I would _love_ to have someone like that around. This is not even a complicated trade.

"Oh no, I'm devastated. You bought my objectively 300k house for $1M bc I evaluated it that way. Whatever shall I do?" goes and rents a nice apartment in a large complex that's valued at $500M

But that's not how it'd work in practice.

In practice the spiteful billionaire will monthly send you offers $10K over the higher of your estimate or fair market value. So you'd be moving every month and incurring all the moving costs continually, or just continually dealing with the legal dealings of such an offer.

The transaction closes and the billionaire just sells the house at a small loss. The situation is asymmetric because the billionaire never actually uses the house.

Harberger taxes seem like a spherical cow solution.

It works in abstract economic theory, but encounters serious problems when you introduce pragmatic complications like cash-flow, malicious actors, non-rational actors, asymmetric value, transaction costs, lumpy probability distributions, and other things. Fixes to those various problems can be bolted on, but the end result loses much of the theoretical advantages which made Harberger taxes appealing in the first place.