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If IP Is Property, Where Is the Property Tax?
nweaver writes "In a response to the LA Times editorial on copyright which we discussed a week ago, the paper published a response arguing: 'If Intellectual Property is actually property, why isn't it covered by a property tax?' If copyright maintenance involved paying a fee and registration, this would keep Mickey Mouse safely protected by copyright, while ensuring that works that are no longer economically relevant to the copyright holder pass into the public domain, where the residual social value can serve the real purpose of copyright: to enhance the progress of science and useful arts. Disclaimer: the author is my father."
There are fees associated with maintaining patents (due at 3.5, 7.5, and 11.5 years), and failure to pay them on schedule results in cancellation of the patent.
Ad valorem taxes, anyone?
http://en.wikipedia.org/wiki/Ad_valorem/
Please, if you're going to use the ideas of another person, at least credit them for it. In this case, you're quoting Robert Heinlein's idea for property tax in his novel "The Number of the Beast" - specifically, when the group of bold adventurers go to a alternate universe where land tax was assessed in that manner.
If I recall correctly, it was put thus:
The owner appraises their own property, and pays tax on that value. However, anyone can come along and against the owners wishes buy the property - at which point the owner has two options: sell, or raise their valuation of the property to a price so high that nobody would want to buy it. However if they did this, they would be required to pay five years back taxes of the new, higher value.
One of the characters in the book (Zeb? I can't recall...) when it was pointed out to him that this was unfair, replied with "if some fool wants 5 hectares of useless, hilly land, we'll simply take his money and buy elsewhere..."
I've lived in states where property taxes were aggressively enforced by municipalities on such varied things as artwork, out-of-state or un-plated vehicles (even if it was never registered or driven on public roads), even office furniture and equipment. In the U.S., sometimes they're administered -- and therefore vary -- at the state level, in other areas it's devolved down to the city/town/county level.
Some states (Florida that I'm aware of specifically) had/have an "intangible personal property" tax, specifically on things like stocks, bonds, bearer notes, money market funds, pretty much anything that's worth anything. Florida's was recently repealed, but it's not like the concept is totally foreign or anything.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
I'm going to ignore patent here. Intellectual property is not all of one kind. I mean here mostly copyright and maybe also trademark, since these are about creativity, not discovery. But the issues are so different that raising them together is confusing.
My first thoughts on this matter went to the nature of real property that allows us to tax it. We don't tax the ownership of a refrigerator. Why should they be different. I have to assume it's that no one is busy making more of it, and so the mere holding of it is a tax on others, who might like to use it. In that sense, if real estate tax can be justified (and I might later argue that it cannot), then the justification is that you're taking up a critical resource from the get go.
In fact, though, copyright is not of that kind. If Gone With The Wind or Cinderella were not created by their respective authors, then those works are just simply not there at all. (You can make whatever claims about a million monkeys you want, but we're not taking more monkeys, we're slaughtering them, and I don't think they'll have the time.) New works of original authorship don't take up space. They are made out of nowhere and every new such work potentially enriches us. So taxing them would be like taxing someone for making new land. If someone could do that (on demand, I mean, not the way we're doing it in the artic with all that melting), I would think twice about taxing it. The making of new land seems a useful skill in a world that is ever more crowded.
While copyrights on newly authored works don't hurt anyone, there is ultimately a cost to the world of allowing one person to continue to hold copyright ownership beyond a reasonable limit, since at some point the world needs to build on what others do.
But the notion that someone should have to pay from the first day of creation for the right to have created that work is the most horrible and regressive tax I could imagine. It would create a ticking clock that would limit the bargaining power of new authors in dealing with publishers, who could afford to outlast the author and just publish the work when it fell into the public domain for non-payment. It would favor the big guy over the little guy. None of that is good.
The middle ground that I might consider would be a tax on long-term extension of copyright. Right now, we continue to extend the copyright term in order to accomplish that. But perhaps a middle ground that says that if Disney wants to extend its rights on a certain work, then it should have to pay heavily for that beyond the reasonable duration of 50 or so years that all authors might reasonably claim to allow them to pursue the use of their works within their own lifetime.
I might even make the claim that real property could use the same protection. If I work my lifetime to buy a property and then at the end of my lifetime lose my job and can't pay the taxes to sustain my ownership, why should I end up with an untaxed refrigerator which I can keep because it's my property, but not a house I can keep? Where is the incentive to work for something that can be taxed away as soon as you own it? I can totally understand a tax on the estate, since my heirs didn't earn the money, and a reasonable argument might be made that they should make their own fortunes. Passing along money to help a young person get started in life, an impoverished person break even in life, or an aging person retire comfortably is one thing, but ensuring that a dynastic fortune consolidates the power for one's progeny is another.
In a sense, the continued use by Disney of intellectual property is the same kind of moral issue. The Disney of today is enriched, perhaps unfairly, by the work of prior generations. Taxing that seems reasonable in a way that is different than taxing you or me fo
Kent M Pitman
Philosopher, Technologist, Writer
Repeat after me: you don't have to declare the "true value of your assets", which is an entirely imaginary notion, except in the tax year when you have *realized* capital gains *by selling the asset*. Lets say that four friends and I get together to form the Pasty-Faced White Guy Boy Band. We write our single "I Cheated On You But Now I'm Sorry Please Take Me Back". It costs us nothing to write, so the cost basis on that song's copyright and associated IP is zero. We perform it for a while, and release it to the Internets, to the adoration of millions of spurned women everywhere. I receive an offer from Big Record Company to purchase the rights to the song, in perpetuity, for $1 million dollars. I reject it.
Where do I put the million dollars on my tax return? Nowhere. No income means no income tax.
Now, had I accepted the offer, I would have realized capital gains of $1 million (probably split five ways), less the $0 cost basis in ICOYBNISPTMB. That would require me paying taxes -- likely at the long term capital gains rate, not as income, in the most plausible reading of my imaginary scenario.
Now, let's say that I reject the $1 million offer, and then subsequently sell to Timmy The Two Bit for $50,000 to prevent the bank from kicking me out of my house. In this case, despite the fact that you might feel my song is still worth $1 million, I would be assessed taxes on only $50,000 of capital gains. Even if the song made me a million in sales in the month before the sale, it would still be *fairly valued* at $50,000 after the sale actually takes place, assuming I am not engaging in tax fraud outside the scope of this hypothetical (for example, by doing a transaction which is not at "arms length" -- perhaps selling to a confederate with the promise to buy back in the next tax year and benefit somehow from a stepped up cost basis).
Help poke pirates in the eyepatch, arr.