The biggest obstacle to Basic Income is figuring out where the money would come from. Even modest Basic-Income schemes in nations like China, India, and the United States would cost trillions of dollars.
A possible solution would be a tax on the data generated, collected, and used by companies like Alphabet (NASDAQ: GOOG), Facebook (NASDAQ: FB), Microsoft (NASDAQ: MSFT), Oracle (NYSE: ORC), Airbnb, Didi, Blablacar, Lyft, Uber, PayPal (NASDAQ: PYPL), Verizon (NYSE: VZ), Visa (NYSE: V), MasterCard (NYSE: MA), Palantir, Amazon (NASDAQ: AMZN), Ant Financial, and Tencent Holdings (OTC: TCEHY). The suggestion was made by Steve Fuller; a professor at Warwick University, Futurism reported.
“We could hold Google and Facebook and all those big multinationals accountable; we could make sure that people; like those who are currently ‘voluntarily’ contributing their data to pump up companies’ profits are given something that is adequate to support their livelihoods in exchange,” Fuller said.
Fuller’s idea makes a lot of sense because most of those companies’ values come from the data they collect and disseminate. Figuring out how to charge a tax on that data will be difficult because much of its value is theoretical.
How do We Tax Data?
A potential solution would be to charge a flat fee on all internet transactions. U.S. Senator Bernie Sanders (I-Vermont) proposed something similar in the form of a tax on all securities sales that would finance college tuition for everybody.
The problem with that is the corporations would simply pass the tax onto their customers by increasing the prices they charge. This is why politicians love sales taxes because average people end up paying them without realizing it.
Other ideas might be to tax the companies’ revenue or income directly. An even better idea might be to tax advertising. Digital advertising is already a $220 billion a year industry globally, Adbank estimated.
Criminals have already placed an “indirect tax” on digital advertising with various kinds of fraud, Adbank pointed out. Adbank estimates that over the next 10 years, fraudsters will rake in $50 billion from digital-advertising scams.
That would be enough money to end global hunger, and end homelessness in the United States, Adbank calculated. It would take $30 billion to end world hunger, the United Nations estimated. Elimination of homelessness in the United States would cost $20 billion The New York Times claimed.
How would the Data or Advertising Tax be collected?
Advertising and data taxes raise all manner of challenges, the biggest of which is the collection. Evasion would be fairly easy, especially for gigantic corporations like Alphabet (NASDAQ: GOOGL).
A potential solution would be to use blockchain and cryptocurrency. An idea that comes to mind would be an artificial intelligence (AI) that automatically mines (generates) a unit of a cryptocurrency; such as Ethereum, every time an ad or unit of data is created. The altcoin would be automatically deposited into the government treasury or the wealth fund.
This would be a hard sell to politicians because manipulating the tax code is one of their favorite means of shaking down business for campaign donations. Corporations might go along with such a scheme; because it can eliminate the need to spend vast amounts of money on tax lawyers, lobbyists, and accountants.
The government would benefit from the elimination of expensive and ineffective tax-collection bureaucracies. The bureaucrats, tax collectors, tax attorneys, tax preparers, accountants, and others who would lose their lucrative and cushy jobs will put up a huge fight to stop such reforms. So setting up such a system will be difficult and perhaps bloody.
Is a Stock Tax the Answer?
Another alternative would be an “equity tax,” which would work like this: In lieu of paying taxes, corporations would give a percentage of stock or tokens to a government-administered wealth fund. The proceeds of the wealth fund would go to finance the basic income and government services.
Norway has a wealth fund based on oil money that is worth $1 trillion. The United States should consider establishing one based on the proceeds of Silicon Valley and Wall Street. The fund can be kept honest by having an AI manage it. A number of AI-managed funds such as Numerai are already in existence.
Potential wealth can be tapped by requiring every company holding an initial public offering (IPO); or initial cryptocurrency offering (ICO), to give 10% of the stock or tokens issued to the wealth fund. That way startups and unicorns can avoid a huge tax bill, and wealth will grow with the economy. An incentive to get companies to go along would be no income taxes for five or 10 years.
This method might be fairer than present taxes because companies would not be taxed on theoretical or paper income. A major problem with our present tax system is that a lot of the tax rates are based on formulas that are imaginary.
Government wastes vast amounts of time, resources, and money trying to collect money that does not exist. Citizens and corporations end up wasting, even more, money and time trying to convince tax collectors that the money does not exist.
The biggest advantage to this is that wealth would be taxed as is it created. The major flaw with our tax system is that taxes wealth after it is generated. That makes evasion easy and penalizes organizations with high theoretical incomes.
There is one obvious certainty here Income Inequality; Technological Unemployment, and Wage Stagnation will necessitate a vast expansion in benefit programs in the near future. We need to start thinking about paying for that expansion before it bankrupts everybody.