Taxing Intellectual Property

Slashdot asks the question, "If Intellectual Property is property, where is the property tax?" What a striking and compelling question! Indeed, if localities, for example were to tax Intellectual Property the way that our land and houses are taxed, the County's budget gap could probably be closed in an instant. The story comes from an editorial in the LA Times.

The present system treats these copyrighted works as a funny kind of real property with no carrying costs, taxes or significant fees. Without carrying costs, copyrights remain in force almost forever - even though, over time, the demand for the copyrighted material can fall to almost nothing. As the demand decreases, the value may remain, but it becomes effectively unavailable to, as the Constitution puts it, "promote the progress of science and useful arts." Witness all the copyrighted books, scientific journals, audio works and visual works that are out of print or otherwise unavailable because copyright law prevents the new, low-cost methods of distribution from being utilized.
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A solution to determining which works are in the "Mickey Mouse" category of copyrights and which are in the more socially valuable "oral rehydration therapy" class of work is not feasible for a government bureaucracy. However, if all copyrights were taxed at a fixed (but significant) amount per year to maintain the copyright (all registered through the copyright office and searchable), there would be a significant carrying cost and most of the copyrighted material would revert to "public domain" and become available to "promote the progress of science and useful arts." As intellectual property and copyrights become an even more significant part of our economy, and as copyright holders (not necessarily the creators) make claims of "stealing" as though it is real property, it should be taxed. Relative to copyrights' significance in our economy, the amount of revenue from this source should be in the hundreds of billions of dollars per year. - Dallas Weaver, The LA Times

It is this kind of creative thinking that needs to provide the basis for a 21st century tax system. The economy is changing rapidly, yet our government systems are still operating from the perspective of the mid 20th century. Our school year, for example, is designed for an agrarian society. Our transportation infrastructure is predicated on cheap gas and one car per household. Our electoral system is based on ridiculously low turnout figures so we have too few voting machines and too large "books" at the polling places, and as a result the system creates lower turnout: Americans hate nothing as much as waiting in line. (Heck, even complains about traffic are basically complaints about waiting in line in a car.)

Here is hoping our next generation of leaders takes a long, hard look at these facts and puts some changes in place that account for the new way society is organizing itself.