Fwd: Feedback

[Richard Moore]

Greetings,

Peter Luiten joined our discussion group just yesterday. Prior to that we exchanged messages (below) re/ the model.

best wishes,

richard

________

Begin forwarded message:

From: "Peter Luiten" <peter....@nettel.net.nz>

Date: 5 August 2009 02:03:17 IST

To: <r...@quaylargo.com>

Cc: "James Samuel" <jms...@gmail.com>, "Helen Dew" <hel...@contact.net.nz>, "Christoph Hensch" <cmhe...@gmail.com>

Subject: Feedback

Dear Richard,

 

I sympathise with your inclination not to reward usury.

 

Sales taxes don't make the implementation of community currencies easier, but I don't see them as particularly discouraging. I am trying to promote community currencies as a mainstream trading option. I don't consider seeking to avoid sales tax a useful way to proceed. Taxes pay for transport and health services; to speak of paying taxes in the same breath as giving money to banksters is to conflate issues which are properly kept distinct.

 

Until our elected lawmakers decide that state revenue is no longer to be gained from income and exchanges, we are obliged to pay income and sales taxes whether we use dollars, local currencies or barter. If I trade a cake for some potatoes, of course I am trying to make a profit from the deal. The profit is the value of the potatoes to me minus the value of the cake to me.

 

Such exchanges often do avoid sales tax of course because they don't go through the banking/accounting system.

 

As local trading and community currencies become the norm, it may be that the only reason to ask customers for some payment in dollars is to have the means to pay the tax. Ultimately tax may be accepted in local currency; nevertheless, it remains a tax.

 

I suspect that the Time Dollar system escapes taxes only because it is not yet seen as a threat to state revenue. However, as with other community currencies, a Time Dollar administration is ultimately obliged to 'tax' members to fund its own expenditure. The administration might claim, for example, one minute in every hour. This constitutes a sales tax and in this respect it is acting as a microcosm of a national government.

 

It is disconcerting to read so soon after the publication of The Co-op Coupon Model: a systematic approach for achieving strong, sustainable, and prosperous communities that the author is "not sure about coupons". What are readers to make of it?

 

I have copied this to others who drew my attention to your model. 

 

Regards,

Peter Luiten

_______________

From: Richard Moore <r...@quaylargo.com>

Date: 5 August 2009 09:24:39 IST

To: Peter Luiten <peter....@nettel.net.nz>

Cc: James Samuel <jms...@gmail.com>, Helen Dew <hel...@contact.net.nz>, Christoph Hensch <cmhe...@gmail.com>

Subject: Re: Feedback

Hi Peter,

Good points. On my earlier drafts, several people responded that taxes make local currencies unusable if they begin to dominate local trading. So I put a lot of work into trying to avoid taxes, with coupons. Now most of the feedback I'm getting contradicts those early responses. And I have a suspicion no attempt to avoid taxes could ever succeed, for the reasons you identify. But I wanted to give it a try and see what people thought.

I like your idea that dollars might end up being used mainly to deal with taxes, apart from their role in external exchanges. If sales tax is 8%, then 92% of local exchanges could be in local currency, not bad! If income tax on average is 40%, then 60% of wages on average could be in local currency, also not too bad. This kind of system would be much simpler to describe.

I don't understand why you say exchanging a cake for potatoes is a profit-seeking transaction. If I have a bakery, I'm trying to make the cakes for less than the market value of cakes. My profit comes from my control of production costs. When it comes time to exchange, the market value of the cake and the potatoes are presumably equal. I should pay an income tax on the difference between my cost and my exchanges, not a sales tax on zero. Thoughts?? (This is under the assumption of bartering, not necessarily part of a local currency model, although it might be a good idea to combine the two mechanisms.)

It seems to me we have three principles we can make use of:

1) A local currency enables exchanges without needing as many dollars.

2) A Co-op and Commons gives us a framework where services can be provided without exchanges.

3) Person-to-person bartering of equal value things can be done outside the exchange economy.  

It is disconcerting to read so soon after the publication of The Co-op Coupon Model: a systematic approach for achieving strong, sustainable, and prosperous communities that the author is "not sure about coupons". What are readers to make of it?

What they are to make of it is that this is a work-in-progress, and I consider it to be a collaborative effort. I don't have all the answers, and I have no background in economics. I see a problem, as stated in the Introduction, and I'm trying to solve that problem. How do we get communities to wake up and start finding their solidarity and their strength? I think the Introduction is the most solid part of the proposal. The rest, as I said, is a work-in-progress. 

When I wrote my book, Escaping the Matrix, I posted each draft chapter to the cyberjournal list, and got lots of feedback. The final book benefitted from all that feedback and wasn't the same as what I had in mind at the beginning. I don't have any background in history or political science either. In some sense I see myself as the 'group integrator' or the 'group scribe', although I put a lot of myself into the work as well. 

If coupons don't succeed in avoiding taxes, then they are too complicated. I was trying to avoid convertibility into dollars, because if they're convertible then clearly they're money and will be taxable. If taxes can't be avoided, then convertibility makes everything very much simpler. But the development stages are independent of how we handle the local currency. 

I have copied this to others who drew my attention to your model. 

Thanks for that. If you all join the Credit Bank list, our discussion can proceed apace and I can produce a more solid proposal for wider distribution.

thanks again,

richard

________________

[Richard Moore]

I don't know how Peter got on the list, but I apologized and took him off. Not sure what he meant by baseless assertions. 

Peter Luiten wrote:

Peter Luiten has never taken up Richard's invitation to join your discussion group. Please take my name off your list.