Re: much improved version: Credit Bank model

[Richard Moore]

Hi Richard,

Nice to hear from you, and glad the Credit Bank concept sounds OK to you. 

I guess there are three independent concepts: 

• the investment & development scheme

• the credit currency

• the community participation process. 

The community process is actually the goal of the initiative. The development process is a means of motivating people to get involved in their community, and start seriously working together to develop their community. Once the community is engaged in this way, it doesn't really matter what scheme we start with - they'll see the problems and find a way to fix them. I talk about this in the blog:

http://thecreditbankdevelopmentmodel.blogspot.com/

I really don't think there's any hope of making anything happen with national governments, and your comment about 'the controllers' would seem to resonate with that view. The community is where we have some hope of gaining some control over our own destinies.

I'm puzzled about something. If the Credit Bank issues new credits out of thin air and gives them to someone, is that taxable income to them? How can it be income if it cost nothing to give it to them? Or is it income when someone exchanges credits for dollars?

curious,

richard

________

Richard Cook wrote:

Richard,

I have been reading your latest version and applaud the concept of the Credit Bank. As you know, my own program includes a new network of community development banks as an element. Economic reform has many aspects but restoring the ability of local communities to function has to be central. Destruction off this ability has not only been the result but also the goal of corporate concentration under the control of the big financial interests. 
I do support the social credit idea of the introduction of new purchasing power from outside the production-consumption system. I see it largely as a non-inflationary means of monetizing the savings needed for productivity growth. Keynes also saw the necessity but wanted to do it through debt. This of course played into the hands of the financiers. Social credit sees it being done through dividend economics. 
The problem of capitalizing a Credit Bank is relatively simple if the bank can create credit that is immediately funneled into production. That is more a legal matter than a technical one--it simply has to be authorized to do so.
As society continues its descent into chaos and the controllers plot to take advantage by herding everyone into the planned concentration camps--with or without fences--we must come up with as many new ideas for positive change as we can, and this is certainly one. I am also encouraging anyone who can to combine with others to form their own credit unions.
Keep up the good work!

[Mark Batten-Carew]

Below my message are comments about the tax status of community currency from a lawyer acquaintance of mine and applies to Canada.  I've stripped her name because this is not a legal opinion.

It would seem from below, that the initial issuance of credits does not constitute a employer or business relationship - more like winning a lottery - and so is untaxed.

By extension, it would seem that receiving food from a food bank would be "free" and therefore not taxed either.  Somewhere in this area, it seems there is room for the argument that if everyone just uses the central credit registry to record how much stuff (measured in credits) they have given away, and no one recorded how much was being consumed (or maybe there is a separate consumption registry, if necessary) then we could model a community on everyone just giving away "free" stuff, and all you are doing is by recording donations is ensuring that everyone is contributing.  In other words, extend the family model to a wider community scope.   The one formalization that would be needed would be conversion to/from dollars going into/out-of the community would have to be handled by some central authority.  I understand this may be too idealistic, but if "gifts" or "unearned income" are tax-free, then it may be possible to frame work within a community as people doing favours for each other or something similar.

Mark

---------- Forwarded message ----------

I'm not sure what "community currency" is exactly, and haven't heard about this situation so my comments are based on my limited understanding of the question and general tax principles.

The principle of what is taxable in Canada is earnings from "employment" or earnings from "business income/investments".  Employment is fairly easy to define, and business income is broader and includes things like rental income, self-employment, investment income including capital gains on investments, etc.

Things that we just get for "free" like lottery winnings are not taxed.  There have been cases where someone was hired for a job but before they started the job the offer was revoked and they got a settlement but because there was never an employee/employer relationship it wasn't income from employment so it wasn't taxable.

If I understand your facts, to be given this free money would seem to fall under the "winfall" category and not be taxable.

[Martin Hattersley]

Speaking as a lawyer myself, I would have thought that so long as there was
no contractual relationship to repay entered into by reason of participating
in the scheme, this concept of "we're all donating what we can to the pool"
would fly from the tax avoidance point of view.

Martin Hattersley, 5929-189 St.,
EDMONTON AB CANADA T6M 2J1
Phone & Fax (780) 483-5442
e-mail <jmar...@shaw.ca>

----- Original Message -----
From: "Mark Batten-Carew" <mar...@gmail.com>
To: <credit-b...@googlegroups.com>
Cc: "Richard Cook" <ricky...@hotmail.com>; "helge nome"
<helg...@hotmail.com>; "Jean Holmes" <just...@adam.com.au>; "Egill Helgi
Larusson" <e...@internet.is>; "Wally Klinck" <wmkl...@shaw.ca>; "Larry
Heather" <lhea...@shaw.ca>; "Jim Schroeder" <jschr...@shaw.ca>; "Martin
Hattersly" <jmar...@shaw.ca>; "Bill Daly" <b.d...@woosh.co.nz>; "Jamie
Walton" <euro...@gmail.com>; "Steve Shafarman"
<st...@citizenpolicies.org>; "Victor Bridger" <social...@ecn.net.au>
Sent: Thursday, June 04, 2009 9:48 AM
Subject: credits- Re: much improved version: Credit Bank model

> *Richard Cook wrote*:

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17:55:00

[Richard Moore]

Bcc: some friends

______

Martin Hattersley wrote:

Speaking as a lawyer myself, I would have thought that so long as there was 
no contractual relationship to repay entered into by reason of participating 
in the scheme, this concept of "we're all donating what we can to the pool" 
would fly from the tax avoidance point of view.

I'm glad to see some creative ideas coming out re/taxation. If we can find a solid solution that enables a local currency to thrive, then some great possibilities are opened to us.

If someone is able to do the research into tax law & IRS policies, so we can get a definitive answer, that would be a valuable contribution.

The gift economy is one possibility.

One way of looking at a local currency is as a commodity. To keep it simple, let's say we use coins for our currency. Let's say we stamp out 10,000 coins made out of cheap metal, with a distinctive pattern, and assume no one tries to counterfeit them. Then we distribute the coins to everyone, and everyone agrees that they are equal to $1. Then we start trading goods and services for these coins. 

What we're actually doing then is bartering, exchanging goods for goods with no cash involved, and one of the goods we barter are these little coins.

So are barters taxable?

Hope someone can get all this clarified.

best wishes,

richard

[Richard Moore]

Bcc: some friends

______

From: noslave

Date: 5 June 2009 10:11:13 IST

To: r...@quaylargo.com

Subject: credits- Re: the thorny tax issue

i'm not an expert, so check out this claim for yourself...

"Edgar [Cahn] first invented Time Dollars 30 years ago. Time Dollars is
now being used around the world to help build communities and earning
Time Dollars in the U.S. is so far the only form of exchange that enjoys
an IRS exception from income taxes."
http://bayareacommunityexchange.ning.com/events/edgar-cahn-presents-time

______

This sounds very promising. I'd like to find out how Time Dollars got this exemption, and what the criteria are. If anyone is in the SF Bay Area, they might consider going to this event at Sergio Lub's in Walnut Creek, where Edgar Cahn will be explaining about Time Dollars. Could be an interesting exchange of views, and Sergio's events are always well worth attending. If anyone does attend, I'd love to hear what you learn.

Also, I've been thinking more about credits and taxes. It seems to me that a credit is really an IOU. The IOU says, "The Credit Bank owes you a standard quantity of commodities", and the IOUs are transferrable among credit subscribers. I assume purchasing an IOU for dollars would be a taxable event, as with any purchase, the buyer paying sales tax and the seller gaining dollar income. No problem there. But is the exchange of such IOUs for goods and services a taxable event? 

I would hope that "standard quantity of commodities" would be in the same category as "one hour of time", and would qualify for the same exemption as Time Dollars. And I prefer the credit model, because of the development leverage it gives to the Credit Bank, and hence to the community. 

a bit encouraged,

richard