Harberger Taxes: What's in a Name?

Harberger taxes are an economic system in which property rights are efficiently allocated in a market that requires asset owners to publicly self-assess the value of their asset, commit to selling the asset at that valuation, and pay an ongoing tax calculated as a percent of that valuation. 

(This should sound familiar to Geo Web followers.)

It is an elegant system that can produce better economic outcomes than traditional private property. It balances investment efficiency with allocative efficiency. It creates a dynamic, fair market without overbearing administrative costs. 

It’s basically the greatest thing since sliced bread… but many won’t give the system a second look because of one word: taxes.

I see it in the reactions to every Vitalik tweet or article that advocates for Harberger taxes.

Vitalik’s most recent tweet was in response to a thread about how secondary sales royalties on NFTs are ineffective (they can easily be circumvented) and inefficient (they don’t incentivize the behaviors that we want or faithfully reward economic value creation). Yet, many of the replies go to bat for the existing royalty model.

Arguing on Twitter usually doesn’t get you very far, but I know a practically foolproof method to get the royalty defenders to contradict themselves: tell them you want to implement sales taxes on NFTs. 

To be fair, sales taxes aren’t exactly the same thing as secondary sales royalties because of how and who they are used by, but the mathematical mechanism is the same. And THAT is the lesson we need to apply to Harberger taxes. 

Sure the mechanism design was first devised with governments in mind, but using the same terminology in other arenas gives people the wrong idea and hampers adoption of a truly powerful idea.

I’m not advocating for a bait-and-switch with terminology either. There is terminology that just better conveys the logic for using Harberger-inspired systems in the growing list of non-governmental contexts.

Geo Web land is irrelevant if it doesn’t have collective buy-in to its legitimacy. It is inextricable from the commons. Assets like this and physical land “ought to be in the commons,” but for practical reasons benefit from private investment/control. 

The term partial common ownership (PCO) better describes that reality. That’s why we use PCO on the Geo Web and other terms like licensor instead of owner and network fees instead of taxes.  

For assets that truly originate from the labor/investment of one person or group, but can still benefit from the Harberger mechanism design structure, insinuating common ownership with PCO might be a misnomer. SALSA (Self-Assessed Licenses Sold at Auction), Always On Sale, and patronage (rates) can be more accurate and effective terminology. 

The language of Harberger-esque systems can and will naturally evolve over time with adoption and experimentation. As a first step to getting adoption though, let’s stop referring to these systems as taxes.

Technical

• We addressed an issue that made newly claimed parcels disappear on the Cadastre map upon transaction confirmation. Yeah… that’s kind of important: https://github.com/Geo-Web-Project/cadastre/pull/219.
• We fixed a bug that caused transaction failures if you initiated a connection with the Cadastre while set to a network other than Optimistic Kovan: https://github.com/Geo-Web-Project/cadastre/pull/220. 
• Our v3 core contracts are getting very close! Likely some partial releases coming this week!
• We’re working on the Spatial Browser after not prioritizing that for quite some time. We needed to bring it current to our Ceramic data model architecture, our new core contracts, and test network deployment. With the Spatial Browser back on par, we’ll be focusing a lot of time developing and supporting new use cases for Geo Web land.

Community

• We recently spun up an official Geo Web group on Orbis that you should all check out.  Orbis, like the Geo Web, uses Ceramic for its decentralized content layer. We’re excited to experiment with decentralized social media and also engage with a community of like-minded explorers without the noise you get on Twitter.
• Keeping up in web3/crypto is a full-time job. This tweet thread has some excellent resources for beginners and veterans to keep an eye on the space without losing their sanity following Crypto Twitter all day, every day.
• With our impending mainnet launch, we need to do some legal structuring to support our exit-to-community vision. I posted some of our current thoughts on the forum.

On Deck

• Release v3 of the core contracts
• Release a new spatial browser
• More Cadastre tinkering