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If IP Is Property, Where Is the Property Tax?
Posted by
kdawson
on Tue Feb 26, 2008 08:36 PM
from the making-the-world-safe-for-mickey dept.
from the making-the-world-safe-for-mickey dept.
nweaver writes "In a response to the LA Times editorial on copyright which we discussed a week ago, the paper published a response arguing: 'If Intellectual Property is actually property, why isn't it covered by a property tax?' If copyright maintenance involved paying a fee and registration, this would keep Mickey Mouse safely protected by copyright, while ensuring that works that are no longer economically relevant to the copyright holder pass into the public domain, where the residual social value can serve the real purpose of copyright: to enhance the progress of science and useful arts. Disclaimer: the author is my father."
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Wow... (Score:5, Interesting)
Re:Wow... (Score:5, Insightful)
Parent
Re:Wow... (Score:5, Interesting)
Parent
Re:Parent just doesn't understand capital gains (Score:5, Informative)
That's an accurate description of Capital Gains taxes, but the discussion is about Property taxes. Maybe you don't pay property taxes where you live, but in many US states every year you have to pay a percentage of the assessed value of property you own as a tax. For example, in the NJ town where I live, I currently pay 16% of the assessed value of my home and land. (66% of that goes to the local school board, 20% goes to the county, and 14% goes to my town.) Property values are just being reassessed now after 25 years; with the new assessment, the tax rate will probably drop to 2.5% to 3%.
So, every year I pay 3% of the approximate value of my property, whether I sell it or not. No mansion for me; even if it was given to me for free, I couldn't afford to own it.
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Re:Wow... (Score:5, Insightful)
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Re:Wow... (Score:4, Insightful)
Maybe require you to file official copyright claims on anything before you can defend it (automatically approved, but chalangeable) and then a small flat fee to maintain that copyright until you declare it public domain (a decision that you obviously can't recant) in addition to a percent of your income based on that copyright as property tax? Or maybe a tax on how much total you've made on that copyright, or some assessment of its current market value if you were to sell it (that'd be hard to do...) until you declare it public domain? (if the former, that'd certainly be an incentive to declare something public domain once you stopped really using it...)
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Re:Wow... (Score:5, Insightful)
For the case you mention, I can think of a very simple solution - some sort of "minimum IP tax". Hold the IP, pay at least the minimum tax. As your revenue stream rises from zero, you continue to pay the minimum tax, until the taxation on your revenue stream exceeds that minimum. You know, pay the greater value.
Then there needs to be a process for releasing content into the public domain, so you can prove it to the Tax Man.
Plus it may sound biased, but there probably needs to be some sort of "equivalent to public domain" status for open source licenses. After all, the purpose of public domain is to make the IP usable by others as a foundation for further work. But then again, that also means that the government would probably meddle in defining open source licenses, at least for tax purposes. I could readily foresee bsd licenses passing the muster, but perhaps not the GPL, though maybe the LGPL. Remember, one thing the US government *likes* is businesses making money, and if you assume that closing the source is *necessary* to making money, as some very powerful business players do, then the gpl can be considered hostile toward that end.
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Valuating for Property Tax Purposes (Score:5, Interesting)
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Re:Valuating for Property Tax Purposes (Score:5, Insightful)
It sounds great in theory. In practice, however, it would be untenable. Linus would never be able to afford the property taxes on Linux, and as a result Microsoft with its billions in cash reserves would be able to buy it for a steal (unless of course Linus let it into the public domain, a decision I'm not even sure he could make.)
Linux is obviously an example, and perhaps a bad one. But a shotgun buy/sell system as you are proposing dramatically favors those with larger revenue streams and ready cash reserves.
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Re:Wow... (Score:5, Interesting)
I agree, assessing intellectual property values would be a huge PIA.
On the other hand, a simple, flat, renewal fee would have the same effect. Or perhaps a sliding scale, so that the longer you hold a copyright the more expensive it becomes. Copyrights that weren't producing revenues would be released, and Disney could keep Mickey forever. Might not generate the billions in tax revenues that the author envisions, but it would get more works in to the public domain.
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Re:Wow... (Score:5, Interesting)
How about $0.01 for the first year, and it doubles every year after that?
So, keeping a copyright for 10 years costs only $10.24, but keeping it for 16 years is $655.36, 20 years is $10485.76
After 32 years, it's $42,949,672.96
After 64 years, it's $184,467,440,737,095,516.16!!!
Even the poorest small guy can afford to keep his Copyright for 10 years, but nobody will have the money to keep creative works out of the public hands for 50+ years.
Again, this seems like the perfect system.
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Re:Wow... (Score:5, Funny)
No, no, no. It's two cents. Two cents.
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Re:Wow... (Score:5, Funny)
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Re:Wow... (Score:5, Funny)
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Re:Wow... (Score:5, Insightful)
The answer is easy: nothing. You're never required to pay the property tax. It's just that you lose your copyright if you don't pay. Since I don't really care about the value of my slashdot comments, I wouldn't pay and they'd lapse into the public domain.
That's exactly the point. Things like blog comments that have little monetary value to their creators shouldn't be protected indefinitely. Neither should books that their publishers care so little about that they're allowed to go out of print. They should move into the public domain so that other people can make use of them without fear of lawsuit.
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Re:Wow... (Score:5, Insightful)
Yes, but by doing so he's pointing out one con to such a system. In that system, for instance, modifying and relicensing GPL software to be closed-source would be legal (in fact, encouraged) unless the author of that software paid a copyright fee.
Which would probably end with something like our modern-day patent system, where big corporations can easily absorb the copyright fees and be invincible while the smaller "people" it was designed to protect get shafted.
-:sigma.SB
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Re:Wow... (Score:5, Interesting)
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Re:Wow... (Score:5, Interesting)
Or something, really I'm thinking any alternative more sensible than the life+70 would be good.
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Re:Wow... (Score:5, Insightful)
There are flaws with that system no matter how you look at it:
Some dude in a garage invents something amazing, makes a few million bucks selling it. In 10 years time, maybe it's become even more relevant (ready for mass adoption), so $megaCorp steps in and 'bids' a few BILLION on it. Original inventor doesn't have that kind of capital, loses rights to $megaCorp. But the rights are now transferred to someone else for their exclusive use. The small guy gets locked out, and the public interest still isn't satisfied.
Under your other scenario ("for IP that drastically changes in value in a short time, a petition
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Re:Wow... (Score:5, Insightful)
With the scenario of $megaCorp, the original owner could bid however much he wants (ten trillion trillion), and then he'll pay himself (so he doesn't actually need to have any money). However if he does that, his taxes will go way up, and he has to decide if the IP is really worth that much, and if it really is worth a BILLION dollars, and no more, he'll sell. If he's emotionally attatched to it and doesn't want it to fall into the hands of $megaCorp, he can just release to the public domain.
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No need for a valuation: tax seems a good idea btw (Score:5, Interesting)
[1] FWIW I think the idea of a copyright tax is a good one, for the sake of making commerically unimportant copyrights available.
[2] The tax doesn't have to be a big one to be effective, and any realistic tax would have to be on a uniform basis and a reasonable level to be administratively workable. Patent renewal fees already exist and are like that, and they do result in many patents being abandoned to the public domain before their term is up.
[3] An additional advantage of a copyright tax would be that in the case of items that might look like 'abandonware' but are not, the tax register would help people's efforts to find the person claiming the copyright, if they want to fix up any kind of proper licensing permission.
[4] A big difficulty in the way of implementation, is that copyright law conditions are now set by international treaty, the Berne Convention. This says that copyright has to be available without formality. So it isn't any longer up to Congress just to alter the law, unless they also want to leave (denounce) the Berne Convention (this would result in lack of mutuality of copyright protection between the US and just about every other country, an inconvenience and cause of loss and expense to copyright holders that caused the US to join the Convention in the first place.)
So, international negotiations would be needed to insert some kind of 'sunset' clause into the Berne Convention. Or else, the tax could perhaps be brought in for some other effect, short of ending the copyright, like maybe avoiding a presumption of licensing-as-of-right: this could be legislatively created for untaxed copyright works. (But I'm not sure that even that would be compatible with the existing Berne Convention anyway.)
[5] So, all in all, the idea sounds good, but is probably impractical until the international climate (in which the US govt currently has a big influence) moves away from the tendency to tighten IP nooses, and starts loosening up.
-wb-
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Re:Wow... (Score:5, Insightful)
Patents however are probably the most widely misused legal instrument in the 'IP law' realm. They're often filed and obtained purely for anticompetitive reasons and are rarely ingenious enough to actually deserve patent protection. Companies constantly reinvent the wheel with minor variations and continually repatent the wheel simultaneously(see recent "online" gift card for sale at POS counter).
I think if a patent is filed and the patent holder has not made any effort to commercialize or otherwise 'use' their patent within a predetermined time period(say 2 years, or 5 years), they should lose it. The benefit to society as a whole for so-called "IP holding companies" is negative and punitive reasons to prevent this situation from occurring should be created.
You have to realize the patent is a government granted temporary monopoly to encourage companies to innovate, or at least that was the purpose. Fast forward to the present and you see now the primary reason to invest in patents is to stifle the competition and raise the barrier to entry. Effectively this creates not a single monopolist for a specific product, but instead creating monolithic industries that are impenetrable to newcomers. The only companies routinely willing to sue others to force compliance with patent laws are those IP holding companies; since they don't actually manufacture, design, distribute, redistribute or retail anything, they have no fear of reprisal.
If someone creates a widget, patents it but fails to commercialize it and another person or company independantly comes up with the same widget and succeeds, what was the original inventor's benefit to society? None, but under current patent law the subsequent inventor is forced to redesign their widget differently from the original inventor even though the original inventor plays no value-adding role in this chain of research, design, invention, implementation and monetization.
So, the trillion dollar question is, how do you fix this conundrum without unfairly empowering tipping the balance of power? I could write a book on the subject, but nobody with the power to change this will read it.
Parent
Re:Wow... (Score:5, Interesting)
I've been advocating that exact idea for a while, with one slight change: if that happens, the IP in question goes into the public domain instead of to the purchaser.
There are some other things I'd change, too -- the first [small number] years should be free, for starters, to make sure that creators who don't have the budget but have a valuable idea have time to do something with it. An artist friend of mine suggested, and I'm inclined to agree, that artwork that isn't sold (ie, original paintings) should be protected for an extended period without cost. There are endelss details, but in general I love the idea...
Parent
this would destroy linux (Score:5, Insightful)
>the IP in question goes into the public domain instead of to the purchaser.
GPL and public domain are not the same thing. Linus owns parts of Linux and holds a trademark on Linux in some countries. He could not afford to pay such taxes, so a company like say microsoft could come along and use his code under these laws.
In general, these laws make no sense and would hurt open source developers even more than closed source developers.
Finally, these are in no way analogous to property tax because property tax is just on land, not on the various other things you own. Also the federal government doesn't even collect property tax. It's a stupid idea that would hurt everyone.
Parent
I wish it was that uncommon. (Score:5, Informative)
I've lived in states where property taxes were aggressively enforced by municipalities on such varied things as artwork, out-of-state or un-plated vehicles (even if it was never registered or driven on public roads), even office furniture and equipment. In the U.S., sometimes they're administered -- and therefore vary -- at the state level, in other areas it's devolved down to the city/town/county level.
Some states (Florida that I'm aware of specifically) had/have an "intangible personal property" tax, specifically on things like stocks, bonds, bearer notes, money market funds, pretty much anything that's worth anything. Florida's was recently repealed, but it's not like the concept is totally foreign or anything.
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Re:Wow... (Score:5, Insightful)
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Re:Wow... (Score:5, Insightful)
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Re:Wow... (Score:5, Insightful)
Perhaps that's true in the short term, but it's not in the long term. Assuming you've made the copies legally (i.e. copyright law doesn't exist), the value of Vista will go down due to supply and demand. If people can get Windows for free, no one (except the ignorant and those needing support contracts) would pay for it.
Sorry, but this is just economics 101.
Let's face it - copyrights are necessary if we want the arts to continue to be a career option. While there are certainly many ways that the law is flawed, the underlying concept is not.
No, this is also wrong. People do *not* have a right to be compensated. Let's say I go out into a field (designated as a public resource) and dig a hole. A really big hole. I work 10 hours a day in the blazing sun and now there is a hole big enough for 2 or 3 olympic sized swimming pools.
I've put a *lot* of work into that hole. Who is going to pay me? Probably nobody, because nobody wants that hole. Just because you work hard on something doesn't mean it has value.
There was never an "industry" for things like books and recorded music for most of history, yet music and writing have existed for thousands of years. Cavemen painted on the walls of their caves. Nobody paid them, but it was still done.
Frankly, I think music in general would be a lot better if there weren't a bunch of corporations making widgets out of it.
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Re:Wow... (Score:4, Informative)
If I recall correctly, it was put thus:
The owner appraises their own property, and pays tax on that value. However, anyone can come along and against the owners wishes buy the property - at which point the owner has two options: sell, or raise their valuation of the property to a price so high that nobody would want to buy it. However if they did this, they would be required to pay five years back taxes of the new, higher value.
One of the characters in the book (Zeb? I can't recall...) when it was pointed out to him that this was unfair, replied with "if some fool wants 5 hectares of useless, hilly land, we'll simply take his money and buy elsewhere..."
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Re:Wow... (Score:5, Interesting)
I think it would be valued at whatever damages you want to claim when you sue someone over it. That'll keep the number of ridiculous damage claims down.
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Property vs Industrial Policy (Score:5, Interesting)
> but what services does the government provide to IP owners?
The government enforces the monopoly they granted you by using it's monopoly on the 'legitimate' use of force. You would be paying the government to send it's goons against any who violated your copyright.
But copyright ain't property, at least it ain't in the US. Our Constituition only grants Congress the option to pass out copyrights/monopolies to promote science and the useful arts. It they were property, for one thing they wouldn't be 'for limited times.' Property implies moral issues but since Congress could by simple majority vote cease issuing any new ones it can't be a property right. Nope, Copyrights and Patents are just a form of 'Industrial policy' for the creative trades. Same as any other Industrial Policy, Farm Policy, Blah Blah. It can and should be adjusted to get the maximum benefit to those in the industry, the country at large and yes, the federal treasury.
I'd suggest something along the following lines:
No more automatic copyright. Screw Berne. Register it or it doesn't exist. Copyrights would have a registration number assigned and they should be international; something like year-country prefix-number. That would allow people to actually KNOW when a copyright had expired by looking the number up in an online database. As things currently stand you needs lots of research to know if a work is actually in the public domain.
Registering should cost a non-trivial amount and it should vary by some sort of catagory chart. Not fair? Who said it was supposed to be fair, it's Industrial policy remember? Articles and books at low rates, television programs at a higher one and movies at a percentage of gross. Good for three years, renewable. Renewal rates set to discourage hoarding low value content while allowing marketable franchises to be milked a bit. After all, creating something of lasting interest in this short attention span culture should be rewarded. But make each successive renewal more exensive on a log scale. Yes, Disney could keep the mouse for a century but the price for a copyright that long should be expressly punitive.
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It isn't REAL property (Score:5, Insightful)
I am sitting in a chair, no one is going to TAX me on the fact that I own some chair (personal property).
Weak argument.
Re:It isn't REAL property (Score:4, Informative)
http://en.wikipedia.org/wiki/Ad_valorem/ [wikipedia.org]
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Re:It isn't REAL property (Score:5, Insightful)
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Re:It isn't REAL property (Score:5, Interesting)
Many states have personal property tax, for instance Virginia taxes your car, boat, RV, and things like that every year.
However, I don't think the worry is about personally owned IP, but rather corporate. A very large number of business jurisdictions tax businesses based on their owned property. As one property tax official told me in one locale, "if it's necessary to run your business it must be listed, and we tax it." If that's the business attitude of the tax man, I think the editorial is spot on.
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Re:It isn't REAL property (Score:5, Interesting)
That's not exactly true. If you're sitting in a car seat, then you're likely being taxed on it. Some states would even tax you for what's in your home, New Hampshire comes to mind, when I lived there, every 5 years or so they would come by and assess your house, now you could not let them inside, but this would cause them to estimate something that's probably higher then your house and everything that's in it. But they would always ask to see what's inside your house, and if you had say i really nice home theater system, yea that adds to the assessment. \
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Why? (Score:5, Insightful)
Re:Why? (Score:4, Insightful)
No, but it should slip into the public domain unless you do.
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Re:Why? (Score:5, Interesting)
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Patents have a "tax" (Score:5, Informative)
Terrible idea for entertainment based copyrights (Score:5, Insightful)
For example, the kid who wrote Chocolate Rain [youtube.com] has a potential revenue stream from the YouTube advert. You can bet he wouldn't have guessed that he would get almost 15 million views - so he would automatically have ceeded his potential copyright into the public domain. Someone else who saw the potential could have stepped in, linked it to all the right sites, and took all the advertising revenue for themselves.
This is an issue which will resolve itself just as soon as the internet becomes the main (legitimate) medium for entertainment distribution. At this point all the money currently spent on old media advertising follows the shows to YouTube or whereever they are being distributed. This creates, in effect, a democratic marketplace which rewards creativity; which will allow viral video authors to generate a revenue stream and (if they wish) go mainstream. Well, that's the dream [livejournal.com], anyway.. and at that point all the big copyright trolls can go fuck themselves as their precious content they horde will have become almost worthless.
Re:Terrible idea for entertainment based copyright (Score:5, Interesting)
We should have a system of copyright where an author only gets a copyright if he publishes his work, registers for a copyright, deposits a copy of the work, and pays a token fee. And where the copyright only lasts for a few years before the author must renew the copyright (if eligible, depending on the kind of work and the number of times it's been renewed already).
We know that this would work well, since it's more or less what US copyright law did up until 1978. We know that the goal of copyright is to serve the public interest by encouraging authors to create works they otherwise would not have created, but having those works minimally protected and in the public domain as rapidly as possible. This serves this goal well, since probably only authors who were encouraged by the availability of copyright would bother to undertake even the very simple steps to procure one. Further, if an author was encouraged by a shorter duration than the maximum allowed, he would likely fail to renew (as usually happened historically), getting that work in the public domain much sooner than if we foolishly gave him as long a term as we could without any involvement on the author's part. It gets copies preserved in the Library of Congress, which can help to ensure the survival of the work over time (especially once it enters the public domain). And requiring him to identify the work claimed, and himself, and his contact information, aids in the public knowing what is and isn't protected (like the title system for land), who to talk to about it, and where he can be reached if you need to license it, etc.
Sure, some amateur authors would create works without regard for a copyright, and the works might turn out to have been valuable, but so what? The system isn't meant to help them at all costs, it is meant to encourage them to create what they would not have created sans copyright. Your Chocolate Rain kid probably wouldn't qualify. That's good, really. Why should the public pay for the cow if the milk is free? Copyright isn't meant to help authors, or be fair to them; it's meant to be totally one-sided in favor of the public, but sometimes the thing that is most in the long-term public interest isn't what is in the short-term public interest.
(Plus of course, only an author can claim a copyright on his works initially; it's not as though anyone could take a public domain work away from its author, who could also try to exploit it for money; it's just that the author cannot exclusively exploit it)
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Majority of Artists (Score:4, Insightful)
A better solution would be to only charge a copyright fee on copyrights held by corporations (i.e. created under a work for hire license or purchased from the artist). When the artist who created the work still holds the copyright (and has no contractual obligations to a company on the use of that work) the current system works fairly decently. Since a company's main priority is its bottom line, unprofitable works would be released into the public domain sooner, but the little guy would still be able to benefit from his / her individual work.
Re:Majority of Artists (Score:5, Interesting)
Second, why should we care about the little guy -- or any author, of whatever size -- at all? Copyright is meant to serve the public interest, period. This means encouraging authors to create works the otherwise wouldn't've created, and getting those works into the public domain as soon as possible (with as little protection as possible prior to that). So long as the author creates works, it is utterly immaterial whether or not he makes money at it. Nor is it a bad thing for a work to enter the public domain and for other authors, regardless of whether they're big or small, to make some use of it. All that matters is getting the most number of works created for the least amount of cost in the form of copyright protection granted (i.e. what copyrights are granted initially, how broad the grants are, and how long the grants last). Entertaining silly, romantic notions of authors is what has gotten us into the mess we now find ourselves in. We need to stop with that crap. Copyright is utilitarian; whatever copyright system best serves the public, that's what we need, without one iota of concern for authors, save for how their condition might affect the public good that is our real sole issue. The most works for the least copyright 'buck.' It's as simple as that.
Parent
Maintenance fee (Score:5, Interesting)
Patents have a maintenance fee. Why not copyrights?
Why not charge a maintenance fee for copyrights every ten years? That way, most stuff will go into the public domain ten years after publication. It won't bother most people, because most people's copyrighted stuff isn't valuable the next day, let alone ten years later, and if it is they can always extend it.
The hard part would be figuring out what to charge for copyrights of commercial material, like proprietary software, books, music, and the like. I'm sure people can figure out something halfway reasonable, likely on the low side.
interesting... (Score:4, Insightful)
The same idea could be applied to intellectual property. The owners of intellectual property should be required to give something back to society. As some other posters have pointed out, the problem becomes valuing the property. The easiest way to value intellectual property is by how much income it brings in to the owner.
By that measure, intellectual property is already taxed. The tax is simply paid through the corporate or individual income tax.
Re:interesting... (Score:5, Insightful)
You're right, they should. It should be in the form of copyright that actually expires! That way, they give back the creative work to the public domain, as was intended by copyright law in the first place.
This isn't complicated, people. Trying to accommodate those who would forever lock up all popular culture since the 1930's is to be part of the problem, not the solution!
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good ideas keep coming around (Score:4, Insightful)
Or, if that's too complicated, we could just ask copyright holders to identify which copyrights they care about and submit a simple application to maintain them [wikipedia.org] or let them flow into the public domain. We did that for nearly two centuries until 1976.
It's just amazing how little we demand that the holders of incredibly valuable copyrights do to obtain those rights and to keep them.
Re:re Not so hot idea (Score:4, Insightful)
The idea is very good. Even not performing assets (i.e. unrented buildings) pay property taxes; of course, if I'm getting $3,000 a month rent from an apartment it is very likely that my property taxes will be higher than if it is a rundown hole in the wall, but even then taxes must be paid.
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Re:re Not so hot idea (Score:5, Insightful)
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