4 ms·

But the IRS still gets a perpetual royalty on every subsequent sale. Why can't the producer?

by twox2 5y ago

deleted 5y ago
[deleted]
geofft 5y ago
Because "the IRS" (not sure which jurisdiction you're in, but here in the US, it's actually the local and state government) is an entity controlled by elections that is obligated to spend its budget in ways decided on by elections, and therefore can reasonably exist forever. The royalties are not for the benefit of the IRS. A state or local government is sort of like an offline DAO, if you're familiar with DAOs. A producer does not live forever, and the producer's heirs get to spend things as they see fit. Also, in many cases, the local government does not get a royalty on every sale - certain sales, such as to non-profits, do not get taxed.
- twox2 5y ago
  I'm not talking about literal royalties. If I have an item that I buy new (or used) and it's not a depreciating asset, and I sell it, then I owe income tax or capital gains, don't I? And then when the new owner sells it a few months or years later as is common in the case of collectibles, they have to pay income tax or gains on their sale as well, and this continues for the entire life span of the object.
  - geofft 5y ago
    Oh, I assumed you were talking about sales taxes, which is the most obvious case of a DAO-like organization taking money on every sale, as a percentage of the selling price. Income taxes and capital gains taxes are on your profit, not on the sale itself, so they're less analogous. If you as a taxable entity don't net make any money, you don't owe any income taxes (more or less); if you as a taxable entity don't make any profit on an asset you bought some time ago, you don't owe any capital gains taxes (more or less). So both of those are much more reasonable than a royalty on every sale - they don't follow the asset around forever, and you only have to pay a percentage of the money you made if you're in fact making money. It seems like, if I buy an NFT at $10000 and then sell it a month later for $9000, some of that $9000 goes to the creator of the NFT and not to me.
    - twox2 5y ago
      "It seems like, if I buy an NFT at $10000 and then sell it a month later for $9000, some of that $9000 goes to the creator of the NFT and not to me." Yes that's correct. That makes it very appealing for creators like artists. I can see how that might be off putting for you though, but I think over time this will become "priced in". Also, only ver few creators will have an active aftermarket for their work. Most will not have a single aftermarket sale.

But the IRS still gets a perpetual royalty on every subsequent sale. Why can't the producer?

by twox2 5y ago

But the IRS still gets a perpetual royalty on every subsequent sale. Why can't the producer?

deleted 5y ago

[deleted]

geofft 5y ago

Because "the IRS" (not sure which jurisdiction you're in, but here in the US, it's actually the local and state government) is an entity controlled by elections that is obligated to spend its budget in ways decided on by elections, and therefore can reasonably exist forever. The royalties are not for the benefit of the IRS. A state or local government is sort of like an offline DAO, if you're familiar with DAOs. A producer does not live forever, and the producer's heirs get to spend things as they see fit. Also, in many cases, the local government does not get a royalty on every sale - certain sales, such as to non-profits, do not get taxed.

twox2 5y ago
I'm not talking about literal royalties. If I have an item that I buy new (or used) and it's not a depreciating asset, and I sell it, then I owe income tax or capital gains, don't I? And then when the new owner sells it a few months or years later as is common in the case of collectibles, they have to pay income tax or gains on their sale as well, and this continues for the entire life span of the object.
- geofft 5y ago
  Oh, I assumed you were talking about sales taxes, which is the most obvious case of a DAO-like organization taking money on every sale, as a percentage of the selling price. Income taxes and capital gains taxes are on your profit, not on the sale itself, so they're less analogous. If you as a taxable entity don't net make any money, you don't owe any income taxes (more or less); if you as a taxable entity don't make any profit on an asset you bought some time ago, you don't owe any capital gains taxes (more or less). So both of those are much more reasonable than a royalty on every sale - they don't follow the asset around forever, and you only have to pay a percentage of the money you made if you're in fact making money. It seems like, if I buy an NFT at $10000 and then sell it a month later for $9000, some of that $9000 goes to the creator of the NFT and not to me.
  - twox2 5y ago
    "It seems like, if I buy an NFT at $10000 and then sell it a month later for $9000, some of that $9000 goes to the creator of the NFT and not to me." Yes that's correct. That makes it very appealing for creators like artists. I can see how that might be off putting for you though, but I think over time this will become "priced in". Also, only ver few creators will have an active aftermarket for their work. Most will not have a single aftermarket sale.