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The issue here is that the value of things is not universal, nor is the means to pay such a tax. For instance, I may discover a manufacturing machine that cuts

The issue here is that the value of things is not universal, nor is the means to pay such a tax. For instance, I may discover a manufacturing machine that cuts the cost of building semiconductor chips in half. My options under this model, though, are to either price it low enough that I can actually afford to build up a business on top of it (in which case a bigger company can swoop in, buy the rights from me, and destroy my business) or price it high enough that the incumbents can't afford to buy me off (in which case, the proposed tax will be large enough that it'll stifle my business, and the incumbents can just wait until my business dies on its own.) The current system is far from perfect, but it does favor upstarts and entrepreneurs' ability to build business rather than incumbents. The big thing I'd love to see is a shortening of the patent exclusivity period before becoming public domain.

karlkeefer 5y ago
> The current system is far from perfect, but it does favor upstarts and entrepreneurs' ability to build business rather than incumbents. I think exactly the opposite is true. Patents are one of the primary ways that incumbents are able to rent seek on their inventions for decades. These large companies hoard patents, and are legally granted monopoly on a given technology, making direct competition on their invention illegal. A world without patents would be more enabling to small entrepreneurs, because the amount of things they are allowed to attempt is so much higher than in our current world.
- HWR_14 5y ago
  Let's suppose you had some novel idea that would greatly increase the value of a social network, idea X. In the current system, you can patent it, build a working version, and then either sell out to FB or another major tech company (ala Instagram) or go public (like Snapchat). Without patents at all, FB sees your app start to take off, looks at it's key feature, assigns N engineers to duplicate it and rolls it out to billions of users. Your app then is a sad knockoff of FB's shiny new feature, withers and dies. Meanwhile, with a Georgist tax, either you have to raise hundreds of millions just to pay the tax when created, or FB buys your patent for peanuts.
  - michaelt 5y ago
    Has anyone ever had a novel idea for a social network, patented it, and been paid for it by FB? Because it seems to me, the way the patent system is supposed to work, and the way it actually works in practice, are very different.
- gameman144 5y ago
  > Patents are one of the primary ways that incumbents are able to rent seek on their inventions for decades. These large companies hoard patents, and are legally granted monopoly on a given technology, making direct competition on their invention illegal. Totally agreed, and the solution there is (in my opinion) to reduce the duration of such patents to the point where newcomers have a reasonable chance to bootstrap a business based on that patent, but not so long that patents bar competitors from coming to market down the line. Value-based taxation will always favor those with deep pockets who can afford to pay top dollar to scrape the cream off of small businesses.
thechao 5y ago
Geoist taxes are always problematic for this reason. I suspect that if the tax valuation is phased in slowly it'd have a good trade-off.
- gameman144 5y ago
  I'm curious what you mean by phasing these in slowly. I've seen the issue crop up in every Georgist or valuation-based tax proposal I've seen, but I'd love to learn more if there are reasonable ways around these bad incentive structures.
  - thechao 5y ago
    I haven't thought about patents. But, for copyrights, I think there should be two "schedules": 1. A fixed original-author schedule which is 28 years, tax free; and, 2. A "work for hire" schedule which is 70+ years, where the Geoist tax is free for the first 7 years, then increases by 1% every 7 years. Again, the rule is this: you self appraise, and pay your tax. Any other entity can pay the balance due (in my opinion, to the Treasury: the monopoly is granted by the people, not the copyright owner), and it places the copy into the public domain. For patents... I'd probably say its "free" unless you enforce its monopoly. Then, if you value the patent at "100 million$" you owe the government N-years X percentage X 100 million. Obviously, the valuation isn't the infringing value — infringement is a fraction of its value. That means a patent only "has value" when it's used to enforce its monopoly.

karlkeefer 5y ago

> The current system is far from perfect, but it does favor upstarts and entrepreneurs' ability to build business rather than incumbents. I think exactly the opposite is true. Patents are one of the primary ways that incumbents are able to rent seek on their inventions for decades. These large companies hoard patents, and are legally granted monopoly on a given technology, making direct competition on their invention illegal. A world without patents would be more enabling to small entrepreneurs, because the amount of things they are allowed to attempt is so much higher than in our current world.

HWR_14 5y ago
Let's suppose you had some novel idea that would greatly increase the value of a social network, idea X. In the current system, you can patent it, build a working version, and then either sell out to FB or another major tech company (ala Instagram) or go public (like Snapchat). Without patents at all, FB sees your app start to take off, looks at it's key feature, assigns N engineers to duplicate it and rolls it out to billions of users. Your app then is a sad knockoff of FB's shiny new feature, withers and dies. Meanwhile, with a Georgist tax, either you have to raise hundreds of millions just to pay the tax when created, or FB buys your patent for peanuts.
- michaelt 5y ago
  Has anyone ever had a novel idea for a social network, patented it, and been paid for it by FB? Because it seems to me, the way the patent system is supposed to work, and the way it actually works in practice, are very different.
gameman144 5y ago
> Patents are one of the primary ways that incumbents are able to rent seek on their inventions for decades. These large companies hoard patents, and are legally granted monopoly on a given technology, making direct competition on their invention illegal. Totally agreed, and the solution there is (in my opinion) to reduce the duration of such patents to the point where newcomers have a reasonable chance to bootstrap a business based on that patent, but not so long that patents bar competitors from coming to market down the line. Value-based taxation will always favor those with deep pockets who can afford to pay top dollar to scrape the cream off of small businesses.

thechao 5y ago

Geoist taxes are always problematic for this reason. I suspect that if the tax valuation is phased in slowly it'd have a good trade-off.

gameman144 5y ago
I'm curious what you mean by phasing these in slowly. I've seen the issue crop up in every Georgist or valuation-based tax proposal I've seen, but I'd love to learn more if there are reasonable ways around these bad incentive structures.
- thechao 5y ago
  I haven't thought about patents. But, for copyrights, I think there should be two "schedules": 1. A fixed original-author schedule which is 28 years, tax free; and, 2. A "work for hire" schedule which is 70+ years, where the Geoist tax is free for the first 7 years, then increases by 1% every 7 years. Again, the rule is this: you self appraise, and pay your tax. Any other entity can pay the balance due (in my opinion, to the Treasury: the monopoly is granted by the people, not the copyright owner), and it places the copy into the public domain. For patents... I'd probably say its "free" unless you enforce its monopoly. Then, if you value the patent at "100 million$" you owe the government N-years X percentage X 100 million. Obviously, the valuation isn't the infringing value — infringement is a fraction of its value. That means a patent only "has value" when it's used to enforce its monopoly.