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We Are All the Supply Chain Now February 18, 2013

Posted by Peter Varhol in Technology and Culture.
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Sounds a little bit like “All your base are belong to us,” doesn’t it? This is an intriguing proposal from a tax inspector in France on the idea that today’s companies take advantage of a lot of free and inexpensive labor and infrastructure. That is lost tax opportunity that needs to be taxed, according to this government official.

Now, before we dismiss it out of hand, it’s worthwhile noting that we don’t tax nearly as much commerce as we used to, both because of its online nature and because digital products can be seamlessly sourced in low-tax havens. Our tax base is shrinking, and those who are paying are paying proportionally more.

And this proposal makes the intriguing point that we aren’t taxing free labor, such as crowdsourcing. When we provide personal data to Facebook or LinkedIn, we are giving something up that those companies are reselling in some manner.

Nicolas Colin, the official, calls it a privacy tax, presumably because it is used to compensate society on our collective loss of privacy in the process of doing work for companies, or for providing them with our personal data.

While I prefer to be minimally taxed, and subscribe to a minor degree the idea that our collective tax dollars fund some absurd things (the absurdity of which is different for each of us), the fact is that we as a society depend a great deal on the commons, and the expense of that commons needs to be in some way shared. I decline to get into the debate on “fair share”; what is fair to one may not seem so fair to another. And I decline to get into a debate on what it takes to fund that commons. But as we have migrated into a more digital world, government in general hasn’t kept up, and our concept of how to collect taxes from those changes is still rooted in ideas from 50 or more years ago.

But where do you draw the line? When a company relies on crowdsourcing for testing a product or concept, they are clearly using the labor of the commons, even though we can choose whether or not to participate. When a company resells our freely-provided personal data, haven’t they obtained a profit without paying for the raw material?

But then it can become still more gray. When I book my flights and hotel for my various and sundry travels, I am surely doing the work that a travel agent or customer service representative used to. That was labor at one time; if I am doing it for myself, does it make it less so? Should the airline and hotel be taxed for using my labor for free, when in the past they paid their own?

Society changes. This proposal sounds like an idea that is rooted in past thinking and practices that seem to make little sense moving forward. But paying for the commons needs to get with the times. The complexity and bureaucracy inherent in a VAT scares me, so something different is called for. I applaud ideas like this, even though this particular one is highly flawed.

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