Jesse Hirsh on Fri, 9 Aug 2002 21:05:08 +0200 (CEST)

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<nettime> Should Intellectual Property be Taxed?!

Should Intellectual Property be Taxed?!

A Brief Discussion Paper by Jamie Reid and Jesse Hirsh

A conflict looms between the forces of technology and the interests of
(intellectual) property. The Entertainment Industry cries foul as Internet
users freely trade copyright material, while at the same time the
Information Technology Industry continues to create tools that further aid
in facilitating the sharing and distrubution of data that is licensed or
protected by copyright.

While this apparent conflict seems to be between industries, or even
between means of distribution, it actually masks a deeper and older
conflict. This tension is between the rights of property, and the
responsibility we carry for the larger society.

Considerable time and effort has been spent articulating and defending
property rights as they translate into the Internet, as well as into our
larger Network Society. Law suits over trademark infringements and domain
name squating, consolidation of patents, as well as the centralization of
holdings in entertainment titles and copyright libararies.

Large industries with vested interests in the control and procurement of
intellectual property have also facilitated the introduction and in some
cases passing of new legislation in this regard. The intent and design of
said policies is to extend into the nework society, and re-arm the
regulatory regime that has governed copyright, patents, and other forms of
intellectual property controls.

The arguments made by (treaty) organizations like WIPO and the WTO, not to
mention the agents and spokespeople for global markets in general, is that
intellectual property is the fuel for economic growth and development, and
only through its consolidation and control can it be harnessed for
monetary gain. In this respect, it is viewed as an economic "right" and
thus intrinsic to our society and way of being.

Of course critics argue that elements of economic life such as "culture"
do not fall within this world view, and thereby "cultural goods" should be
exempt from such property and trade agreements. Similarly indigenous
cultures that for centuries had societies that focused on sharing and
alternate forms of possession rather than property are now confronted with
a world regime that allows others to own their ancestral land, patent
their genes, and even copyright the ceremonies.

So if we are to acknowledge let alone allow intellectual property to be
such a 'right', it seems quite reasonable to suggest that it should return
some benefit, and take responsibility for its role in society. It should
be taxed like any other alleged form of property. This acknowledges that
Intellectual Property has become de facto real estate. Rights come with
responsibilities, and one of the responsibilities traditionally associated
with property rights is that of taxation, and financial contribution to
the society (and social good) as a whole.

Property in the sense of real estate is subject to taxation, a public
income that has been used to build the cities we live in, and construct
the public works, transportation, and sanitation that we rely and depend
on. Similarly property as assets are valued and used in the calculation of
personal and corporate income tax.

In this regard a tax on intellectual property could be applied against the
valuation of a company based on a certain percentage of declared
intellectual property assets and holdings.

It could be a tax applied exclusively to incorporated entities, so that
artists and individuals (whether inventor or entrepreneur) would not be
discouraged from being creative or innovative. Rather the legally
incorporated interests who have limited liability while owning and
controlling most of the so-called intellectual property, would be
compelled to compensate society for the right to have sole posession of
certain ideas or processes which could otherwise be freely available for

Similarly another exemption to the tax would be if the intellectual
property in question were released under a General Public License (GPL),
i.e. into the public domain, and would therefore be free for the public at
large to use and redistribute as they so desired. This could be seen as a
means for existing cartels and holders of vast amounts of intellectual
property to avoid bankruptcy by releasing said property into the public
domain and thereby avoid having to pay the tax.

Also, the introduction of otherwise exclusive material into the public
domain would facilitate a substantial increase in the level of social
capital available publicly, fostering a new culture of collaborative,
peer-inspired and peer-reviewed work. In this way, the new model of
arranging the rights and responsibilities associated with intellectual
property could have far reaching implications for the way and means by
which we organize and distribute knowledge and practice.

Applied to areas such as medicine, scientific data, software, and even
geospatial data, the taxation of intellectual property coupled with the
subsequent release of substantial amounts of said property into the public
domain can have an enabling effect on our society.

The funds from one can be used to sponsor the further development of the
other, creating a new public wealth from which to address social problems
and opportunities. Certainly geneticly infused medicine has the promise
for exponential growth and benefit if and when controlled, owned, and
developed in the public interest.

Innovations and creative expression can be shared and built upon, as
opposed to buried or shelved. Collaborative opportunities can abound,
while also creating new revenue to fund public infrastructure and policy.
The prime example of this would be the creation of the Internet, which
under similar publicly funded projects could evolve and mature into an
environment with universal access to broadband connectivity.

We see the situation at hand as an attempt to translate the ownership
rules of the last regime into the new environment of the Internet. Trade
representatives and key legal firms, on behalf of industry associations,
and a few of the larger intellectual property holders, are attempting this
as a survival mechanism in an age of rapid and generally unpredictable
(technological) change.

Taking into consideration their existing legal gains, political power, and
economic might, it only makes sense to mimic their argument, and do the
same with taxation laws. Extend the taxation of property into the Network
Society and its central nervous system, the Internet.

If an entity with limited liability (like a corporation) is to own
intellectual property, then it should have to compensate society for that
ownership without liability, which is a right that people and citizens do
not have.

We raise these issues for the purpose of discussion, exploration, and
speculation. We realize the implementation of such a taxation mechanism,
in any of its myriad forms, would have tremendous impact on the economy
and society as it currently exists. We feel that the configuration of the
regulation of intellectual property needs to be modified to take into
account the actions and ambitions of those so deeoply invested in the
control and current configuration of the regulation of intellectual

Initially written in Toronto during April of 2002

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