Some commons trusts will generate income from the sale
of usage permits. Many others will need income to acquire
property rights, restore degraded habitat, or give
children start-up capital. It’s therefore essential
to encourage a multiplicity of revenue sources. The best
way to do this is through a federal commons tax
credit.
When I was in the solar energy business during the
1970s, our customers benefited from a combination of
federal and state solar tax credits. As I frequently
explained then, a tax credit isn’t the same as a
tax deduction — it’s bigger. A deduction is
subtracted from the amount of income subject to tax; if
your marginal tax rate is 30 percent, a tax deduction
saves you thirty cents on the dollar. By contrast, a tax
credit is subtracted from the amount of taxes you pay,
regardless of your tax bracket. If you owe taxes, it
always saves you one hundred cents on the dollar.
The premise behind a commons tax credit is that
wealthy Americans owe more to the commons than they
currently pay to the government in taxes. That being so,
a commons tax credit would work like this. The federal
government would raise the uppermost tax bracket by a few
percentage points. At the same time, it would
give affected taxpayers a choice: pay the extra money to
the government, or contribute it to one or more qualified
commons trusts. If people do the latter, they
get a 100 percent tax credit, thereby avoiding additional
taxes. The message to the wealthy thus is: You have to
give back more. Whether you give it to the IRS or
directly to the commons is up to you. If you want to
eliminate the government middleman, that’s
fine.
What qualifies as a commons trust? It’s a trust
that either benefits all citizens more or less equally or
collects money to restore an endangered commons. Social
Security, the American Permanent Fund, the
Children’s Opportunity Trust, and most land and
watershed trusts, would qualify. By contrast, a normal
charity would not.
Contributions to normal charities would remain
deductible from taxable income, but not from taxes owed.
...
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