NEW IDEA: Karmic tax/credit

Here’s a radical new idea for redesigning the economy of a country.

What if on top or below the corporation tax, personal taxes or VAT a karmic tax or credit would be added?

And this tax or credit would be proportional to how much good or harm they provide to society.

Ex: A lot of us agree that it’s a good thing to tax heavily alcohol and cigarettes. As we don’t want our citizens to harm themselves in the process.

Unfortunately, what is taken into account for the final price is only the amount a customer is willing to pay. It’s only the value exchange between the customer and the company.

The price you pay does not reflect the damage to the environment or mistreatment of its employees and third parties, or the fact that customers are mistreated and don’t have many options. Hence companies are not held fully accountable for the respective harm that they cause.

If company A sells electricity at 10$ per unit but rejected carbon emotions in the atmosphere for which we would measure a relative cost C of the carbon emotions/total unit sold. (Cost that would be evaluated by mandated environmentalist experts with multiple cross-reference).

Now company B sells electricity at 10$ per unit but had no carbon emission whatsoever.

Is it fair that company B would pay as much tax as company A? Is it in the benefit of society that company B would pay as much? Maybe it cost even more to produce? In that sense company A would be more competitive and company B. And that would be not only unfair, but would incentivize companies that do more harm than good to achieve a more competitive price for the customer. The damage to the environment is nowhere part of the equation. And this is the problem of our current economic system.

It doesn’t take into account the value that company A destroyed. It should instead seek to promote company B instead, for not harming the environment.

Introducing Karmic tax/credit

That is why I propose that we setup a karmic tax/credit. It’s a tax or a credit that would come on top of current taxes, tax if the company does harm or credit if a company does good:

Good for the environment, its employees, its customers, or third parties….

All the impact will form multiple metrics, and the value of all those metrics will be combined to form either a positive or negative ‘karmic’ ratio.

Which represents the ratio of benefit/harm.

The more benefit a company provide compared to its harms the higher this ratio will be. And all is done in comparison with other companies in the same sector. So it’s always relative to the competition. And aimed at having companies compete not only on pricing but also on ‘goodness’.

If the ratio is positive, this company should receive credits.

If the ratio is negative, this company should pay additional taxes.

This new karmic system will strongly incentivize companies to improve all the metrics that matters for the progress of society.

Here are some examples of what those metrics would be:

Economical

1. The relative size of the company.

The bigger the company, the more ‘negative’ will be the karmic ratio. As in society we would want to promote the creation of new companies so that new companies can provide more offerings and alternative. Keeping healthy competition alive. Which is the basic of all economic system and will lead to the promotion of new contenders and the limitation of monopolies.

Social

1. Treatment of workers.
2. Treatment of customers.
3. Treatment of third parties.

Some of those metrics like poor treatment of workers and customers would simply be measured by a reputation system in which employees can rate their employers, if they are treated correctly, with respect and paid a decent wage… Customers would rate their transactions and third parties could make claims if they receive damages from the company’s operations (Ex: When Coca Cola sucks out water from rivers in India). We can have confidence that various parties would expose the good or the harm genuinely as they would have little incentive to manipulate their votes and rating if anonymized. This could come in the shape of an open web platform.

In all those metrics we would compare the satisfaction rate of workers in a similar industry. For instance “energy” production companies.

If company A sold as much energy as company B. And there are only two companies on this market. If employees of company A reports more satisfaction than company B. Then company B should pay a certain amount to company A.

So that the two companies do not only compete on price. But also on good tenure. That is the ultimate tool for incentivizing companies to improve their good tenure while providing a competitive offering to its customers.

Companies will complete to increasingly find an efficient ratio between good delivered to the customer and good treatment of employees.

And this would be one metric, other metrics would come to play a balance in the equation as well.

Look at those people. So happy to be happier thanks to the karmic tax system.

Environmental

1. Carbon emissions.
2. Dangerous or Non-recyclable material used.
3. Hazardous security practices.

The bad players would pay for the good ones.

Let’s say, employees of A are happier (and better paid) than B, the difference in karmic ratio would be in the favor or A: B should pay a tax that will come as credit to A, for a ratio X….

But…

If company A pollutes far more than company B. It leads to a ratio of Y.

The total karmic ratio that a company will have to pay/gain will be a sum of all ratios. Ex (with only those two metrics exists):

A karmic ratio = X - Y

B karmic ratio = Y - X

Companies will compete on a variety of metrics that are all designed and measured according to the evaluated positive impact on society and the environment; Solving greatly the problem of incentivizing good behavior and dissuading bad behavior in an economy.

The good players would be rewarded, while the bad ones penalized.

It seems self-evident that this system would lead to a flourishing of the quality of life of citizens, be them employees, customers and third parties of the products created by companies.

It would also make the role of the governments a lot simpler and less ‘political’. The main role of the government would be then to collect those metrics and weight them appropriately according to their relative cost/benefit to society. Which should be slightly more a matter of facts than opinions on individual metrics, which is more a scientific endeavor than a political one.

Voters could in that instance vote on the “values” they want to promote. So they might choose to promote the metrics of “Employees” satisfaction. Or damages/benefits to the environment. Instead of voting for ‘candidates’ Voters could vote for the “metrics” that they consider the most important. It would then be the role of the government to enforce those metrics. (I’ll admit that’s the part that is more on the ‘unlikely’ side of things)

Such a project would allow the governments to be able to fully play their roles as arbiters of the economy in a more fluid and unbiased manner. Less susceptible to corruption and lobbying.

Both governments and companies would effectively be held accountable by the bottom up. Leading to a great empowerment of society and a true reflection of how much correlation there is in price paid/tax paid, and value created/destroyed.

If you like this idea. Spread it.