0% voluntary tax - "freemium" subscription for governance services

Initially created during work at Estonia DAO in April 2020: E-Estonia Voluntary Tax P2P Personal Tokens UBI Blockchain DAO

Now we are 3 years later and I would like to TLDR and summarise key findings.

First principle: 0% is the default tax rate

Everything else is “race to the bottom”, at some point there will be some jurisdiction that offers 0% tax.

I’m seriously considering NEGATIVE TAX RATE, with a disclaimer: payment in credit for services or governance power, rather than cash.

(in crypto world governance tokens tend to have free market value, here we can make it non-transferable, therefore no financial value, unless a secondary market for governance power emerge)

It makes intuitive sense to me:

  • Employers like Amazon, despite all the hate, provide valuable services to the economy.
  • Big corporations have unofficial “lobbying power”, now at least we make it transparent and official

Negative tax rate It reminds me of various governments trying to invite Tesla Gigafactory, quote from Reuters :

U.S. electric vehicle maker Tesla stands to receive at least 1 billion euros ($1.2 billion) in public funding from Germany for setting up a battery cell factory near Berlin

With 0% tax what is the source of revenue?

Services provided by the government.

What are some government services?

  • Company registration.
  • Dispute resolution.
  • Access to social network.
  • Access to job marketplace.

Do I need a subscription?

I can abstain from paying the tax and then purchase service directly - free as in free market.

Some of the services might be available only to those who are subscribed.

Making it a “freemium”

One-off payments or subscription?

Why would you subscribe?

Because benefits from the subscription outweighs the cost

If I’m going to pay tax voluntarily, these “services” need to be at least as valuable to me as the tax I’m paying.

The incentive structure can incentivise a subscription, making it effectively a “no brainer”

Can I pay extra to get “super premium”?

Examples of premium services offered by a traditional government:

Source: https://www.gov.uk/faster-decision-visa-settlement

It makes intuitive sense to me. Default statutory deadline for 99% of the cases but if someone wants to pay for the premium service it’s great.

(I like the fact that the money goes to the government officially, not “under the table” in the form of bribes to an individual civil servant)

Do you want to support your country?

Citizens contributing their time / energy / effort / money towards the country… I voluntarily chose this country, of course, I’m proud to support it.

Financial subscriptions might be problematic to some, in fact, I personally do not like piling subscription costs. I was thinking about an alternative: 1 hour per week commitment is reasonable. The tokens representing a claim to the time belong to the DAO and every member has the incentive to maximize the value of these tokens.

Of course, time of every person will be priced differently by the free-market:

  • 1 hour of Elon = $100k
  • 1 hour of Bezos, Gates, Buffet, Obama = $50k
  • 1 hour of Draper, Cuban, CZ = $25k
  • 1 hour of dudes like me = $500

If there is no market demand for the tokens of some person, the treasury accrues up to a certain amount, say 2 days of work max.

Document from 2020 linked once again

E-Estonia Voluntary Tax P2P Personal Tokens UBI Blockchain DAO

Many pages. Many comments. Many examples. More depth. This post is just TLDR, summarising the key points:

  • 0% voluntary tax rate as default baseline
  • “freemium” subscription
  • 1 hour per week payment
  • aligned incentives
  • source of revenue

Surely you have loads of thoughts, feedback, comments, ideas :bulb::bulb::bulb:

Polling time

  • I would like to support my country with voluntary tax + my time
  • I would like to support my country with voluntary tax ONLY
  • I would like to support my country with my time ONLY
  • I do not want to support my country, free-rider economy

0 voters

Interesting reflections. I do think the model described here makes more sense though — I think we need to stop thinking in payment terms, and start thinking in staking terms.

With tokenomics there’s no need to charge people for things, you can rely on market forces so that locking up enough supply rises the token’s price.

Copy paste from your linked article:

In turn, citizens don’t actually pay anything. They lock up $NATION during a given timeframe, but when that time comes, they can withdraw it. It’s fully theirs. They are very incentivized for Nation3 to do well.

As more economic activity happens on the Nation3 jurisdiction, like business transactions between individuals or DAOs, more assets are secured by services like the upcoming Nation3 Court, and $NATION benefits from a proportional increase in demand.

I think we can connect both approaches, best of both worlds.

Owning locked 2 $veNATION is a solid incentive to want `$NATION to succeed.

And then, on top of that, we can add additional incentives coming from subscriptions.

Just like prompt engineering (for AI image generation) is a new thing, token engineering is a new thing. Related:

Personally, I would like to retain a high engagement ratio and people who care about the country. The current state of the poll: I do not want to support my country, free-rider economy has the most amount of votes.

Related, also 1 hour per week