Taxing data is not crazy

There are some interesting similarities between a recent proposal commissioned by the French government and the book out by Jaron Lanier just now “Who Owns The Future?”

Both analyses signal the dominance of corporate actors in a big data world and both suggest new methods of taxation as a potential solution to the problem. An article over at Forbes explains the commission’s proposal by Nicolas Colin and makes a lot of sense.

The French report has been received with predictable knee-jerk responses across the tech world. It is true that governments have not been very good at regulating the internet. But not regulating the internet is not a solution. We could hope for representation that is competent when it comes to the digital world.

The companies that create the internet should not cry foul. They have a track record of evading taxes more than contributing their fair share back to society.

I’ll tackle Lanier’s position in another post. I just watched the conversation he had with James Bridle in Conway Hall and noticed some errors in Lanier’s ideas: they require a fully functional semantic web, they seem overly informed by private copyright practice and complementarily they take a weak government for granted1.

How you would enforce such a law is another question entirely, but it cannot go further off the mark than how large companies manage to evade taxes right now. It may in fact be a lot fairer to tax data at the point of collection/use.

If you don’t bother to read the article above, I can sum it up in two key points below:

Data is hazardous waste material and as such its production and storage should be discouraged (the CO2 tax was given as an example in the Forbes article). Cory Doctorow compared personal data breaches to nuclear disasters, because the fallout is so tremendously hard to contain and control. Whoever collects large amounts of personal data treats the privacy damage caused by breaches as an externality. As such the storage of such data should be discouraged with a tax.

Data is capital and should be taxed as all capital is. Storage, mining and arbitrage using data can generate revenue for sophisticated market actors (those that Lanier terms as those with ‘the biggest computer on the network’). Data is a value adding asset that generates wealth and more data for those who already have it. If we don’t want a situation where a small group of people get richer at the expense of everybody else, we should tax it.

So data is both capital and hazardous. We tax many things with either of those properties so we should definitely tax something that has both.

  1. Most of the problems he states do not exist in a social democracy. Social democracies will face a similar set of problems in the near future, but musicians who can’t pay their medical bills are not one of them.

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