Lachlan Smith

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Tax: The Original Crowd Funding

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June 26, 2014

In recent years crowd funding sites have been a popular way to connect inventors and creators with consumers to fund projects that would otherwise be difficult to commercialise. These are typically small projects or less than a million dollars.

But what happens when you want to fund a large project. These are the things that typically private industry is interested in funding, but what is these projects are so big, or the benefits not clearly commercialisable that private industry is not interested. These are the projects that range from tens of millions to mega projects worth tens of billions of dollars.

What if there was a way that everyone who were to benefit from these projects to contribute to them? Well there is a way, and it's tax. The average person will contribute about 30% of the income to taxation, plus an additional 10% to 20% from the purchase of goods and services. Almost half our income is collected by taxation, but what do we get for our money?

The benefits of taxation are enormous, infrastructure, and services can be provided which form the building blocks of any civilised society:

  • Transportation: roads, rail, aviation, ports
  • Education: schools, universities, libraries
  • Health care: hospitals, doctors
  • Energy: generation, transmission, distribution
  • Communication: postal services, telephony, Internet
  • Water
  • Sanitation: sewerage, garbage collection, recycling
  • Investment in the future through research grants for everything from energy to health

These are just a few of the benefits of taxation. The services that taxation provide form the values that the society which benefits from them holds. When the apportionment of the taxation to services provided does not match the values of the society, then society attempts to correct the mismatch.

In simple terms taxation is the funding model for building civilised society. This way by working together and giving what we can, we achieve more than any of us could as an individual.

Mega projects are an important area government funding is necessary. It is generally accepted that trade is good, it numerous benefits that are unquantifiable in a commercial sense. Private funding will only go so far to open trade where commercially viable. However we know that by providing funding to open new trade routes by building transportation networks, we increase the diversity of supply to a local economy.

When you fill out your tax this year, keep in mind all the services you use and get enormous benefit from before making that dodgy deduction; and think, if those services weren't available when I need them, how unhappy I would be; because it's not the government who keeps the money, it's you who ultimately benefit.

Tags: crowd funding tax

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