Income agreement and digital taxation

Social peace in our country, and in the rest of the democracies, is only viable from an income pact.

Thomas Osborne
Thomas Osborne
25 September 2022 Sunday 17:53
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Income agreement and digital taxation

Social peace in our country, and in the rest of the democracies, is only viable from an income pact. This will have to finance the public policies that our democracy needs to be sustainable. However, this pact cannot repeat the fiscal model that emerged from the industrial and post-industrial economy of the 20th century. Among other things because the concepts of capital and work have been resignified, as well as the sources of prosperity that sustain capitalism under the digital revolution.

The 21st century needs a new income pact that operates on a platform economy that uses technology intensively. Something that requires the effort to think about a new tax system. On it, the public policies that prevent our democracy from deteriorating must be defined. Not only because it will be necessary to neutralize the advance of inequality and poverty, but also because our public services must be efficient in preserving health and guaranteeing education for all. Inalienable conquests to which the viability of our system of freedoms is subordinated.

Can anyone imagine democracy without them? Doesn't the political experience of the 20th century show that our way of life is impossible without a welfare state? In this sense, the pandemic has confronted us with the need for the Welfare State to expand its scope of action and design more ambitious hospital frameworks, which extend its capacity to care for our elderly and include the mental health of a society that is increasingly vulnerable to the anxiety projected by the cultural dislocations of our time. To the point that the future viability of democracy will have to explore civic care policies. Actions that will collectively restore the idea of ​​a good life that is consistent with the moral well-being that sustains the centrality of human decision in an intensely mechanized environment.

The questions raised by this diagnosis are clear: how to address them and with what resources? An especially complex challenge in the face of the ecological, pandemic, economic and geopolitical polycrisis that, in the words of Edgar Morin, exceeds the capacities of democratic governments. If we want to neutralize the negative effects of such an incomprehensible and deep structural crisis, we will have to find new resources to finance the policies that liberal democracy must imagine if they want to have citizens aligned with it.

The United Nations report published this week recognizes that the pandemic has compromised the sustainable development goals for 2030. From 2019 to now, the progress made on a global scale in the last decade has been reversed. This is evidenced by the indicators of the fight against climate change, the eradication of poverty and hunger, the improvement of health and the universality of education, among other objectives that are part of the 2030 Agenda.

Hence, it should not surprise us that, associated with this reversal, the global setback suffered by democracy is taking place and that translates into a dangerous reduction in the list of countries that enjoy it. Mainly because inequality has grown alarmingly and the social glue between rich and poor, who are the middle classes, has been reduced and lost consistency. Also in Europe and the United States.

The solution, therefore, goes through an income agreement that updates the capital-labor pact that designed democracy in the second half of the 20th century. A pact that made possible the welfare state that resolved the inequality arising from the industrial and post-industrial revolutions. For this, it is necessary to assume that both capital and labor have mutated. Also the sources that produce prosperity and the income that this translates into. The looks and approaches of the past are useless. Neither are the solutions to a superposition of crises that must promote imaginative responses that improve the world that is in our hands.

Ian Bremmer explains it in: The power of crisis. The resilience of capitalism and liberal democracy can be up to the task of tackling the effects of the pandemic, the climate emergency and the disruptive technologies that make wealth pass quickly from one hand to another. To achieve this, it must be admitted that capital has ceased to be basically financial. Today, wealth springs from data and algorithms, as well as technological innovation. Capitalism is cognitive. It massively uses platforms where human work is minimized because it interacts with increasingly efficient layers of artificial intelligence, as well as with industry 4.0 structures that use robots and exponential technologies that do not require the intervention of human beings.

This is where 21st century taxation must be rethought, with taxes that are levied on the wealth released by the technological revolution, as well as the costs, including environmental costs, caused by a digital transformation that makes massive use of the cloud or affects the organization of the business and the market for goods and services. The consequence of all this also affects cultural changes that transform human beings and their way of relating to others; they lengthen life expectancy; masses of specialized workers who need to be retrained and empowered in the face of technology are unemployed, and leisure and care dynamics are introduced that must be revisited if we do not want our social system as a whole to collapse.

Twentieth-century taxes are useless for this effort. As the rents that were born from the agrarian property order of the old regime were ineffective in solving the problems of inequality that the nineteenth-century industrial revolution released. The new tax system must be digital if it wants to respond to the needs of the new class structure that modifies the organization of our society and that, starting with its habits, affects the balances that within it must guarantee social peace and, above all, that common denominator of equality that makes democracy possible.