This proposal aims to tax Parcel 0 NFTs to fund future Parcel 0 work.
If you appreciate this effort, please like the post to advance the idea to snapshot.
In order to fund additional Parcel 0 projects, it is necessary to attain a continual source of funding. Without a revenue source off the land itself, such as natural resources or tourism, there are few opportunities other than taxation.
There will be regular taxes that need to be paid to the state of Wyoming as well as paying for accountants and lawyers and others to insure we are handling everything with the LLC properly. In addition to these basic costs, without funding, there will be no ability to create projects, and without projects, there is not much to keep the interest of Parcel 0 NFT holders.
By using Partial Common Ownership and taxing accordingly, we can ensure that those who believe an NFT has utility will continue to own these NFTs.
In addition, this will serve as an ideal initial experiment of PCO with limited downside or exposure.
This proposal is to make the following changes to the Parcel 0 NFT Contract:
Add a Plot Value to each Plot NFT to indicate the value in ETH that the NFT Holder places on the individual plot.
a. Defaults to 0.1ETH.
b. Only the NFT Holder can change this value.
Add a single Taxation Rate that will be used to determine the tax for each plot based on its Plot Value,
a. Defaults to 10% of the Plot Value
b. Only the Tax Collector role can change this value.
Add a single Repossession Account that will receive Plot NFTs that owe too much tax
a. Only the Tax Collector role can change this value
Add a mechanism to Collect Tax on a regular basis.
a. Only the Tax Collector role can call this action.
b. Add a Tax Collection Period, defaulting to one solar year.
c. Add a Next Tax Collection Date that is updated when the Collect Tax action is taken.
d. When Collect Tax is called, if the Tax Assessment is non-zero for any Plot NFT, increase the Tax Assessment by the Taxation Rate as interest
e. When Collection Tax is called, if the Tax Assessment is more than or equal to the Plot Value, the Plot NFT will automatically be transferred to the Repossession Account
Add a mechanism to Assess Tax
a. Only the Tax Collector role can call this action.
b. Stores the Tax Assessment value per Plot NFT based on the Plot Value and the Taxation Rate.
c. Add a Tax Assessment Period, defaulting to 30 days.
d. Add a Next Tax Assessment Date that is computed based on the Next Tax Collection Date.
e. This mechanism can be called at any time between the Next Tax Assessment Date and the Next Tax Assessment Date to prevent gaming of the Plot Value.
f. When called, it updates the Tax Assessment for all plots and update a single Tax Assessed Date.
g. If a Plot NFT has unpaid Tax Assessment from a prior period, the Tax Assessment will increase by the new Tax Assessment amount.
Add a mechanism to Pay Tax that NFT Holders will use to send the appropriate amount of ETH to the Contract.
a. Only NFT Holders can call this action.
b. When called with at least the Tax Assessment amount, it will set the Tax Paid Date and reset Tax Assessment to zero.
Add a mechanism to allow any CityDAO Citizen to Purchase the NFT away from the NFT Holder for an amount higher than the Plot Value assigned to each Plot NFT.
a. Only CityDAO Citizens can call this action.
b. The amount paid will be provided to the current NFT Holder.
c. If there is an unpaid Tax Assessment on the Plot NFT, then that amount will be paid to the Contract rather than the current NFT Holder and will execute the rest of the Pay Tax action.
d. The amount paid will be set as the new Plot Value.
The developers will be paid a total of $10,000 for all work to update the contract and admin tooling, to be paid after the first tax collection.
This is a good idea in general, but is poorly applied to Parcel Zero.
To collect taxes implies there is some value for those from whom taxes are collected. In traditional cities, that money funds infrastructure like roads, local government, and schools. Even PCO expects the one taxed to have use of the land; it is not reasonable to believe that anyone would want to (or even be able to given conservation status) live on Parcel Zero in any meaningful way, so I’m not sure what is available to commonly own.
This could also be seen as a bait and switch; we have just granted “governance” rights but never said anything about the holding of this NFT costing you money. Personally, I don’t see how to tie this back to value for Parcel Zero.
That said, as a proposal, this is an incredible. I think it just needs to be grounded in expectations that are known up front, and applied to a parcel that people would have enough interest in to compete to utilize.
I think this would be better suited as a CIP where an additional parcel was acquired for this explicit purpose (I’m not personally ready to make the leap for a primary home, but would be very happy to participate in this for jungle/oceanfront property that could be used as a destination location).
Possibly so, but I don’t think it’s a bait-and-switch if it’s voted on by the folks who own NFTs. The whole idea of governance in my opinion is to decide these things. If folks don’t want to do it, that’s cool. If only a few people care enough to vote, that says something about the governance model as well.
Agree with @DenverCitizen9 there needs to be some sort of value for people to actually hold these prior to a tax. but lets see, maybe parcel 0 holders will go for it.
Is there a way to notify all parcel 0 holders of new governance structures?
Unfortunately that’s not what this PIP proposes. Defaulting the taxes is not self-assessed, it is imposed.
Requiring the NFT holder to make updates means forcing them to spend money to change this, or forcing them to pay money if they don’t. This coercion is purely extractive and for what benefit to the NFT holder? Even the $10k proposed for this doesn’t currently exist (and I’m also not sure it’s enough to actually complete this effort). Parcel Zero treasury currently holds $2,700 and that money is needed to pay taxes/insurance/etc…
Even with taxes the numbers don’t add up, and what will Parcel Zero do with the repossessed properties? Current volume is ~1 NFT per week. Assuming our selling of properties doesn’t affect the floor prices that’s 6.7 ETH per year (maybe covering the cost of this effort alone), and I think an NFT that costs money to hold is more likely to tank in price than go up in value. Also, that’s expecting people won’t bother to set the valuation at 0.00000001 ether or something obnoxiously low meaning we won’t have income and we won’t have repossessed NFTs.
All that said, the big missing piece is value. Without the value proposition, there’s not a justification for anyone to pay the taxes.
I think dictating this change is unfair, and I don’t think the 0.1 default amount is reasonable. I suspect the actual amount would be substantially less than this, and I think individual plot holders would need to opt-in. There are people who bought this with the expectation that they would tuck it away for a long time. Waking up months from now to find out your NFT is gone seems wrong to me, and “but that’s what the citizens wanted” is not a good look.
Assuming this did go through, I think there ends up being a mass exodus where people are dumping the NFT that they didn’t pay for to get that last $100, $50, $10 out of it that they can before it starts costing them money or is taken away from them.
I would 100% support this for a new property which was a desirable/usable location that people would want to compete to be a part of. Stated simply, I don’t think we have the value or use demand necessary to make this successful for Parcel Zero.
It’s really interesting @mdnatx and I really appreciate the real-world considerations of how taxes could be applied and self-assessed. One concern is that there are 30 subpoints listed on the bottom of the proposal, and while I appreciate the specificity, I found it slightly overwhelming.
My other concern is that, if this passed, I believe I would immediately value my Parcel 0 NFTs at 0.000000001 because I don’t want to be taxed. If I forgot to do so and was assessed a tax of 0.1 ETH per NFT, I wouldn’t pay it. I’d rather lose the NFT than be told to pay taxes on something I already paid a fee to mint.
To be clear, the tax isn’t 0.1 ETH. The value is 0.1 ETH, and the tax is 10% of that, so it’s literally $15 right now (plus gas fees). IIRC, we all spent about $10-$15 to mint this in the first place, so it’s pretty easy to say that we need to spend about $20 per year (with fees) on taxes per plot.
If folks don’t value it, they can absolutely lower the value they place on the plot and risk losing it to someone who does think it’s more valuable.
I thought about making the default value really low, but then folks would likely lose their plot even if they didn’t want to. I tried to pick a default that was low enough to be reasonable taxes per plot (0.01 ETH is ~$15 right now) but high enough so that it wouldn’t be an easy decision for someone to just buy them all up.
5k plots * $15 = $75k, so not sure how it doesn’t add up. It far exceeds the tax costs on the property, so we might actually be able to do something there.
Without a value proposition, there’s not a justification for holding onto the property at all. I believe that with recurring revenue, we could what value we can create. And if it turns out that folks don’t value it at all and don’t want to build or do anything, then we can decide to sell the property. We would only be out $10k for development costs.
Sell them back to the market. They would have a value assigned to them and folks could buy it. May need to update the value based on the tax assessment when repossessed?
The concern I have about a new property with a lot of value at stake is that we don’t have any idea how people will game this. I tried to build in a lot of safeguards above (sorry for the detail), but I’m sure that I’ve missed something. And if there’s real, usable property at stake, that could be disastrous. I’d rather experiment with this parcel while we have it rather than wait for another parcel that we don’t have yet so that we can run into all of the issues here first and fix them up for the next one.
I only see one comment from @will, so I am curious to know more of his feelings about the design and approach as my de facto harberger sounding board, but overall, I think this is super solid for a proposal. The kinks can be worked out through iterative design phases, revenue can be generated, and we can learn something interesting to share with the world.
I understand this is a small grant ammount but for reference - parcel 0 taxes are less than $700/yr so the grant represents over 100% of the tax value.