A New Community
Due to the political turmoil we are experiencing in the United States, I frequently think about real-world solutions to the problems our society is facing.
Community funds are an idea that brings the decisive actions of elected officials closer to the people.
A community fund combines a realistic capitalist structure with a utopian socialist ethos.
In each "community," which can be defined as a localized region, such as a zip code. A spill-over investment fund will be established, funded by the residents of that area.
The fund will deploy the residents' capital, bound by fiduciary duty to maximize returns within the value constraints set by the residents in the area. The funds will be distributed only to community improvement expenses.
Community improvement expenses are infrastructure-related and cannot be distributed to individuals or groups; they must be either spent or reinvested.
The term "spill-over" refers to how the fund will be structured like a bucket. The returns the fund generates are like water being poured into the bucket. If the returns exceed the limit of the fund (top of the bucket), the excess will be distributed to the highest-need project out of all the funds in the county.
To help better illustrate the idea, let's run through an example:
In Salt Lake County, there are around 40 zip codes. Let's zoom in on 84114. The fund is established through public fundraising, government investments, or private investments.
Staff are hired for the fund through elections by community members, or, if unable to make such decisions, employed by the Regulatory Authority on Community Funds (a regulatory division of the government, which would need to be established).
The excess proceeds from the hiring round and additional capital raised through a subsequent fundraising round will then begin to grow.
By reducing state tax, there will be a dual-deposit tax on residents, not exceeding their current payment of state or federal taxes.
The dual-deposit tax refers to the 70% of the taxable amount that is given to their local community fund, with the remaining 30% deposited towards a strategic regional investment fund.
84114 starts to accumulate a substantial amount in the fund, reaching $12 million.
There is a significant need for roadway redesign. The community realizes a need for improved sidewalks. They attend an annual meeting (established when setting up the fund), where an election is held to allocate the capital.
They end up adding some more sidewalks, leveling and replacing old ones, and widening a few around the town.
The total of the project was $4 million. Now, after the community investment decisions are made, a second deadline allows funds to spill over the threshold.
The day the deadline hits, 84114 still has $8 million left in the fund ($12 million initially - $6 million in community investment). The threshold is set at $5 million, so there is an extra $4 million.
The surplus is also subject to dual-deposit taxation as before. However, the surplus tax is progressive on returns above the threshold. The more the returns, the more benefits go to the community and the region.
The local community is still incentivized to maximize gains; however, there is also a benefit to the regional community.
This system promotes gain, but provides equity.
After 50 years, the community has been able to provide itself with beautiful parks, robust public transportation, stunning landscaping, social programs, healthcare, and more.
The strengths of individuality are preserved, as needs differ, solutions can meet them wherever they are. However, collectivism is still maintained; everyone is a partner.
I challenge you to comment on an issue you see with this framework. What improvement would you spend on if you had a community fund?