Is New York State government ready to “hack money” by launching a digital currency for New Yorkers to exchange individual tax credits through a system akin to a “public Venmo” account?
In bill A08686/S06792, Assembly Member Ron Kim (D-Queens) proposes the state establish the “empire state inclusive value ledger establishment and administration act.”
The Inclusive Value Ledger, abbreviated to IVL, would create a master account and system of individual wallets to make and receive payments to state entities and other residents, according to the bill’s memo.
The legislation puts forward a novel approach to exchanging goods and services in New York: Use untapped tax credits, the same kinds of credits you may collect otherwise in U.S. dollars annually from a tax refund check, as a form of currency.
“The first thing we’re doing is simply creating a public version of PayPal or Venmo and allowing people to transact their tax credits, like real money, for free,” said Kim, who described the process as “hacking money.”
Kim worked on the concept of creating a public currency platform with Robert Hockett, a law professor at Cornell University. He based the idea on a white paper, written by Hockett, called “The New York Inclusive Value Ledger: A Peer-to-Peer Savings & Payments Platform for an All-Embracing and Dynamic State Economy.”
Around $55.7 billion of tax credits go uncollected, according to Kim’s estimation. These credits may take the form of social benefits like Medicaid reimbursements, child or dependent care tax credits or earned income tax credits, all of which require an application process.
Kim proposes people should have ready access to these credits in their day-to-day lives, either digitally, through a smart-phone application, or a physical card.
“The complicated and inefficient nature of our tax systems means that often times people don’t know which tax they can qualify for or how to apply for them, and then when they do, it can take a really long time for tax returns to be processed,” said Jenny Zhang, a member of NYC – Democratic Socialists of America’s Debt and Finance Working Group, who supports the bill.
“What this legislation does that is different is it aims to leverage technology as a solution to more efficiently get tax credits to those people who are eligible for them,” Zhang said.
Inspired partly by blockchain technology, the plan would allow people to exchange tax credits peer-to-peer, or smart-phone to smart-phone, without using a private intermediary or incurring a service fee, which Venmo and Paypal charge.
Assuming small businesses take to the idea, people could also use the credits to buy products at small storefronts, like bodegas and pharmacies, and help fuel the local economy. A major corporation like Amazon wouldn’t accept credits through IVL, but mom-and-pop stores would, said Kim.
The assembly member hasn’t specified any mechanics behind IVL payment system’s interface, like how it would work with smart-phone technology or its overall design. In regards to the cost of building IVL, he said the amount “is nominal compared to the returns.”
Kim and his supporting partners, including the Chinese-American Planning Council and NYC-DSA, are in the early stages of an awareness campaign to inform New York residents of the idea.
“What we’re doing now is hosting a series of public seminars, taking this concept and idea on the road,” Kim said.
State Sen. Julia Salazar (D-Bushwick, Cypress Hills, Greenpoint, Williamsburgh, parts of Bedford-Stuyvesant, Brownsville, East New York) is the sponsor of the measure on the senate side. She declined to comment on this story.