Harberger Taxes

TL;DR:

Harberger Taxes allow people to own things temporarily—but only if they’re willing to:

1. Declare a price they’d sell it for
2. Pay a tax on that declared value
3. Sell to anyone who pays that price

This model ensures that assets (land, licenses, usernames, NFTs, even funding rights) don’t become monopolized. It incentivizes honest valuation, discourages hoarding, and redistributes wealth through taxes that support public goods or common funds.

In Web3 and public goods coordination, Harberger Taxes have been proposed for:

• Domain or handle ownership (e.g. ENS, Lens)
• Governance rights (e.g. voice tokens or delegate slots)
• Funding allocation (e.g. owning rights to direct treasury funds)
• Land or digital space (e.g. plots in metaverse or onchain cities)

Smart contracts make Harberger systems trustless, transparent, and enforceable, opening the door to dynamic, fairer property systems.

Best For

• Preventing monopolization or squatting
• Funding public goods via asset taxation
• Dynamic ownership of scarce or shared resources
• Continuous allocation of rights or privileges

Good At

1. Incentivizing accurate valuation of assets
2. Creating continuous public goods revenue
3. Keeping valuable assets in productive use
4. Aligning private control with social benefit

Dependencies / Requirements

• Smart contracts to manage ownership, valuation, tax payments, and forced sales
• Clear rules on tax rates and collection
• Use case where assets are desirable but shouldn’t be monopolized
• Treasury or funding pool for tax redistribution

Not Good At

• Assets requiring long-term stable ownership (e.g. identity)
• Communities averse to forced sales or price manipulation
• Contexts with highly speculative or low-liquidity assets
• Environments without tax enforcement or compliance mechanisms

Who Should Use It?

• Protocols managing scarce resources (e.g. names, seats, land, governance slots)
• Public goods networks experimenting with continuous revenue mechanisms
• Communities aiming to prevent asset hoarding or passive rent-seeking
• Builders designing programmable, fair ownership models

Example Use Cases

• A DAO implements Harberger Taxes for governance seats: delegates must pay a tax on their seat’s value and sell it if someone bids that amount
• A digital land platform uses Harberger logic for plot ownership—ensuring turnover and funding infrastructure from taxes
• A funding mechanism gives rights to allocate treasury funds to people who hold “directorship tokens” taxed and sellable at their self-set price