Soapbox moment: note that I first said “revenue”, not “income”. From an accounting perspective, the personal income tax on wages is ONLY a tax on “income” if one assumes the cost of your time is zero. Since every hour you give up in exchange for salary places you one hour closer to dying, that’s a dubious assumption at best. It’s much better to be born a corporation, where you are only taxed on your revenue minus expenses. That’s an “income tax.”

Here is a recent and entertaining blog post detailing the IRS’ views on barter:

http://globaleconomicanalysis......ssion.html

In short, nothing changes — you must declare all your revenue for tax purposes, and any barter currency must have an exchange rate with Federal Reserve Notes.

For specific logistical guidance on paying employees in a local currency and using local currency with your accounting system, the BerkShare Web site has a useful presentation:

http://www.berkshares.org/accountingseminar.htm

I also invite you to contact our Executive Director Melissa Frey to be connected with other businesses paying in PLENTYs, or Pittsboro accountant Corinne Dunn for more specific guidance.

What are the legal tax implications when using a barter system? What about for employees being paid in a local currency? This gets to the heart of the issue.

Jon

One of the PLENTY’s other successes, in my opinion, was illustrating just how much work we still have to create a vibrant, sustainable local economy — especially with respect to the essentials like food, clothing, shelter, and fuel. My first step in understanding the path of the PLENTY was talking with vendors who were involved in the original currency, including Weaver Street Market. I had an extremely illuminating conversation with the folks at Weaver Street, and that discussion really captured the frustration they felt at not being *able* to buy enough locally from suppliers who took the PLENTY.

I left that conversation with the conclusion that buying locally is a “chicken and egg” problem. In the case of Weaver Street, it wasn’t so much an issue of not being willing to buy locally as it was not being *able* to buy locally. They just couldn’t find enough local trading partners who were willing to accept the PLENTYs that were rolling in.

That’s a big part of our challenge — we need more local businesses, more local suppliers who can meet the needs of their trading partners. Creating those businesses takes time, effort, and talent — as well as a market opportunity.

Our expectation is that a reinvigorated local currency will highlight local market opportunities while providing the time for these new businesses to develop. For example, as the local co-op grocery begins to see an influx of local currency, they will begin looking for ways to spend the currency… and their efforts to find local suppliers will assist new suppliers in establishing themselves. But convertibility ensures that the grocer won’t be left wondering how to meet payroll or pay invoices in the short run while new suppliers are being identified.

In other words, the difference between a redeemable local currency and a 10% off coupon in the local paper is that the redeemable local currency provides a gentle mechanism to encourage local businesses to trade with one another — the local business gets to keep that 10% if they can spend a PLENTY earned with another local business. The long-term, recurring nature of that stimulus will encourage folks to find local suppliers, while convertibility preserves short-term viability.

So even with convertibility, the PLENTY sign means at least a desire to buy locally as much as possible — and if you’re a local supplier, a business that accepts PLENTYs will much prefer spending them with you as opposed to trading them back into FRNs.

BJ

p.s. – Regarding your question… with our membership drive and re-launch, the old PLENTYs will be convertible into new PLENTYs for a period of time at par (1 old PLENTY = 10 new PLENTYs = $10). This conversion is being paid for by the folks at Piedmont Biofuels, who have already been driving the PLENTY’s existing circulation by using a portion of their dollar income to buy back PLENTYs for distribution with their payroll on a regular basis.

I think the original PLENTY not being convertible was more than just an oversight or a declaration that banks are evil (I don’t think the original group ever had that conversation). When one spent a PLENTY, one knew it had to be spent again locally. It was OK to pay more than WALMART prices for that wrench or local supermarket prices for the tomato since, it was hoped, you were guaranteed that money would be spent for other local things (maybe at your own business) that didn’t benefit from the negative externalizes of international trade. “In Each Other We Trust” meant just that; accepting a PLENTY meant you trusted that you could spend it again somewhere.

I remember asking businesses if they took PLENTY’s and, time and time again, I was told they didn’t because the didn’t buy much locally. Their payroll was done in Ohio, they bought their supplies from Staples, and they couldn’t afford to buy anything but the absolute cheapest items available. When I see those “Buy Local” stickers I always imagine “(but we don’t)” underneath them. Often businesses want me to buy local but they don’t make that same commitment themselves, either as a business or in their personal lives (even if they don’t sell what is made locally, at least their labor is locally produced and they can take some salary in local currency to spend elsewhere.)

The new PLENTY will be convertible and, perhaps, that will make is succeed where the old currency had failed. But in some sense, it succeeds by giving up on the trust and the inherent contract of the original. A business could just accept PLENTY’s with the intent of it being just a 10% coupon for getting peoples business and take the month’s accumulation to the bank for exchange to dollars and spend them at Staples. In some ways it isn’t really any different than publishing a 10% coupon in the local paper.

The original PLENTY was not issued to random people who sent in a membership application. It was required that they agree to accept PLENTYs in exchange for goods or services they produced. Those who didn’t have a business were encouraged to buy PLENTY’s from a vendor who had many of them. The exchange bank was the rest of the community.

There are many reasons the original PLENTY didn’t take off. Certainly the odd denominations were confusing, many of the “businesses” were not the member’s primary business, and there were decisions that could have been made better. But in the end, I believe a big impediment was local businesses unwillingness to commit to buying locally themselves.

Certainly our local coops and many galleries feature local goods and I have made a personal commitment to buy from them whenever I can. It is harder to determine for other stores if they buy locally. I always saw an acceptance of the (old) PLENTY as a good sign that they do, I don’t think it is as clear with the new one.

I wish the best of luck with this.

P.S. A question: Given the similarities in the old and new currencies, is there any official policy on what will happen with the old currency?