In this guest post, Loretta B. describes a unique way to build social capital and to save money.
Two weeks ago my boyfriend and I enjoyed a rare night out on the town. We dressed up in our best clothes, had dinner at a special restaurant, and headed off to the symphony. This was my first time at a symphony, and we had a fantastic time. Our tickets were worth $75 a piece.
Make no mistake, I am very frugal. In fact, I fall into the “make your own laundry detergent” category of frugality. How on earth could $75 tickets fit into such a person’s budget? I do something called time-banking. 
Some refer to it an alternative currency system, a form of volunteerism, a way to build communities, and an international movement for social change. I think it’s all that and more. I encourage you to watch the introductory video on the national timebank website.
Where did those symphony tickets come from? The symphony is a member of our timebank. Members of the timebank do bulk mailings for the symphony, and the symphony makes tickets available for each performance. The symphony was two hours long. So I spent two time dollars for each ticket. We could have volunteered to be ushers; but the ushers wore uniforms and were not allowed to sit down, a far cry from our romantic date.
What is time-banking?
Time-banking is built around the basic concept of earning and spending hours. Everyone’s skills, whether they are a medical professional or a house painter, are worth one “time dollar” per hour. The hours that you earn are stored in a “timebank” and can then be redeemed for any service of your choice from any member of the timebank. That is the thing that I like the most about time-banking — it is a great equalizer.
My local timebank is called Community Exchange (CE.) I think that is a perfect name, because the people I have met though the timebank have become my friends and neighbors.
How is this different from bartering?
With bartering you need to find two people who each have something that the other wants or needs. You may have to haggle or compromise about the value of your item, or compensate in some way, if the exchange of goods or services is perceived as being unequal. With time-banking, everyone’s skills are equally valuable, and you can make your exchange with anyone you want.
Everyone has a skill — some might surprise you. An elderly shut-in who doesn’t drive can make beautiful wedding cakes. A woman in a wheelchair who needs her house painted used to train police dogs and now provides puppy training. The retired school-teacher who needs her leaves raked has a kiln and is teaching ceramics. A common question when we meet each other is, “What do you do?” “What do you need?” or “What can I do for you?”
I have provided house painting, taught basic computer skills, and helped people job search and post resumes online. It felt great to make such a difference to someone on such a personal level, not an anonymous contribution of money.
I house-sat for a woman who was a certified yoga instructor, and then I spent my first hour — on yoga. I had always wanted to take yoga, but the expense had stopped me. It was a disaster — I promptly fell on my rear! But I had paid with time dollars, so I tried again, and now I love it. Time-banking allows you to do things that you might not normally be able to afford.
Weaving community
There’s a serious side to time-banking, too. The biggest needs are transportation and companionship. That seems so simple — take a bus, join a club! In reality, getting a ride to a medical procedure is more complicated than simply taking a bus, and a daily phone call to check up on the elderly who have no family is extremely important. Time-banking allows the elderly or handicapped to stay in their homes and live independently an average of three years longer than an isolated individual.
There are doctors that participate in our timebank. Other members will provide babysitting in the office lobby while parents are being examined, and these members can in return attend medical workshops and receive certain medical care, (there are some restrictions for legal and liability reasons).
I recently took several months of family leave to take care of my Dad. There were complications. A century ago, family and neighbors would have stepped in and helped. My boyfriend was my emotional rock, but his job was not flexible enough that he was able to help me on a daily basis. So for much of the time I was alone, and I felt like I had no-one to turn to. I found a lovely woman through my local time-bank who does respite care. She came over and stayed with my Dad, allowing me to run necessary errands. And, having gone through this herself, she had lots of useful advice. The hospital’s physical therapist wanted grab bars put in the shower, and a timebank member who provides handyman services installed them for me.
When my Dad died, my yoga teacher from the timebank came and stayed at the house during the funeral. She removed all the medical equipment, restoring the house to normal. Others served food and cleared up at the luncheon after my Dad’s funeral. I cannot tell you the relief I felt having people I could trust take care of that for me, and financially, I would not have been able to afford the luncheon any other way. When people around me complain that they don’t even know their neighbors anymore, I want to tell them — become a good “neighbor” and you will have good “neighbors”!
Time is money
What if going to the symphony isn’t your thing, and what you really want is an Xbox 360? Can you buy one with time dollars? Not in my timebank. But what if you had money in your home repair account to have your house repainted this summer, and instead you spent only time dollars and the cost of paint? Or had your car’s oil changed or your hair cut and paid in time dollars instead of cash? Maybe in an indirect way, you can buy that Xbox with time dollars — with the money you saved!
Read more about time-banking at the official Time Banks web site.
GRS is committed to helping our readers save and achieve your financial goals.Savings interest rates may be low, but that’s all the more reason to shop for the best rate.Find the highest savings interest rate from Ally Bank, Capital One 360, Everbank, and more.
This article is about Odds and Ends, Relationships, Tools
Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.
Discover is a paid advertiser of this site. Reasonable efforts are made to maintain accurate information. See the Discover online credit card application for full terms and conditions on offers and rewards.
SEARCH FOR RECENT ARTICLES
This is a very interesting concept. When I was growing up my parents owned an educational toy store and through the local “chamber of commerce” program called the freedom exchange (not exactly sure of the name) but the idea was, merchants could exchange goods and services with each other without cash transactions, etc..
That was 20 years ago, and I haven’t heard much about it since.
I suppose this service would work well until new people come in with the intent to take advantage of the situation.
loading....
Time-banking is great. I have been doing it for years. Just beware that it is better to do it within the structure of a community organization so the expectations and standards are understood by the participants.
I once tried to do a time-banking arrangement with a friend, but he just couldn’t let go of his need to pay me an hourly rate for helping him. To each their own, but I definately recommend looking for a time-banking organization in your local area.
Also, I don’t want to think about cash payments from friends and neighbors when I’m doing my taxes each year.
loading....
This is a fascinating idea. I just spent a little time looking at the Time Bank website. I need to find out if we have one here. Chances are excellent that we don’t. However, I am intrigued enough by this idea that I might even look in to getting one started…
loading....
I really like this idea. So does Communist China, Communist Korea, Communist Cuba, the now defunct Communist Russia . . . you can see where this is going.
Like any system, eventually someone in power will want control, greed will kick in, and the people at the top will ruin everything. With the flick of a database entry now suddenly I get all sorts of free stuff. Systems like this can only exist if everyone involved agrees that their time is no more valuable than another persons time. I’m not so sure that’s true.
What happens when you trade your 2 hours for your symphony tickets worth $75, but then someone else trades two hours for something worth $40. That puts your time worth more than theirs. What happens if a CEO of a large corporation spends 40 hours putting together a deal that brings 12000 jobs to a city for years to come . . . do they get to go to the symphony 20 times? Where is the incentive for advancement?
In small scales in communities this plan works great, but it can’t scale and that’s why it doesn’t work globally.
loading....
What an awesome idea! I have to see if there is such a program in my area. I think this is fantastic and as the recession worsens, and the dollar falls, this type of exchange and bartering will become even more popular.
It is a very good idea for local communities to set up alternate forms of trade now.
loading....
This sounds great – I’m definitely going to check the website out and see if there’s something in my neighborhood.
Traciatim’s comment seems kind of negative. Comparing it with communism? Also, the whole point seems to be for it to work in small scales in communities. This system doesn’t seem like it’s meant to “go global”, except in that little communities all over the globe could do it.
loading....
Another great guest post… I’ve never even heard of this concept. Checking out the Time Bank website now.
loading....
Hey Becky, could you explain how this is different from communisms philosophy that everyone is equal and we should all pitch in together for the greater good, rather than individual gain?
loading....
@Traciatim,
I agree with you about the fact that this kind of system would not work on a large scale level, however I have another argument as to why not. It’s supply and demand. What if there is a huge supply of house sitters that all want to go to the opera? House sitting will have to be devalued in time dollar since there are so many of them while people will fight through their teeth just to get some tickets to the opera willing to pay more than one time dollar per ticket.
As to this working on a local communiy level, I still think that there will be a huge difference between supply and demand for the different services people can and would provide. If you’re lucky and have a skill that is in high demand you can volunteer as many hours of your time as you want. And if you’re looking for special services that noone else needs, the more power to you, they will be always available to have. Otherwise, you’re probably SOL.
As for my personal experience, I volunteer in my community as a firefighter with no compensation for my time and that is fine. I also help out my friends and neighbors with their computer needs/problems free of charge. Now if I need some help with feeding my cat and checking the mail while I’m gone on a vacation I know I can count on someone doing it for me in return.
Another great situation where it works is babysitting. If you have kids and your neighbors/friends have kids you can just swap out babysitting services for each other and save a bundle.
Another point that this article did not mention is that you’re actually getting a lot more for your time than you otherwise would, even if the service you got in return is a “lesser” service than the one you provided. Tax benefits. Every hour you put in and get credit for is tax free! You cut out the middle man. If you take social security medicare and taxes into account it could be 30% or more. So even if your time to you worth $20/hr and you get a service that is worth only $15/hr you still come out ahead.
A lot of people like to put dollar figures on their hourly rate, but it can be misleading. If you make $20/hr but you only work 40 hrs in a 168 hr week your actual earning per hour is a mere $4.7/hr. That is roughly how much your time is worth. Your free time only worth $20/hr if you can actually find a place that is willing to pay that.
loading....
Cool idea. It could work at a small scall but I agree with the Ayn Randian style poster Traciatim. At some point someone’s hour is more valuable then someone else’s and all hell breaks lose. But it should work on a small scale very well. I think as long as someone goes in focused on the volunteer type aspects instead of what-can-I-get-out-of-this aspect, things should be fun.
Again, cool post and well written Loretta.
-Josh
loading....
@Traciatum, I’m having a hard time wrapping my head around your criticism. You are saying time-banking is bad basically because Communism doesn’t scale well?
I think that is largely irrelevant because unlike Communism, time-banking is completely voluntary. In your example, the CEO who time-banks 40 hours would indeed be perfectly happy with 20 symphony tickets because he *chose* to time-bank 40 hours. If he didn’t think his time was worth 20 symphony tickets, he wouldn’t have done it.
Also, there is absolutely nothing wrong with Communism/Socialism in theory. In fact its a damn good idea. The problem with Communism is and always has been with its practical implementation. It’s applied on top of legacy systems that have infinite opportunities for corruption.
In fact, some elements of Socialism are very successful, even in our society; particularly those that address the failings of Capitalism , basically anything that has to get done but doesn’t have an immediate profit motive, such as taking care of the poor, public works, public education etc.
loading....
This is a fantastic concept!
I think that the reason Traciatim holds reservations about it is that he/she thinks of it as an involuntary replacement for our monetary system, rather than a voluntary organization to which people choose to belong. If I understand correctly, everybody who participates in this organization does so with the understanding that they are “paying in” at an even hourly exchange as many hours as they wish, just as they would volunteer for their church or school as many hours has they wish, doing whatever they choose. If a doctor does not want to pay his/her time in medical services, he/she does not have to. He/she could trade cookie baking time, yard work time, etc. One chooses the amount of time “paid in” and the “payback” one receives.
loading....
I don’t know if I understand. It just seems like an alternative form of money. Instead of doing something and getting a time bank dollar, why would the person just do it for real dollars, and then spend the real dollars however they wanted?
Also, I think of the problems with communism/socialism is that there is no incentive to do well if there is no reward or no negative effects for failure. I agree that it does address well the needs that don’t have an immediate benefit for people, but ideally (and here is maybe a failing of capitalism) people who do well are charitable enough to take care of those who cannot. Although I would argue that public works and education are not necessarily part of the failings of capitalism, while I agree that taking care of the poor is.
loading....
Hey I think you are confused. With time banking you do work for someone and earn an “hour” you can then take and spend that hour on someone by having them do something for you.
loading....
Seems like a nice way to get involved in the community and for individuals to help one another by sharing services.
I think some people commenting here are making too much of this. Its not a global economy or anything close to it and its not meant as a way to maximize your individual gain from effort. If you don’t think trading 1 hour of time for 1 hour of time is a good idea then don’t participate, simple as that.
Jim R
http://freeby50.blogspot.com/
loading....
I grew up in a small town in the hill country of the South. A local storekeeper and a high school math teacher jointly kept what was called “The Ledger”. The Ledger was an accounting of the time individuals in the community had devoted “doing favors” for others. “Favors” could be anything from providing rides, housekeeping & cooking, childcare, farm work, to tutoring and (in one horrible case) flood cleanup.
The Ledger was kept at the general store and several times daily different people would come in to see if there was anyone who could help with some task. The storekeeper would name one or more likely candidates who had either mentioned they could do things like the named task or who had done things like that for others in the past. Suggested names also often came with comments suggesting timely availability (“I don’t think she’s busy now”), quality of work (“He did a fine job for Mrs. Perkins”), or the slightly ominous “That would be good for him/her to do”, a vague suggestion that the named person was running too large a negative balance on The Ledger and needed to be doing more for others.
As a task was completed, the person helping and the person being helped would sign a note listing the nature of the work and the number of hours involved and the sum would then be added to The Ledger. Every so often the high school teacher would audit the storekeeper’s records for accuracy (and remind families with large negative and positive balances to give/accept “favors” to even out the accounts).
The Ledger disappeared with the coming of LBJ’s Great Society programs and the increased cash economy in the area, but this last Christmas I witnessed an elderly lady who was babysitting being thanked for her services. She said simply, “Oh, don’t worry about that. You don’t have to mark it down.” I’m sure they didn’t know that she was telling them that the babysitting was a little favor, not important enough to be “marked down” (entered) in The Ledger.
I wish someone had told us we were a bunch of communists and what we were doing was totally unworkable, so that we wouldn’t have done it for so many years. Oh well…
By the way, in doing my morning webcrawl I encountered another excellent piece on time banks that I’d like to share:
http://www.boston.com/ae/events/articles/2007/09/10/innovative_banks_foster_sense_of_community_by_tying_dollars_to_providing_a_service/?page=1
loading....
Great post and I love the idea.
However, isn’t this still bartering which has to be declared with the IRS?
Mike
loading....
This is a great idea- thanks for sharing!
My only question- is the time traded subject to tax like bartering is?
http://www.irs.gov/taxtopics/tc420.html
loading....
@Greg
See, I trade carpooling the kids to school with my neighbours. I shoveled their driveway out of about two and a half feet of snow when they were away on vacation so they could get their kids in to the house and not half to park on the street and climb over a huge (probably 4.5′, it was almost as big as me and I’m 5′ 5″) snowbank left by the plow over a few days. That’s called being a good person, you don’t need to bank time for it. I don’t expect repayment, and I don’t expect to have someone else do something nice for me for the hours of time that I put in in these style of arrangements.
@All
It just takes a few bad apples to ruin everything. If everyones time is equally as valuable then I can go on there and bank up time doing menial tasks at mediocre quality and my time is just as valuable as someone who worked their tail off re-shingling someones roof for a day. Why do you pay your roofer 30 bucks an hour and the kid who mows your lawn 5? Because the value of the service is different. That’s why we have money, to make these exchanges go smoothly.
Plus, try telling the IRS/CRA that you didn’t make any money working this year, you were just given time credits. See how long they come back with the bill for the value of all the services you receive. I don’t think you’ll pay that one with time credits
I’m all for a volunteer network of communities helping each other, and everyone should always go out of their way to help their neighbours. Making all time equal independent of the service IMO is just silly.
Plus, it’s not tax free in the USA:
http://www.irs.gov/businesses/small/article/0,,id=113437,00.html
or Canada:
http://www.cra-arc.gc.ca/E/pub/tp/it490/it490-e.html
loading....
@Fourpillars and Escapee
I would think that it is – not being a tax-expert, I am not 100% sure – I would love to hear from some expert tax accountants about this issue…
loading....
“Although I would argue that public works and education are not necessarily part of the failings of capitalism, while I agree that taking care of the poor is.”
What I meant by that was these are examples of things that might not get done at all if there isn’t an immediate profit motive. If a job takes an enormous amount of input to do, with delayed benefits for a very long time, you might have trouble finding a corporation to do it in the free market. Same goes for public education. If left up to the free market, we would likely not have any schooling at all for people in areas where its not profitable to educate them. I’m thinking inner city ghettos and extremely rural areas. Social security is another example.
The principles behind taking care of these things are as socialist as anything in Cuba or China.
loading....
In early America in small towns social sharing and socialistic ideas were put into practice. The people of Jamestown, Plymouth and other early settlers had a common food supply and such. But even in small towns socialism does not work as the early settlers found out. To those of you who say timesharing is a good idea let me tell you, it isn’t. Now don’t get me wrong, generosity, sharing with others, charity, helping people anonymously, and other good works are great, and I am all for them. But many socialistic ideas have been tried in the past and history has shown us that Socialism (and Communism) does not work. It sounds nice, it even feels nice to share and get back help and other things but it does not work. Mankind cannot live in a Socialistic state. For icup, Socialism does not help address “shortcomings” in Capitalism. In fact, it does worry me how many people see the socialistic programs in our society and praise them. Socialism does not work and can ruin countries.
loading....
This is bartering. The element being bartered is the time unit rather than the service or product, but it’s still barter.
I think it’s a lovely idea in theory but I’d rather pay people for their work, in part because I believe that the monetary system is a centralized barter system that everyone participates in, and in part because I like having the concrete reality that I paid you to paint my house, and you did a poor job. In a system like this, there’s little social consequence to incompetence and it’s likely that the court system would be less sympathetic to something that appears to be “trading favors” rather than a business transaction.
loading....
Simply put, this is not a good idea. Whoever wants to participate in it, go ahead – I for one, would rather excercise moderate self control when spending, and not have to preoccupy myself on anal-retentive time-charting.
Just enjoy life responsibly! There’s a difference between being smart with your money and being the penny-pinching drag that can think of nothing else besides trivial ways to save 5 cents.
Making your own detergent – please.
loading....
For tax question, here’s from Time Bank website FAQ:
http://www.timebanks.org/faqs.htm#taxexempt
Are Time Dollar exchanges tax-exempt?
Yes, and this is another reason why Time Banking is different than bartering: it is not taxable. In normal bartering, you have to declare the value of the good and services you receive to the IRS. We have an IRS private letter ruling that Time Dollar exchanges are tax-exempt.
loading....
For those who asked about tax, here’s from Time Bank website FAQ:
http://www.timebanks.org/faqs.htm#taxexempt
Are Time Dollar exchanges tax-exempt?
Yes, and this is another reason why Time Banking is different than bartering: it is not taxable. In normal bartering, you have to declare the value of the good and services you receive to the IRS. We have an IRS private letter ruling that Time Dollar exchanges are tax-exempt.
loading....
Give me a break. Why are so many people being all OH NOES COMMUNISM IS TEH EVAL AND SO THEREFORE IS TIME-BANKING!!!!1!!!!
If you don’t like time-banking, don’t do it. Its as simple as that. Its a method of frugality, not a system of freaking government!
And I would argue that quite obviously, it can work. Hence the article.
And whether you like it or not, there are many many successful socialist programs in effect in this country right now, that if they did not exist, many many people would be completely screwed.
Capitalism’s biggest failing is that its not in the capitalists’ best interest to help people out of poverty, quite the contrary in fact.
loading....
OMG, OMG, Communism. Communism is evil! OMG!
The worst parts of communism are not present in this time sharing. Anyone who thinks so should go research communism. Communism involves _Taking_ away the wealth of the wealthy, and _Giving_ it to everyone equally. Communism favors the whole over an individual. Time sharing favors the individual. Early communist leaders starved their own people to increase collusion. Time sharing gives people with desired, but less monetarily valued, time an opportunity to pay for other people’s time. Communism’s final stage involves converting the entire world into communism. It’s fundamental idea of communism, Time sharing isn’t even close.
It also really bothers me that people think that socialism is going to destroy the country. The US has never been capitalist. Look at schools, police, the army, fire depts, even politics. These services are paid for by all, and used by some, explain how that is capitalism?
Try to be less Mcarthy, and more friendly.
loading....
I want to address the issue of communism/socialism vs. time banking, and also to respond to Andy’s charge of alternative money.
Time banking is different from communism because:
1. It is voluntary.
2. There is a negative effect if you don’t do the work. If you don’t do the time, you don’t get the dollars to exchange.
3. The downfalls you describe are downfalls of capitalism, not communism.
What you’re saying is a downfall of communism, i.e, that
is actually a downfall of capitalism, not communism. It is in a capitalistic society that the “worth” of someone’s hours can be undermined by someone else — in communism/socialism, an hour is an hour, regardless.
As far as Andy is concerned, sure, this could be done for real dollars, and it is — every day. But it is often difficult to hire people for a small, short-term job. For example, envelope-stuffing is notoriously boring and it’s difficult to find people to do it, but if you know you are doing it just once, you’re doing it as a group and you get a perk you might not get otherwise, it isn’t so bad. People don’t usually take jobs like that, though, because it’s not steady work and they would starve to death.
Also, in this system, if you don’t like stuffing the envelopes that week, you never have to do it again, whereas in most paid situations there is an implied responsibility to keep doing the job.
Because the system also helps with networking and friendships, it holds a different kind of reward than just getting cold cash in your hand, and is a way for people with arcane skills to use them when they otherwise might not have the opportunity.
loading....
I had no idea that my guest post would be in any way controversial…
Let me clear up any misunderstandings…
There are no tax repercussions because there is absolutely no monetary value assigned to any service. The link provided by Traciatim refers to bartering – where you assign a value to a service and find someone who is willing to barter with you. A house painter in that scenario may barter 100 hours of painting for one 15 minute doctors visit. In timebanking, one hour is equal to one hour, and it is tracked by the timebank. There is no “profit” to report. The timebank is a non-profit organization that strictly follows all the rules and regulations that entails. Members receive an orientation at which we learn what is allowable, and what is not. This is why you cannot trade time dollars for the Xbox 360 – it would violate the rules.
It is not remotely like communism, because membership is completely voluntary.
It not all that different than volunteering, and one does not replace the other. In fact, almost without exception, the members of my timebank are also community volunteers. I also do things like shovel snow for my neighbors, and have been an active Habitat for Humanity volunteer for at least 12 years. And as both a volunteer and a timebank memeber, let me point out another difference. You are all speaking as givers. What if you have a need?
In fact, I never intended to use any hours. I have many friends and wonderful neighbors. What about when I needed help? They did help me. So much so, that I felt like I had begun to take advantage of my friends and neighbors. My Dad was ill for MONTHS before he died. Was I supposed to ask my neighbor to take time off from work because I needed help taking care of my Dad? That would have been ridiculous. Also, everyone wanted to attend my Dad’s funeral, how could I ask one of them to stay at the house, serve at the luncheon? I may never need help again, but if I do, I will not feel any hesitation in asking for help.
That’s the REAL beauty of timebanking – you don’t need to be embarrassed to ask for help. It’s not an imposition, It is reciprocation. In timebanking there is no stigma in asking for help. In traditional volunteering there is always a giver and a receiver. Often the person receiving the service is perceived as being needy, and sometimes needs to prove that they meet some kind of criteria for need before they can get help.
Forget about anal record keeping – not a single person who helped me with the funeral even recorded their hours, I had to report them for them. Yes, some people are looking for something for nothing, but there are many more people out there that are in need of help but too proud to ask for it. I am a proud person, I would have never asked for help, no matter how badly I needed it. Those are the kind of people in a timebank, not people looking for a handout.
loading....
I really enjoyed this post. But how is there not a time bank organization already in Los Angeles?!!
loading....
“At first glance, it seems crazy that someone is paid the same for web design and pulling weeds, but this turns out to be the core of what makes Time Dollars really work. In the Yin, or caring economy, everyone’s time is valued equally – just like it is inside a [communist country]. You wouldn’t ask your cousin to give you two hours of dog walking for every hour you spend fixing his computer.”
(P.S., I changed a word in there, but it’s clearly marked just as a ‘real journalist’ would mark it . . . see if you can spot it
Actually you would . . . because a dog walker required very little skill other than having a pulse. The web developer probably took a long time to go to school and perfect their work. That why you pay some kids 5 bucks to walk your dog, but your company pays 60K-80K a year to someone doing the business website, and a computer tech charges 60 bucks and hour to fix your machine. They help their friends though, not for time credits, because that’s what friends do.
Different skills require just that . . . different skill. These skills should be treated appropriately. If you neighbour needs help building their new steps and you can swing a hammer, you should be helping (or offering), because your a neighbour and that’s what naighbours do. You don’t need time dollar credits, you just need to be human.
loading....
Also note, this article broke one of the rules to keep the time dollar system tax exempt:
“The important thing to remember, however, is that in order to maintain the Time Dollar tax exempt status, you can never make an equivalency between a Time Dollar and regular dollar.” (FAQ contents)
“Our tickets were worth $75 a piece.” . . . “So I spent two time dollars for each ticket.” . . . making each time dollar worth $37.50.
You’ll now need to include the $150 on your income tax this year. I’ll be sure to let the IRS know to be watching for it.
. . . (not really, but you should if you are an honest person).
loading....
No, the tickets were worth $75 apiece, but the symphony was 2 hours long. That’s why it costed 2 time dollars.
loading....
Traciatim, as plonkee said, the symphony was 2 hours long, so it was 2 time dollars.
Perhaps if I explain it more, it will help you understand it more. The symphony makes a certain number of tickets avaiable for CE members for unused seats to their subscription series. These are seats that would not be sold at a ticket window, because it is to a subscription only performance. The tickets have no value. The tickets are given to members moments before the show, and the ushers take you to your seat.
loading....
If the tickets have no value, how are they ” . . . worth $75 a piece.”?
That’s like saying “I didn’t pay her for the sex, I paid her to leave” . . . the actual act is the same. You spend 4 hours of time on tickets worth $75 thus if you hadn’t of worked for it you would have nothing, valuing your time at $37.50 per hour.
The tickets would only have no value if they gave away all the empty seats for free to anyone who was walking by to fill the seats and you happed to have one, not giving them just to select people who are willing to trade work, which has value, for them. Other people paid $75 each, therefor their market value is $75.
loading....
Okay, to clear something up, I am responsible for part of the nit-picking here. My editing mangled things, apparently. Loretta submitted the following two sentences:
“This was my first time at a symphony, and we had a fantastic time. The ticket price would have been $75 a piece.”
I changed that to:
“This was my first time at a symphony, and we had a fantastic time. Our tickets were worth $75 a piece.”
Maybe that doesn’t change anything in this discussion, but let’s be clear that I’m the one who used that phraseology, not Loretta.
loading....
It’s still the same thing, she received something that not anyone could receive based on work done that was traded for something of value = taxable.
loading....
“You can never make an equivalency between a Time Dollar and regular dollar” means that you can’t set up an exchange rate between Time Dollars and US dollars. That hasn’t been done here. This time, 2 Time Dollars got something worth $75. Next time, it might get them something worth $10 (your example of a kid mowing a lawn who would otherwise be paid $5/hr). That means that Time Dollars aren’t just another currency.
loading....
For anyone interested in timebanking, but are genuinely concerned about the tax implications, please do not let Traciatim scare you away with the bogeyman that you would be doing anything illeagal. I strongly suggest that you contact your local or national time-bank. They are all fully trained in this complex issue, and strictly adhere to all rules and regulations, approving of only transactions that will not have tax issues. This is also another reason why transactions are tracked so closely, to monitor their legality.
loading....
Intriguing! I’ll check this out! Thanks for posting this.
loading....
@ Traciatim :
If you would stop trying to be a “know it all” mayby you would understand how this really works. I think this is a neat concept Lorreta,and if it works for you that is all that matters, you probably just wanted to share you’re story with others and did not think you would be “attacked”.Also, any more posts from you Traciatim will not be read from me and hopefully no one else, so if I were you I would just calm down and don’t bother responding back anymore!!
loading....
If I were any more calm, I’d be comatose. Exchanging hours for hours is fine, as both hours have the same value if you are providing similar services.
Here is the trouble, if I’m a consultant and I make 100 bucks an hour to program web pages, and decide to exchange that service with someone who bakes for about 10 bucks an hour then rules would state that I have given away 90 dollars and someone else received it. If you convert that to hours, the same thing happens. The link above showing the IRS’s tax free letter very specifically states that like services with like values are being exchanged as hours and therefor has no tax implication. In the case of the Symphony it very clearly was an exchange of 4 hours for $150 worth of something else and should be taxed as income, even though the item is not physical money, it has market value.
Of course, everyone gets defensive and berates the person pointing out the facts rather than the ‘feel good’ tax evasion strategies.
loading....
Ed McCartan: “[A]nal-retentive time-charting” was surely less time consuming than the making change, check writing and card swiping/signing you are more used to performing.
Traciatim: You seem to think that wage differences are based on skill differences. Under Capitalism that is hardly the case; a simple counter-example: Paris Hilton gets more for giggling and flashing her panties at a club for a few hours than an astrophysicist gets for a year’s research and/or teaching. Perhaps wage differences can be better seen as based on the outcome of supply and demand functions. I know it is an affront to self-esteem to believe that an hour of one’s labor isn’t worth more than someone else’s, but under capitalism there is simply is no inherent (skill-based) reason to value (say) an hour’s web design over an hour’s weed pulling. It’s just the result of market forces and competitions for the moment.
Also, “being human” is all well and good, but humans generally need more organization than that to scale activities and alternative economic systems provide such organization.
All: As I indicated in my earlier comment, I grew up in a situation where people navigated in a number of different economies. Yes, there was a Capitalist marketplace and it did become more dominant over time, but there were several others operating in parallel or even competition with it. The largest was a near universal farm family self-reliance and self-sufficiency. There was the gifting, sharing and assisting network of family which often extended to include friends and neighbors. There was the political economy of state-provided services such as education, criminal justice and relief (welfare). Church networks favoring co-religionists was commonplace. Barter and lending often supplemented capitalist exchanges in a cash-poor community. Nonprofits operated on the fringe of capitalism: the Farmer’s Co-Op, the Credit Union and the like. Etc. Etc.
The appeals of conventions like “The Ledger” were not just that they enabled exchange in a cash-strapped community ill served by the Capitalist marketplace. They also sidestepped a host of problems inherent even in a well-developed Capitalist market. For example, at a time when people calling themselves Christian took teachings against usury seriously, there was no giving or taking of interest on Ledger accounts and “debts” did not compound. Also, when proud people refused to accept charity or go on relief no matter how great their need, The Ledger allowed them to be helped with pride intact, with the understanding that they would accept aid today in return for paying back the favor to someone else at some point in the future. When greed was a sin and not a point of pride (pride was another sin, incidentially), exchanging hours of labor prevented favor “accumulations” from being very skewed. Etc. The diversity strengthened the community and improved the lives of the participants.
loading....
I really don’t understand the negative comments here. I think this is an amazing idea where people can trade time and talents which may not be of an monetary value, but are still very necessary to a close community.
The people bashing this idea are not the ones who have used it and found it to be unsuccessful, they are the ones who haven’t even taken the time to look at the website and have made incorrect judgments with very little information. Personally I wouldn’t value anyones opinion who thinks they know everything about a program simply because they took 1 minute to read an article.
I have taken the time to look at the program and because there is not on in my area already I am taking the steps to start one. This is a phenomenal program that is well thought out and has had tremendous results. Listen to the people who have used the program and taken the time to actually know what they are talking about. I would say the rest of the negative posters here just like to hear their own voices, but they don’t even get that out of it.
loading....
I love the idea of timebanks. We have one like that in Seattle (http://timebucks.org/), but I couldn’t find the listing for any timebanks for Seattle or nearby- anyone know of one?
Also, my other issue with the timebucks is that you can buy in to it, which somewhat defeats the purpose of escaping the economy, no?
loading....
To address the tax question, the time-bank webpage refers to an IRS ruling that addresses the tax consequences of the time-bank organization, not the members themselves. The IRS ruling states: “Specifically, no opinion is expressed concerning whether a member earns income as a result of the member’s participation in the program.”
Having said that, I think time-banking sounds like a nice idea.
loading....
“Paris Hilton gets more for giggling and flashing her panties at a club for a few hours than an astrophysicist gets for a year’s research and/or teaching.”
Yet if Rosie O’Donnell did the exact same thing she would probably not make the same amount of money. Therefor if Paris and Rosie both were trading ‘hours of panties’ for ‘hours of bush trimming’ then the . . . [yard work people . . . pun most surely intended] Paris ‘hours’ are worth more to the population, that’s capitalism at it’s finest. Thanks for the point.
Peoples willingness to pay, income, and capitalism aren’t based on the need of society, but only peoples willingness to pay. Your taxable income relies on people’s willingness to pay you, if that is in hours, muffins, oil changes, or dollars. Making everyone value exactly equal no matter the act is communism at work, even if it’s a voluntary program.
” . . . humans generally need more organization than that to scale activities and alternative economic systems provide such organization.”
Exactly, the value of money paid for time is all the incentive most people need. I work in a large corporation making OK money. If my value was just as good if I was sweeping sidewalks why bother doing anything more than that? That’s the problem with the plan, is there is no incentive for learning, development, or progress. Capitalism rewards people for these things. In the USA there is a balance between the republic government and the capitalist economy (though skewed to the corporations) so that the needs of the people kind of somewhat co-mingle with the plans for profits of the corporations.
@Nigel
“. . . people can trade time and talents which may not be of an monetary value . . .”
That’s the problem, they don’t have no value. Trading work which has value in normal circumstances with things and/or work that has another value is bartering under the law and is tax evasion if not reported. It’s only in the case that someone trades like skills that there would be no problem. For example, you trade some yard cleanup for an hour of helping someone move; both manual labour tasks that could arguably have the same value for the same amount of time.
In the example in the article 4 hours of labour were traded for 2 tickets who’s market value was $75 each, $150 together. That’s an obvious work-for-profit scenario and should be counted as income.
P.S. Sorry if the pun was too much, you can change it to lawn mowing if you want, I just think it was funny. I guess that’s just my sense of humour.
loading....
Jennifer pointed out a very important detail. First, an IRS private letter ruling is not law, it is merely how the IRS interprets the law. What the law is what Congress has written and intended. That said, I.R.C. 6045 requires the broker to send transaction information to the IRS and the customer for tax purposes, it does not state that this type of bartering is not to be included in gross income. The applicable rule is I.R.C. 61(a)(1) – “…[G]ross income means all income from whatever source derived, including … compensation for services…”
26 C.F.R. 1.61-2(d)(1) provides that if services are paid for other than in money, the fair market value of the property or services taken in payment must be included in income.
Even though the Time Bank uses a “pay-it-forward” system, where there are no contracts between the parties, what is the truth of the matter? The truth is that everyone involved is benefiting from the exchange of services.
loading....
Ok…… I did read bits and pieces of your’e “philosophy” on this subject Traciatim, I lied… Only because I want to tell you to go do some situps..that will at least benefit you !!
loading....
This sounds like an excellent, innovative idea. I must point out, however, that if you are exchanging professional services — let’s say, wisdom tooth extraction for two weeks in a condo in the caribbean — then you are committing tax fraud.
To be completely honest with the IRS, you MUST report all professional services rendered for which you received ANY type of remuneration — including goods or other services.
loading....