"The IRS has ruled that you cannot tax time."
That's how Hogan puts it; the IRS is more verbose. The agency ruled in 1985 that time banking is not bartering. Barter exchanges—organizations where property and services are traded—can be taxed. However, the IRS distinguished this from time banking, and has ultimately agreed that time dollars are not taxable.
"It's the labor that we're exchanging," Hogan says. If she were cooking a meal as part of her time bank service, she says, "then I'd bring you the receipt from the store for the ingredients, and you would pay me cash for that."
In part because of tax rules and in part to uphold the time banking ethos, Hogan says that it is necessary to ensure that the rules are followed.
Transactions must be on a strictly hour-for-hour basis. Participants cannot bid with their time, offering two or three time dollars for an hour of service that they particularly want.
Hogan says that she also finds herself discouraging members from tipping. "You get people wanting to give extra hours or wanting to congratulate someone on a good job."
Doing the accounting at a time bank can also be a surprisingly complicated task, Jones says, especially when a time bank also deals in physical goods.
"When I first got here, I thought, 'This can't be this intricate,'" he says. "But if you have 10,000 time dollars and there's not enough people to trade in your system or not enough items to make good of value to you, then essentially the system collapses. Those items, the dollars have to be backed either by people in the system or they have to be balanced by items in the store."
Time banks also often face the problem of having enough U.S. dollars to be sustainable. A system that doesn't deal in money but still wants to pay even a single worker, let alone a small staff, must rely on donations and grants. Cahn says that this has been an uphill process for many time banks.
Allison Basile, founder of the 440-member DC Time Bank, which serves the Washington, D.C., area, is an example of this.
"In D.C.'s case we have not had a coordinator. It's basically just been a very small sliver of my time," she says. "In some ways, I'm pleasantly surprised that we continue to grow." The goal, Basile says, is to eventually be able to pay a coordinator, but she says that is probably a year or two away.
Though many time bank proponents fervently believe in the power of the hour, they do not labor under the notion that time could supplant the dollar.
[READ: 10 Things to Do While You're Unemployed]
"Oh, sure, there are anarchists that want to change the world," she says, but Hogan adds that ultimately, time dollars often simply help people to operate without cash from time to time.
One economist explains that time banking boosts often-ignored economic activity. The types of work that people do around the house and the favors that people exchange with each other have value, even if it is not reflected in GDP, she says.
"There is a lot of what I believe is relevant to the economy, in the sense that it produces goods and services that enhance well being, that is not paid. And there is the potential for more of that," says Neva Goodwin, codirector of the Global Development and Environment Institute at Tufts University.
Goodwin also notes that time banking is a supplement to a money economy that is in many ways more efficient: "You can search wider for what you need, and more people can find you. And if you have skills that will generate a high income, you're likely to want to use them that way," she says.
Reader Comments (