Editing Judicial governance proposal (section)

===Governance tax===
The parameter <math>p=10%</math> in the above example is the ''governance tax''. From the DGF model, the parameter <math>p</math> is included in the minting ratio <math>m</math>. It can be chosen by the DAO to be any number <math>0\leq p< \infty</math>.

The governance tax is particularly equitable, since every worker pays precisely the same amount, relatively. Since every WSC donates the same <math display="inline">10%</math> to governance references, then the remaining REP every worker receives from a WSC has the same value by the [[wikipedia:Quantity_theory_of_money|quantity theory of money]] in economics. To illustrate this point, notice that if every members' REP holdings were arbitrarily doubled, then the salary each member receives would be unaffected.

The REP salary is unaffected by the <math display="inline">10%</math> of REP tax whenever it is incinerated, because there is no actual loss in REP salary, because everyone has the same governance tax for every WSC.

Similarly if governance equally redistributes REP within the Forum – meaning the amount leached from posts is equal to the amount donated to posts – then any member whose posts are not affected will not have any change in their REP salary.

The only time general REP salary is affected by the governance tax is when the reference donation and leaching is not equal. When donation is larger than leaching, then the REP salary of other members is decreased, since the total REP is increased, diluting the power of REP. When leaching is larger than donation, then the REP salary of other members is increased, since the total REP is decreased, which concentrates the power of REP. Therefore the effect on the salary is bound by the size of <math display="inline">p</math> and is typically much smaller. It is worth reiterating: ''governance tax REP sent to the incinerator is good for every member of the DAO.''

So a tax of <math display="inline">p=10%</math> does not affect the value of REP unless it is used to donate to new posts in excess of leaching, which should only be done to redress past mistakes.

==== Fairness ====
Regardless of the change in REP total, the tax affects every REP token equally, since the tax dilutes REP universally. Since every WSC post is required to donate at least <math display="inline">p=10%</math> of its REP to governance, then that REP is available for revaluing the WDAG in response to governance proposals that the DAO approves, as long as the DAO is actually earning revenue.

==== Governance agility vs stability ====
Finally, the <math display="inline">p=10%</math> parameter is arbitrary. Governance can decide to make <math display="inline">p=1%</math> if the DAO wishes governance to move slower, or <math display="inline">p=200%</math> if it desires faster governmental responses. A smaller number gives greater stability and less responsive regulation. A larger choice destabilizes the DAO and is a threat to security, but also makes the DAO more nimble and responsive to changes in the market and makes policing more effecting.