Thoughts on Taxation

[asr]

I have had thoughts about what will happen when cryptocurrency use has become more adopted by the public.  One main concern that I have about this subject is what governments will do to enforce taxation.  Although I don't enjoy paying taxes, I can see in some instances where taxation might be necessary (the building of roads, education, police forces to ensure public safety, etc.).  If a good number of people used cryptocurrencies, I would imagine that it could become more difficult for governments to ensure that people are reporting transactions that would result in taxation.  If it does become extremely difficult for governments to that these things are paid for, how do you think that the governments will respond?  I think that it would be silly and ineffective to try to outlaw cryptocurrencies.  Are there alternative methods of taxation that you think governments might use to obtain funds?  Again, I am not really for many of the wasteful programs that are supplied by governments today, but I still can see the need for governments to provide at least some minimal infrastructure and public order.  What are your thoughts on these issues?

[bryant.coleman]

Why should the government tax Bitcoin transactions? They should concentrate on taxing the income. If someone receives his income in the form of Btcoin, then he should pay the tax on that amount (preferably in fiat). Other than that, I don't think any of the Bitcoin transactions should be taxed. We are already paying the transaction fee to the miners.

[asr]

Why should the government tax Bitcoin transactions? They should concentrate on taxing the income. If someone receives his income in the form of Btcoin, then he should pay the tax on that amount (preferably in fiat). Other than that, I don't think any of the Bitcoin transactions should be taxed. We are already paying the transaction fee to the miners.

I'm sorry.  I should have been clearer about what was being taxed.  I agree that if people were to earn their income in Bitcoin or another cryptocurrency and income taxes were to be the form of taxation for a government, then people should pay income taxes on those coins that they earned.  I guess what I was trying to say is that unless a government knows owns particular wallets, how are they going to know how much someone has made in income?  How are they going to know that a transfer between two wallets was income vs someone just transferring their funds between two of their own wallets?  I think that with cryptocurrencies, it could be very easy for someone to hide from a government what they actually earned in income and/or have in cryptocurrency holdings.  If it became very difficult to tax someone based on their income that was held in cryptocurrency, they might use some other form of taxation other than income taxes.  They might possibly try to raise funds through increases in property taxes or taxation based on something else.  It is fairly difficult for me to determine what they could use other than income taxes or sales taxes (it could even be harder to ensure the remittance of sales taxes).  It would also be very easy to hide funds with brain wallets and other such tactics if the government said they owed money to them from cryptocurrency income.

[Chef Ramsay]

Roads, education and police/fire/ems can all be payed privately by contractual services outside of the realm of government. However, if those were the bare bones of what government serviced, many folks would be ok w/ that and that would result in severely low taxes rather than what people pay as it is. If you're talking the USA where the spending is outrageous by fairy tale standards, the entitlements and vast offense spending is the bulk of the spending and debt.

So, back to the basics in the US, these can all be payed or contracted at a local level and DC can be sliced w/ a meat cleaver w/o the rest of the crap which could also be done and payed for, in another fashion w/o corruption. As an example: roads can be taken care of by either contracting communally in a private fashion or each person on the block can take care of their share of the road manually; education can be payed for by homeschooling their own kids or pooling them with other like-minded folks in the area; and policing/fire/ems can be payed for per diem, thru insurance or private dispute resolution organizations which is like insurance in another way.

So, governmentally we can do things in a more efficient way or privately things can be dealt with similarly. National, state or local defense can be handled similarly. Welfare can be handled by local charities in a true free market where only the truly disabled would be cared for by charity and the rest would be expected to work in some way for a helping hand.

[Elwar]

I think everyone will just voluntarily give bitcoins to the government because of the love we all have for taxes and our great leaders.

Without taxes we would have no roads.

As Ben Franklin said during his emancipation proclamation speech: "Without taxes we will all be confined to our homes with no way to get anywhere, that is why we must have the 16th Amendment as part of our Constitution."

And he was right.

Most people love paying taxes, I'm not sure what you're talking about OP. You sound un-American and should have your door kicked in by our hero cops to drag you to tax prison.

[bryant.coleman]

I'm sorry.  I should have been clearer about what was being taxed.  I agree that if people were to earn their income in Bitcoin or another cryptocurrency and income taxes were to be the form of taxation for a government, then people should pay income taxes on those coins that they earned.  I guess what I was trying to say is that unless a government knows owns particular wallets, how are they going to know how much someone has made in income?  How are they going to know that a transfer between two wallets was income vs someone just transferring their funds between two of their own wallets?  I think that with cryptocurrencies, it could be very easy for someone to hide from a government what they actually earned in income and/or have in cryptocurrency holdings.  If it became very difficult to tax someone based on their income that was held in cryptocurrency, they might use some other form of taxation other than income taxes.  They might possibly try to raise funds through increases in property taxes or taxation based on something else.  It is fairly difficult for me to determine what they could use other than income taxes or sales taxes (it could even be harder to ensure the remittance of sales taxes).  It would also be very easy to hide funds with brain wallets and other such tactics if the government said they owed money to them from cryptocurrency income.

OK. So you are talking about people hiding their income from the Internal Revenue Service (IRS). This is not limited to Bitcoin. A lot of people, who receive their salary in fiat cash (especially from freelancing.etc) do hide their income. And I don't think that hiding the Bitcoin income is any more easier than hiding the fiat income.

[pureelite]

I have had thoughts about what will happen when cryptocurrency use has become more adopted by the public.  One main concern that I have about this subject is what governments will do to enforce taxation.  Although I don't enjoy paying taxes, I can see in some instances where taxation might be necessary (the building of roads, education, police forces to ensure public safety, etc.).  If a good number of people used cryptocurrencies, I would imagine that it could become more difficult for governments to ensure that people are reporting transactions that would result in taxation.  If it does become extremely difficult for governments to that these things are paid for, how do you think that the governments will respond?  I think that it would be silly and ineffective to try to outlaw cryptocurrencies.  Are there alternative methods of taxation that you think governments might use to obtain funds?  Again, I am not really for many of the wasteful programs that are supplied by governments today, but I still can see the need for governments to provide at least some minimal infrastructure and public order.  What are your thoughts on these issues?

We must understand that taxation is very important. If you are making money, you are obligated to pay taxes, but not only by law, but by you own beliefs: if you get free education, med-care etc, you should know where it all comes from..

[bryant.coleman]

We must understand that taxation is very important. If you are making money, you are obligated to pay taxes, but not only by law, but by you own beliefs: if you get free education, med-care etc, you should know where it all comes from..

Take your BS to somewhere else. If you want to pay taxes, then do so. No need to give lectures here. I have paid for my education, and right now I am paying for my medicare. So I am not obliged to fund those corrupt politicians, who use tax money to launch new wars. Let them first stop the wasteful expenditure of tax money. Then I'll seriously consider paying taxes.

[erikalui]

Bitcoins are mainly earned by freelancers and it's not a permanent job income which needs to be taxed. Freelancers don't pay any taxes as their income is not fixed and hence bitcoins will not be taxed as well. Until and unless the currency is not regulated, no taxes are applied.

[bryant.coleman]

Bitcoins are mainly earned by freelancers and it's not a permanent job income which needs to be taxed. Freelancers don't pay any taxes as their income is not fixed and hence bitcoins will not be taxed as well. Until and unless the currency is not regulated, no taxes are applied.

What sort of logic is that? Earnings from freelancing are taxed in almost all the countries, where there is a tax on net income (I am not talking about countries which are not having the income tax, such as the Bahamas, Andorra, Monaco, Kuwait, Qatar and Saudi Arabia). In my country, the earnings from freelancing are treated just like any other type of income, and taxed at the default rate.

[erikalui]

Bitcoins are mainly earned by freelancers and it's not a permanent job income which needs to be taxed. Freelancers don't pay any taxes as their income is not fixed and hence bitcoins will not be taxed as well. Until and unless the currency is not regulated, no taxes are applied.

What sort of logic is that? Earnings from freelancing are taxed in almost all the countries, where there is a tax on net income (I am not talking about countries which are not having the income tax, such as the Bahamas, Andorra, Monaco, Kuwait, Qatar and Saudi Arabia). In my country, the earnings from freelancing are treated just like any other type of income, and taxed at the default rate.

I was working as a freelancer and my income was not taxed   They don't usually tax self employed people as compared to paid employees. If in case your income crosses a particular value, you need to fill a form so that you don't get taxed. I know what I'm saying.

At first I paid TDS and then I filled the Income Tax form (I guess it was 16) and then I received a refund of my money which means I did not have to pay taxes.

[bryant.coleman]

I was working as a freelancer and my income was not taxed   They don't usually tax self employed people as compared to paid employees. If in case your income crosses a particular value, you need to fill a form so that you don't get taxed. I know what I'm saying.

At first I paid TDS and then I filled the Income Tax form (I guess it was 16) and then I received a refund of my money which means I did not have to pay taxes.

OK. So you are living in India (I remember seeing your post in some other thread), and your freelancing earnings were not taxed. In India, income up to INR 250,000 ($4,000) is not taxed (correct me if I am wrong, last visited that country in 2014). You avoided paying taxes, as your total income was lower than $4,000. But that doesn't mean that the freelancing income is free from taxation.

[(oYo)]

A 1% tax applied to people and corporations equally (no loop holes) would bring in more revenue than the current system. I believe the people should not be taxed whatsoever and the revenue from taxing corporations alone would still surpass current levels.

[countryfree]

I'm always amazed to see people worrying about the government... That damned beast can tax property, it can tax all businesses with a street addresses, it could also tax Internet connection, or even phone lines. The government can tax you if drive a car because it made it illegal to drive a vehicle not registered, so... I'm afraid the beast will survive.

[freeyourmind]

A 1% tax applied to people and corporations equally (no loop holes) would bring in more revenue than the current system. I believe the people should not be taxed whatsoever and the revenue from taxing corporations alone would still surpass current levels.

The system that you're suggesting of 1% tax (I'm assuming on all sales) would generate significantly less tax than the current system.  It wouldn't even cover the current consumption tax.

There's sales/consumption tax as well as corporate income tax, personal income tax and municipal property tax. 

[(oYo)]

A 1% tax applied to people and corporations equally (no loop holes) would bring in more revenue than the current system. I believe the people should not be taxed whatsoever and the revenue from taxing corporations alone would still surpass current levels.

The system that you're suggesting of 1% tax (I'm assuming on all sales) would generate significantly less tax than the current system.  It wouldn't even cover the current consumption tax.

There's sales/consumption tax as well as corporate income tax, personal income tax and municipal property tax. 

There's far too many ways for corporations and rich people to avoid paying taxes. If there were no loop holes, way more tax money would be collected. I heard the 1% figure somewhere, can't remember where. Don't get hung up on the actual figure though, the important point I'm trying to make is that corporations have far too many ways too avoid paying taxes (not to mention the subsidies they receive) and the poor (middle class) are left footing the bill. Of course it's always justified by using scare tactics, implying that these large corporations need tax breaks and subsidies otherwise they would up and leave.

[bryant.coleman]

There's far too many ways for corporations and rich people to avoid paying taxes. If there were no loop holes, way more tax money would be collected. I heard the 1% figure somewhere, can't remember where. Don't get hung up on the actual figure though, the important point I'm trying to make is that corporations have far too many ways too avoid paying taxes (not to mention the subsidies they receive) and the poor (middle class) are left footing the bill. Of course it's always justified by using scare tactics, implying that these large corporations need tax breaks and subsidies otherwise they would up and leave.

The current corporate tax rates range from 0% to 90%. In most of the countries, it is around 10% to 40%. Tax evasion is severe, in countries where the tax rates are high, such as the United States and Japan. But still, I don't think that reducing the taxes from 40% to 1% is the solution. Even if it will bring back the taxes lost to tax evasion previously, the overall tax revenue will be minuscule.

[Possum577]

Is the OP a tax agent, posting undercover, trying to understand how we would tax ourselves if forced to do so?

Income is taxed, sales are taxed, using certain things are taxed. I think a government would want to tax income...which for bitcoin comes from earning bitcoin and also appreciation in bitcoin that is then transferred to fiat. It's a very grey area but you have to believe that governments will find a way to tax income if they can (i mean the obviously all need the money, so why wouldn't they?)

[(oYo)]

There's far too many ways for corporations and rich people to avoid paying taxes. If there were no loop holes, way more tax money would be collected. I heard the 1% figure somewhere, can't remember where. Don't get hung up on the actual figure though, the important point I'm trying to make is that corporations have far too many ways too avoid paying taxes (not to mention the subsidies they receive) and the poor (middle class) are left footing the bill. Of course it's always justified by using scare tactics, implying that these large corporations need tax breaks and subsidies otherwise they would up and leave.

The current corporate tax rates range from 0% to 90%. In most of the countries, it is around 10% to 40%. Tax evasion is severe, in countries where the tax rates are high, such as the United States and Japan. But still, I don't think that reducing the taxes from 40% to 1% is the solution. Even if it will bring back the taxes lost to tax evasion previously, the overall tax revenue will be minuscule.

Stop getting hung up on the 1% tax figure I gave (that number really is too low, if you believe we actually need to pay taxes at all, perhaps 10% would be more realistic) and focus on the fact that corporations and the 1% (elite) are evading paying most of their taxes. (Not to mention the preferential treatment, subsidies and bail-outs they demand.)


In the following video (around the 2:33 mark) it's stated that Apple paid only 1.9% tax instead of the required 35% tax they were supposed to pay. That's just one example.
The Tax Free Tour (vpro backlight - 2013)

After all is said and done, the government doesn't actually need tax revenues.
http://www.real-debt-elimination.com/tax_freedom/why_taxes_are_not_necessary.htm
"The Biggest Game InTown" about the Government CAFR wealth shell game

This video is more concise. (Only 13 mins long.)
Introduction to the CAFR - Why You Can't Get Ahead

[Elwar]

In the end people just love taxes. That's all there is to it.

Without taxes, how would Hitler be able to fund his armies and gas chambers?

I think everyone goes back to that thought when they think of taxes and are grateful that he was able to get the funding necessary.

How would we be able to pay for drones to kill our own citizens? Would Bush have been able to bomb Fallujah with white phosphorous melting the skin of any women and chlidren within a few hundred feet?

How else would our governments have had the money to fund ISIS?

I think everyone looks at their paycheck and sees the portion of the tax money taken out of their paycheck and thinks "I hope that went to fund a terrorist this week."

And what about the roads??? Right? Tanks and troop carriers can roll down roads a lot easier than some unpaved span of dirt.

We can all agree on that right?