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Author Topic: make bitcoin tax friendly  (Read 2221 times)
ThomasV
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June 02, 2011, 08:31:06 AM
 #1

Please do not answer this post if you are against government and taxes. I would like to talk about a technical solution, not about politics.

With the current client, a unique bitcoin address can be generated for each transaction.
This feature serves two functions:
 - allow sellers to keep track of payments
 - make sellers anonymous

Given the recent legal concerns about bitcoin and tax evasion, I think it would be better if sellers could provide a proof that they are not dodging taxes. This would be possible if they used a unique bitcoin address for all transactions, linked to their real-world identity. We can even imagine a future legal framework where sellers register their bitcoin addresses to a government entity, and where unregistered addresses would be allowed only for private and non taxable transactions.

Unfortunately, if sellers use a unique bitcoin address, they lose the capability to keep track of who paid them. This is because a single feature serves two functions.

I guess this could be fixed, if the bitcoin client offered the possibility to send a message to the seller (for example via e-mail), signed with the same key that was used for the transaction. The message would contain a transaction ID provided by the seller. The signature would authenticate it.

I do not know if this has been proposed before. I think that such a feature would help us build a legal framework around bitcoin, and promote bitcoin as a threat to the current banking system, but not to governments.


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dissipate
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June 02, 2011, 08:37:14 AM
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I do not know if this has been proposed before. I think that such a feature would help us build a legal framework around bitcoin, and promote bitcoin as a threat to the current banking system, but not to governments.

This is an impossible goal. The foundation of the modern state rests on central banking and control of the currency. Likewise, central banks are dependent upon the state to get people to trust their currency and enforce legal tender laws. A threat to the state is a threat to the central banks and a threat to the central banks is a threat to the state.
Meni Rosenfeld
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June 02, 2011, 08:50:06 AM
 #3

I think the protocol already allows arbitrary messages to be included in a transaction. So it's just a matter of having the client include a message on one side and display it on the other.

How will the tax agency know you're not doing additional transactions and receiving payments to an address other than your "official" one?

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ThomasV
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June 02, 2011, 09:01:14 AM
 #4

How will the tax agency know you're not doing additional transactions and receiving payments to an address other than your "official" one?

They would know it when they try to buy something from the seller.
Note that a tax agency could also sign registered addresses with their own private key; if a receiving address does not have the agency's signature, it means it escapes taxation, and the buyer would know it.

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matonis
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June 02, 2011, 09:05:21 AM
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This sounds like trying to design a technical feature for µTorrent that would charge per download.

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June 02, 2011, 09:12:11 AM
 #6

Please do not answer this post if you are against government and taxes. I would like to talk about a technical solution, not about politics.

I do not know if this has been proposed before. I think that such a feature would help us build a legal framework around bitcoin, and promote bitcoin as a threat to the current banking system, but not to governments.

Too bad. Bitcoin IS a threat to governments, precisely because it's a threat to the current banking system. As for government and taxes, if you're FOR these things, you really need to go and do a lot of soul-searching and ask yourself WHY you would support mass violence.

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Meni Rosenfeld
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June 02, 2011, 09:17:39 AM
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How will the tax agency know you're not doing additional transactions and receiving payments to an address other than your "official" one?

They would know it when they try to buy something from the seller.
Note that a tax agency could also sign registered addresses with their own private key; if a receiving address does not have the agency's signature, it means it escapes taxation, and the buyer would know it.
Got it, sounds interesting.

I'd love the ability to disarm arguments against Bitcoin on grounds of potential tax evasion.

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benjamindees
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June 02, 2011, 09:27:24 AM
 #8

The technical solution, and what will occur, is for taxes to evolve to make economic sense.  Bitcoin does not threaten a capitation tax, or tariffs for instance.

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June 02, 2011, 10:22:15 AM
 #9

Please do not answer this post if you are against government and taxes. I would like to talk about a technical solution, not about politics.

What if no one is against taxes and government? What if we are against the frameworks they operate? That makes it necessary to respond.

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I think it would be better if sellers could provide a proof that they are not dodging taxes.

Providing proof and requiring proof different things. LOL.

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We can even imagine a future legal framework...

Keep imagining.

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register their bitcoin addresses to a government entity, and where unregistered addresses would be allowed only for private and non taxable transactions.

You haven't the slightest clue what the word Register means. Register means you accept a given institution to have authority over you. That includes suspending your constitutional rights. No sane person would register anything if they knew what the word meant. You can instead Declare and Associate an identification token and that is of your own free will without any implication for your liberty.

Prevention of unregistered addresses would be adding new authority. Why would anyone do that? Authority is not the same thing as Function. The fact that authority might be necessary to fullfil a given task does not entitle an institution to such authority. Take wiretapping for example. A situation may require warrantless wiretapping. It does not entitle law enforcement to as much as they might need no matter how much they need it.

Just because they need it to fullfil previous function doesn't imply automatic entitlement. Regardless of the situation. If they fail at their work, then so be it. Create an institution that finds another way.

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I do not know if this has been proposed before.

Probably 100 times.

Quote
I think that such a feature would help us build a legal framework around bitcoin, and promote bitcoin as a threat to the current banking system, but not to governments.

Taxation is a function of banking not government. The only governments that actually have a say in taxation are county and local. Banks don't own those yet.

Second, you have no idea about the difference between function and authority. Authority isn't delegated like a privilege or a license. Authority is the assignment of power which can only be removed by someone of higher authority and only if that authority itself isn't a full transfer of power. When you accept authority, you are not assigning a responsibility. You are assigning someone over you.

When someone has authority, they have authority over you firstly, then they have authority to exercize their function. Power transfer is the biggest unreported scam in the history of liberty.

Second:

We now have as our three branches the economy, the media, and the military. Behind these structures we bankers, corporations, and government. Bankers manipulate the economy and own the media. Corporations influence media and sell technology to the military. The government suppresses the media and controls the military. The government doesn't represent the people. The lower echelon of bankers operates in corporations. The middle echelon of bankers operate in government. The lower echelon of corporations operate in media. The middle echelon of corporations operate in government. There is no independent echelon of government.

If the government is just a shell institution for bankers and corporations, how the hell do you not threaten government while threatening banks?

Proposal: http://forum.bitcoin.org/index.php?topic=11541.msg162881#msg162881
Inception: https://github.com/bitcoin/bitcoin/issues/296
Goal: http://forum.bitcoin.org/index.php?topic=12536.0
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June 02, 2011, 12:30:33 PM
 #10

Just a bitcoin bank is enough.

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June 02, 2011, 03:51:53 PM
 #11

Just a bitcoin bank is enough.

And I think they will appear soon enough!

Most people would like to have the safety a bank can provide you with: If the coins are lost, the bank has to cover the loss = No more paranoia.

TraderTimm
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June 02, 2011, 04:50:01 PM
 #12

Here's a quick car analogy for you:

Making bitcoin 'do <this>' makes about as much sense as making cars able to carry a horse in a special compartment. We don't need the old system anymore. This will become even more true as things shift to pure BTC trades, and we won't have to deal with currency conversions. Granted, more of a future prediction than the reality now.

I know everyone is worried about the flip side of an open system being used for things we may not personally agree with, still doesn't undermine the fact that peer-to-peer currency has changed the entire game. Just watch.

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marcus_of_augustus
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June 02, 2011, 10:30:01 PM
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You are proposing a "technical solution" (euphemism at best imo) to kruft up the client ...

... what exactly is the technical problem you are trying to solve. I don't think you've specified the problem.

Maybe a bug report?

ThomasV
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June 03, 2011, 08:05:55 AM
 #14

... what exactly is the technical problem you are trying to solve. I don't think you've specified the problem.

the technical problem is the following :

I would like to receive bitcoins from different people on a single receiving address, and still be able to know who paid me.

is that clear enough ?

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marcus_of_augustus
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June 03, 2011, 08:10:27 AM
 #15

... what exactly is the technical problem you are trying to solve. I don't think you've specified the problem.

the technical problem is the following :

I would like to receive bitcoins from different people on a single receiving address, and still be able to know who paid me.

is that clear enough ?


Perhaps.

Though that would be a feature rather than a technical problem, I'd think. The s/ware is still beta and still getting stabilised, the network is pretty chaotic, but I'm sure you'd be welcome to try implementing it.

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