Anonymity and taxation

[Sjalq]

If all the transactions are so clearly visible and they all date back to the creation of the relevant bitcoins, wouldn't bitcoin simply be the single best taxation tool of all time? All that would have to happen is to make it illegal to own a bitcoin address that has not been registered with the state.

Voila, world wide taxation. Not only that but the capital structure of the entire world would be subject to regulation then. The government can then control what you get money for even more than they do now.

[sortedmush]

How would this be enforced?

[caveden]

I've once thought about it too. They could taint addresses and control them.
They could also force miners not to accept transactions from non-declared addresses, but that would be particularly difficult as it would require an international coordination.

Meaning, there would be a set of "declared" addresses within a jurisdiction that government would trace and tax, and a set of undeclared addresses still free. Transferring between these two sets could be strongly taxed instead of strictly forbidden, this way authorizing money to cross borders somehow.

That wouldn't make bitcoin a perfect taxation tool though. People would still use free addresses, as they do undeclared cash transfers.

[caveden]

How would this be enforced?

Forcing big business to use only declared addresses. Taxation suits big business, as it mostly rules out the small ones. They would cooperate.

But yeah, that wouldn't be totally enforceable. The banking system is 100% traced and yet people manage to avoid taxes today.

[Sjalq]

Today there needs to be a lot of leg work to trace money between institutions. With bitcoins all you would need to do is have a record of address holders. You would be able to trace the flow of money very, very well and much faster than you can today.

[stic.man]

the UK tax authority stated that thus far you are only taxed in BTC if you convert it to FIAT currency.  So why ever cash out? 

Cannot wait until you can buy things like houses directly with BTC

[Sjalq]

the UK tax authority stated that thus far you are only taxed in BTC if you convert it to FIAT currency.  So why ever cash out? 

Cannot wait until you can buy things like houses directly with BTC

That's today, what happens when NHS and the pound collapses?

[stic.man]

maybe by then we can have open cart integration

[Nesetalis]

the only way i see taxation working on bitcoin... is as a secondary fee added to the transaction.
who it would go to? some global authority? or perhaps you select which government (address) your tax goes to.. so if you wanted you could spend your taxes in Brazil from the UK... but thats the only way i see it being done... and only if the government horded enough processing power to fork the chain and require this tax to show up.

[caveden]

Today there needs to be a lot of leg work to trace money between institutions. With bitcoins all you would need to do is have a record of address holders.

They would need the same amount of leg work to trace transactions happening on free addresses. Actually it would be much harder, since there would be no institutions cooperating.

It would all be a question of how easy it is to live using more undeclared bitcoins than declared ones. That could work as a double-edged sword for big corporations actually, as people wanting to spend undeclared money would turn to smaller business who don't collaborate with government.

[Sjalq]

They don't need additional structures. Once they find out you have the money, they'll want to know where you got it, what it was for and then their cut of it. They can simply force you to pay by threat of imprisonment.

My bigger concern is for bitcoin. It would not be an insurmountable task to build an alternative using many of bitcoin's fine properties and simply add the concept of complete anonymity with completely reliable accounting.