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Author Topic: ?How to restrict who mines <- A Bitcoin the Government would like VAT-Coin  (Read 909 times)
davidpbrown
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May 05, 2013, 09:35:35 AM
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I just wondered that if there was a coin that was VAT-Coin, a government might rather like that.
That is a coin for commercial transactions that takes VAT tax off each transaction.. 20% for the UK, for example.

Just a thought..

That perhaps would require .gov are sole miners and I don't know, if there's a way to restrict who is a miner.



(# Posting here in BTC-dev rather than Alt-TC because 'Note that discussion of how these currencies *relate to* Bitcoin may fit in other categories.')

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cjp
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May 05, 2013, 10:52:07 AM
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20% for the UK, for example.
Which government will receive the VAT for which transactions?  Grin
How will people be stopped from doing all their transactions in the country with the lowest VAT?
So I think you'd have to have a UK-coin, a US-coin, a China-coin and so on. And people would have to be monitored to stop them from using other countries' coins. And from using Bitcoin of course, which would still be the stateless, VAT-less alternative.

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davidpbrown
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May 05, 2013, 11:17:21 AM
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Indeed.. but I'm less cynical about people widely understanding the need for their Government to receive some taxes. It would perhaps require a change in thinking and perhaps that's too big a step just yet - for us to trust people widely.

There are often suggested two limiting cases; extremes, one where the Government isn't interested and conspiratorial and then one where the People are absolutely set against the Government but in reality there plenty of room for finding something that is realistic and can provide a happy medium.

If merchants were obliged to use UK-Coin for transactions, for example, perhaps the majority would do. There are always and have always been ways of avoiding taxes but on the whole it seems we have developed a society that understand that Government does have a useful role to play.

Personally, I think Government does too much atm that society more widely could do better for itself but there will always be a need for the representation that is Government and considering the limiting cases of where everyone uses cryptocurrency, I wonder what that suggests for providing resources to Government. Expecting people to donate to Government isn't realistic.. half the reason we have representation, is that it's easier for someone else to action our interests.

Perhaps the future of tax might be simply based on income tax and voluntary payments but I doubt that it could be that simple just yet.

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cjp
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May 05, 2013, 01:09:27 PM
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Indeed.. but I'm less cynical about people widely understanding the need for their Government to receive some taxes. It would perhaps require a change in thinking and perhaps that's too big a step just yet - for us to trust people widely.
I'm not cynical about that either. People know they need public works, and that those public works need to be paid for. They just don't want to be the ones paying for those public works, if they know other people aren't paying.

If merchants were obliged to use UK-Coin for transactions, for example, perhaps the majority would do. There are always and have always been ways of avoiding taxes but on the whole it seems we have developed a society that understand that Government does have a useful role to play.
I think it's a wrong 'design' to put taxation rules in the coin system. Bitcoin-like systems are designed to be inflexible when it comes to rule changes. OTOH, the need for taxation changes with the economical and political climate, and there is no such thing as a 'right' VAT level(*).

Also, the organization receiving the payments would be even more powerful than today's government: if people don't want their government anymore, they can't get rid of it by not paying taxes anymore: in order to stop paying taxes, they'd have to switch to an entirely different payment system, which makes it extremely difficult(**). If you want to know how dangerous this is, have a look at the resource curse: governments that don't depend on taxation tend to be less responsible. The same will be the case if people can not stop paying taxes.

So, it's better to keep the coin rules simple, and organize taxation in a different way.

Personally, I think Government does too much atm that society more widely could do better for itself but there will always be a need for the representation that is Government and considering the limiting cases of where everyone uses cryptocurrency, I wonder what that suggests for providing resources to Government. Expecting people to donate to Government isn't realistic.. half the reason we have representation, is that it's easier for someone else to action our interests.

Perhaps the future of tax might be simply based on income tax and voluntary payments but I doubt that it could be that simple just yet.

Income tax is just a variation on the VAT tax theme. I call both of them a 'transaction tax'.
Voluntary payments aren't going to be very high, unless people can 'prove' to each other that they paid: this will allow for a 'social pressure' system to kick in. Bitcoin allows people to generate such proofs, so this is an interesting possibility.
Involuntary taxation has to be based on what is enforceable. Bitcoin reduces enforceability on monetary transactions and on monetary property, but some physical property (e.g. houses, factories) can not be hidden, so that can easily be taxed.

(*) I guess many people here would disagree and say that 0% is the right level. But even libertarians agree that public works need to be funded, although they want to organize it in a purely voluntary fashion.

(**) Such a switch has to start small and grow gradually, like Bitcoin is doing. A government that's aware of the danger will stop such a switch when it is still small. On the other hand, a tax revolt can grow very quickly as a 'viral' idea through the population, since people can still keep their jobs and pay their food while joining the revolt. The speed makes it hard to control for the government, so the government has to prevent it by keeping the people happy.

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Schrankwand
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May 06, 2013, 11:51:40 AM
 #5

Quote
Indeed.. but I'm less cynical about people widely understanding the need for their Government to receive some taxes. It would perhaps require a change in thinking and perhaps that's too big a step just yet - for us to trust people widely.

How about we do not change anything and do it like we do it now.


You sell or buy. Merchant makes a transaction in his wallets to move 19-20% or whatever VAT he has to pay. And declares it at the end of the period.

We do not have any need for any special system of VAT. At this moment in time, we are already using accounting standards that can do all the stuff that does not need to be implemented anywhere.
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May 06, 2013, 12:10:40 PM
 #6

Taxing transactions would be pretty extreme. People transfer funds between their own wallets all the time, for perfectly legitimate reasons. For instance, I wouldn't want some bar owner to see how many bitcoins I have when I pay for a beer.

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Schrankwand
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May 06, 2013, 12:28:47 PM
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Taxing transactions would be pretty extreme. People transfer funds between their own wallets all the time, for perfectly legitimate reasons. For instance, I wouldn't want some bar owner to see how many bitcoins I have when I pay for a beer.

Yeah, for example that. I would argue that we don't need any new rules apart from the question at what point in time business HAVE to convert their earnings into Fiat money to make their taxes.
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