How will blockchain affect the taxing system?

[Ladysmith]

The recent exposé about the Trump family finances shines a light on the ways in which the wealthiest Americans can avoid estate and gift taxes on the transfer of assets to their children.

https://www.nytimes.com/2018/10/11/opinion/trump-bezos-estate-tax.html?action=click&module=Opinion&pgtype=Homepage

"Like Donald Trump, many of the Forbes 400 acquired some or all of their wealth from their parents. These transfers of wealth pass entirely free of income taxes."

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.

Can blockchain and the inevitable virtual economy make the taxing system less disproportionate?

[cellard]

The recent exposé about the Trump family finances shines a light on the ways in which the wealthiest Americans can avoid estate and gift taxes on the transfer of assets to their children.

https://www.nytimes.com/2018/10/11/opinion/trump-bezos-estate-tax.html?action=click&module=Opinion&pgtype=Homepage

"Like Donald Trump, many of the Forbes 400 acquired some or all of their wealth from their parents. These transfers of wealth pass entirely free of income taxes."

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.

Can blockchain and the inevitable virtual economy make the taxing system less disproportionate?

They could do this by issuing closed source currency, but then again, most transactions are already digital, it just lacks an open blockchain.

As far as taxing foreign currencies and neutral ones like bitcoin, I don't see how, they can only tax exchange deposits.

But the wealthy will always have resources to circumvent taxes. They can hire the best accountants and lawyers in the world and find ways to avoid the cut. Also in some countries taxes are nonsensically high which only incentive that behaviour.

[HabBear]

"Like Donald Trump, many of the Forbes 400 acquired some or all of their wealth from their parents. These transfers of wealth pass entirely free of income taxes."

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.

Can blockchain and the inevitable virtual economy make the taxing system less disproportionate?

Transfers of wealth to kids or heirs is not entirely free of income taxes. It's subject to estate taxes which equal 50%+ of the value being transferred. This is precisely why the Trump family had to commit fraud to transfer their father's wealth to the kids. They couldn't even set up a trust that would protect all the assets from probate.

Blockchain can't change or circumvent government tax laws.

Blockchain can enable transaction tracking and transparency. Blockchain make payments incredibly fast and transparent. Blockchain can't ensure that people report their income accurately or truthfully.

[Marcel666]

For the blockchain to be used to facilitate taxation. The individual has to have his assets in digital currency or represented adequately in the same ratio.
Anonymity would be a stumbling block.
And also bitcoin is decentralized, hence no taxes imposed on it, for now.

[davis196]

The recent exposé about the Trump family finances shines a light on the ways in which the wealthiest Americans can avoid estate and gift taxes on the transfer of assets to their children.

https://www.nytimes.com/2018/10/11/opinion/trump-bezos-estate-tax.html?action=click&module=Opinion&pgtype=Homepage

"Like Donald Trump, many of the Forbes 400 acquired some or all of their wealth from their parents. These transfers of wealth pass entirely free of income taxes."

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.

Can blockchain and the inevitable virtual economy make the taxing system less disproportionate?

Most of the wealthiest Americans avoid taxes by transfering assets to charity foundations,not to their children.Look at Bill Gates,Warren Buffet and many billionaires.
However,I'm pretty sure that taxation can be implemented inside the blcokchian,as a part of the transaction fee.Anyway,I don't think that such taxation will be implemented.

[stompix]

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.
Can blockchain and the inevitable virtual economy make the taxing system less disproportionate?

A well-functioning democracy will not think about double taxing anything.

Taxes on inheritance are just stupid, that money has been already been taxed once and the parents have already been fleeced by the government, why tax it again. This is like that cartoon with Elmer and Bugs Bunny when from that 1 million inheritance he is left with a few cents.

And it doesn't matter how much that inheritance was, 1 million or 100$, it's still money that has been earned and taxed once. If you want a taxing system that is not disproportionate, have a flat tax, not a percentage.

[Hydrogen]

There are many wealthy families in the united states. The Rockefellers, the JP Morgans, the Trumps. With the Estate Tax (aka Death Tax) being 40% one may wonder how wealthy families maintain their familial wealth if they pay a 40% tax every generation. The most simple explanation is: none of them pay the 40% estate tax. Many of us were aware of this, long before it was mainstream news. It is old information and not particularly news worthy.

Part of the problem with taxation is those living in poverty, and those in higher income brackets up to the middle class, are losing political and social influence. The scales are tipping in favor of one percenters, which in turn increases their influence while diminishing the influence of all others. Tax laws shift in favor of one percenters, to the detriment of all other social classes, as society feels the implications of this paradigm shift.

Bitcoin's open ledger could make it harder to hide lump sums of cash from tax authorities. This doesn't necessarily represent progress however as taxation regulatory policies are designed to reflect favortism towards wealthier demographics, who wield vastly more monetary and political influence.

To fix tax laws requires shifting influence in the opposite direction. Such a thing is not easy to achieve.

[Thanasis]

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.
Can blockchain and the inevitable virtual economy make the taxing system less disproportionate?

A well-functioning democracy will not think about double taxing anything.

Taxes on inheritance are just stupid, that money has been already been taxed once and the parents have already been fleeced by the government, why tax it again. This is like that cartoon with Elmer and Bugs Bunny when from that 1 million inheritance he is left with a few cents.

And it doesn't matter how much that inheritance was, 1 million or 100$, it's still money that has been earned and taxed once. If you want a taxing system that is not disproportionate, have a flat tax, not a percentage.

Already we are paying double tax for what we are earning once,we need to pay taxes when we exceed the limits for an individual in all the countries which is called income tax and then we need to pay tax to all the things which we were buying so already double tax for the people in democratic countries too.So it is not fair the currency taxation system so it will be something beneficial for the people when we have blockchain technology implemented.

[yunzau]

Yes, it can be applied in all systems, especially taxes because the payment process is through many parties and long. With blockchain it can be faster, more accurate, transparent and permanent data.

[ShadowBits]

The recent exposé about the Trump family finances shines a light on the ways in which the wealthiest Americans can avoid estate and gift taxes on the transfer of assets to their children.

https://www.nytimes.com/2018/10/11/opinion/trump-bezos-estate-tax.html?action=click&module=Opinion&pgtype=Homepage

"Like Donald Trump, many of the Forbes 400 acquired some or all of their wealth from their parents. These transfers of wealth pass entirely free of income taxes."

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.

Can blockchain and the inevitable virtual economy make the taxing system less disproportionate?

Since no one can really tax them since it is fully transacted inside the blockchain, governments will have a hard time for it. Unless then can tax it through centralized exchanges.

[1Referee]

A well-functioning democracy will not think about double taxing anything.

Is there actually a well functioning democracy? To me it seems like a rigged game all the way through, regardless of what country it concerns.

My overall net worth in terms of fiat value (concerns savings, stocks, bonds, precious metals, crypto, etc) gets taxed year after year after year. The government doesn't care whether you gained net worth or lost it, as long as your net worth tops their set limits, you'll get taxed. It's the worst possible form of theft, especially with how you can't do anything about it.

If you refuse to pay what's due, your bank accounts will be frozen, and they'll seize the income from your employer till your "debt" is cleared. That's why I'm glad 75% of my net worth is in Bitcoin. I efficiently made sure that they won't be able to ruin my life by freezing/seezing all my legacy assets and accounts.

[South Park]

The effects of cryptocurrencies and the tax system will depend entirely on how much adoption takes place, if almost everyone adopts cryptocurrencies then it's likely there is going to be so much fiscal evasion that governments are going to make them illegal but that will probably not stop all of those evading taxes, if this happened for long enough it's possible that governments will have no choice but to become smaller.

[Btcjunpitz18]

For me, the blockchain does not affect the taxing system of the country because it seem like it helps the government to provide a good economy. Example, you use your digital money in buying stuffs that all you need and that stuffs is having a tax you purchase.

[BILGPS]

It is very difficult for now to show any affect of the crypto taxes on blockchain the tax will be paid by the user if they are willing and crypto market if grows and just like donation every one should pay some tax to their country exchange then it will be a good initiative but people use crypto to hide their wealth they will not be ready to pat one penny as tax.

[mu_enrico]

If (and only if) blockchain become mainstream then maybe the tax system would be like ICO system, there will be proposals, people vote on smart-contract, then fund release if cap reached. Otherwise, the government would simply use old the old tax system. They will simply impose taxes on exchanges.

[geopolisch]

"Like Donald Trump, many of the Forbes 400 acquired some or all of their wealth from their parents. These transfers of wealth pass entirely free of income taxes."

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.

Can blockchain and the inevitable virtual economy make the taxing system less disproportionate?

Transfers of wealth to kids or heirs is not entirely free of income taxes. It's subject to estate taxes which equal 50%+ of the value being transferred. This is precisely why the Trump family had to commit fraud to transfer their father's wealth to the kids. They couldn't even set up a trust that would protect all the assets from probate.

Blockchain can't change or circumvent government tax laws.

Blockchain can enable transaction tracking and transparency. Blockchain make payments incredibly fast and transparent. Blockchain can't ensure that people report their income accurately or truthfully.

Well, that last part is true to some extent, but we also have to realize that even if it brings about transparency and transaction tracking, wallets are not necessarily attached to one single person which makes the idea of not being able to track P2P transactions before they can even say it is going to be taxed will be a hard thing to achieve.

The only way taxation can be effective will be through the exchanges, and just like you said, the chances to even evade tax without reporting your actual income is always going to be there somehow with blockchain and in that case, there would be some limit for the government when it comes to taxation.

[stompix]

A well-functioning democracy will not think about double taxing anything.

Is there actually a well functioning democracy? To me it seems like a rigged game all the way through, regardless of what country it concerns.

My overall net worth in terms of fiat value (concerns savings, stocks, bonds, precious metals, crypto, etc) gets taxed year after year after year. The government doesn't care whether you gained net worth or lost it, as long as your net worth tops their set limits, you'll get taxed. It's the worst possible form of theft, especially with how you can't do anything about it.

If you refuse to pay what's due, your bank accounts will be frozen, and they'll seize the income from your employer till your "debt" is cleared. That's why I'm glad 75% of my net worth is in Bitcoin. I efficiently made sure that they won't be able to ruin my life by freezing/seezing all my legacy assets and accounts.

No, there is not, otherwise, we probably wouldn't be here complaining about the current system.  

My reply was mainly addressed at the OP who said:

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.

as I don't think in a democracy we should have proportions.

In my country, we have a flat 4.5% tax that goes to health coverage, and to me it doesn't sound too fair seeing one guy paying 500 euros and another 50 and getting the same treatment.
I'm pretty sure the guy with an x10 contribution won't get 10 kidney transplants and the other one just one. Of course, it's impossible also to make everyone pay for it equally and have a viable health system ...so we're back to the utopia that will never be.

As for the tax, if I buy a house worth 100 000 which I'm going to leave to my son, I'm already paying another 100 000 as income taxes before making those, I'm paying another 11 000 in VAT, around 300 euros in local taxes and mandatory insurance every year and then my son will have to pay 25-50% inheritance tax?

Insane is a mild word for this, we're paying it already 3 times, and what do we get in return ?!
I'm no Trump or any other Forbes T100 fan, but I can understand them in this situation.

If (and only if) blockchain become mainstream then maybe the tax system would be like ICO system, there will be proposals, people vote on smart-contract, then fund release if cap reached.

Just no!
ICO's have screwed enough people already, we don't need an ICO to ruin an entire country.
You don't need tokens or crypto or a blockchain to run a modern tax system. The blockchain is a simple distributed database, we already have those in almost every developed country, no need for fancy words schemes.

[mu_enrico]

If (and only if) blockchain become mainstream then maybe the tax system would be like ICO DAO system, there will be proposals, people vote on smart-contract, then fund release if cap reached. Otherwise, the government would simply use old the old tax system. They will simply impose taxes on exchanges.

My bad, bounties ruin my brain.

Just no!
ICO's have screwed enough people already, we don't need an ICO to ruin an entire country.
You don't need tokens or crypto or a blockchain to run a modern tax system. The blockchain is a simple distributed database, we already have those in almost every developed country, no need for fancy words schemes.

C'mon man, no need to explain what is blockchain to me.

When cryptocurrencies used in the everyday transaction (perhaps replacing fiat), the government will lose control of money, they couldn't force people to pay taxes. Therefore, governance would be similar to decred, smart cash, etc., with proposals (vote using smart contract).

[realBitcoiner]

The recent exposé about the Trump family finances shines a light on the ways in which the wealthiest Americans can avoid estate and gift taxes on the transfer of assets to their children.

https://www.nytimes.com/2018/10/11/opinion/trump-bezos-estate-tax.html?action=click&module=Opinion&pgtype=Homepage

"Like Donald Trump, many of the Forbes 400 acquired some or all of their wealth from their parents. These transfers of wealth pass entirely free of income taxes."

The measure of a well-functioning democracy is a tax system that fairly apportions its burdens.

Can blockchain and the inevitable virtual economy make the taxing system less disproportionate?

If you can somehow manage to convince governments to use blockchain to stop the corruption you will face a lot of backlash. Not just from rich people but also from all types of people, first of all rich people control almost all the sides of business world and definitely the media as well, as soon as you do something that will stop corruption you will have to say no to probably billions of dollars from bribes, which means you are better than most people because almost everyone would accept world shattering amount of money however it also means you will face all kinds of media scrunity because rich people will give order to ruin your life on television everyday.

[coinplus]

Peer to peer transactions will be a hard thing to track down, let alone be able to get taxed, so one way or the other; this would affect the taxing system. The only spot where taxation may actually be applicable is when we get to see people making use of the exchanges.

In the long run, most exchanges will be regulated anyway and as long as you are making fiat deposits and withdrawal, you will definitely get taxed. Judging from the fact that exchanges are centralized, and apparently, everyone's activities can be monitored, and in that case, it is more like you being subjected to capital gain tax. Still, here we need to take note of how popular those decentralized exchanges are becoming day to day. I guess, governments may need to think about switching over to new type of taxation rather than just taxing on income stream nor taxing while transacting.

Just taxing all the citizens with some flat fee (every month or year) might be a solutions for governments in long run .