From: Duncan Frissell <frissell@panix.com>
Date: Sun, 15 Oct 95 05:06:41 PDT
To: Rick Busdiecker <rfb@lehman.com>
Subject: Re: Cybersecurity
In-Reply-To: <9509250107.AA05910@cfdevx1.lehman.com>
Message-ID: <Pine.SUN.3.91.950925060508.23639B-100000@panix.com>
MIME-Version: 1.0
Content-Type: text/plain



On Sun, 24 Sep 1995, Rick Busdiecker wrote:

> I'm guessing that you're talking about the fact that fully applied
> crypto (e. g. fully anonymous digital cash) makes it essentially
> impossible to base a tax system on income.

Yep.

> With full application in place, a government would be forced to shift
> the basis of the tax system toward `real assets' and the receiving of
> goods and services within its borders.  However, outside of
> transactions involving pure information exchange, this simply shifts
> things from one side to the other in a relationship where the basic

I am also projecting a transition from physical to non-physical goods and 
services.  Thus most entertainment, financial services/investing, 
professional services, and indeed the rest of employment services will 
tend to be non-physical.  We see a lot of unbundling already in which 
services are split off from the more physical parts of a transaction.  
Drop shipping, contracting out, etc. 

> Earnings tend to correlate reasonable well with receiving goods and
> services, at least over long periods of times.  Also most people are
> more or less tied to a certain area of the world.  Certainly there are
> exceptions, but the average case is more relevent when considering

Say that it was 1750 and you were a French Physiocrat.  You might say 
that land and agriculture should be taxed because that represented the 
only important part of the economy and the nation's wealth.  The making 
of goods was insignificant.  You would have ignored what was to become a 
big part of the economy.  It is possible that the non-physical part of 
the economy will become much bigger than the physical.

Note that most money itself is non-physical.  And if the physical part of 
the economy is taxed and the non-physical isn't the market will be 
skewed in favor of non-taxed activities.  

Also even though most people are geographically bound, if their 
consumption switches to non physical goods, they can acquire these goods 
anonymously or securely from any place on earth.  So even if you don't 
travel, the locus of your transactions can.

DCF