From: Duncan Frissell <frissell@panix.com>
Date: Sun, 15 Oct 95 16:37:30 PDT
To: Black Unicorn <unicorn@polaris.mindport.net>
Subject: Re: Crypto & Taxes [WAS Re: Cybersecurity]
In-Reply-To: <Pine.SUN.3.91.951015141533.18407A-100000@polaris.mindport.net>
Message-ID: <Pine.SUN.3.91.951015191827.6604A-100000@panix.com>
MIME-Version: 1.0
Content-Type: text/plain




On Sun, 15 Oct 1995, Black Unicorn wrote:

> Were I an overseas employer, I would be quite happy to work in a 
> "disinterested" jurisdiction and hire American workers to telecommute and 
> issue their pay blindly to the number only or crypto bank account of their 
> choice and promptly encrypt or lose the records.

Thanks for responding, Black (if I may call you Black), it means I don't 
have to.  

> Remember, there is an incentive for employERS as well as employees to 
> flee the tax system of a nation that is manipulative of it.  Employers 

Also an incentive for jurisdictions to engage in a beneficial "Dutch 
Auction" in which they offer lower and lower tax rates to attract 
employers and employees.

> Who are you going to work for?  The publisher who is based in New York 
> and reports all payments, or the publisher who works in the Cayman 
> Islands, reports nothing, and merely sells the manuscript to the big name 
> publisher in New York after purchasing it blind from you?

And as the intellectual components of goods and services are increasingly 
unbundled from the physical for efficiency reasons (greater range of 
competitors made possible) more work can be done at a distance.  

> When this is true, the most profitable venture in the United States will 
> be retail smuggling.  And as taxes are raised again and again, compliance 

Fairly easy these days with drop shipping of goods by third parties and 
the bypassing of retail distribution chains for more and more goods.

In any case, if goods end up being a smaller portion of Gross World 
Product, taxes on them become less significant.  The existence of 
taxation of physical goods certainly tips things in favor of the untaxed 
non physical goods and services.

Note that agriculture once made up 95% or more of GWP.  It doesn't any 
more.  Non physical goods like entertainment, financial services, etc can 
grow to dominate the world economy because they adapt well to cheap 
distribution over the nets.

In the Progress and Freedom Foundation's Friction Free Capitalism, taxes 
are a big part of the "friction" that is disintermediated.

DCF