From: Bill Stewart <stewarts@ix.netcom.com>
Date: Sat, 18 May 1996 16:17:30 +0800
To: cypherpunks@toad.com
Subject: Re: Spending a year dead for tax purposes
Message-ID: <199605170659.XAA22441@dfw-ix10.ix.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain


At 04:35 PM 5/14/96 -0700, Hal <hfinney@shell.portal.com> wrote:
>I think the intention then is to create "fully anonymous" companies.
>These would be organizations whose principals and employees are known
>only by pseudonyms, even to each other.  Their only contact is
>electronic, via an anonymous network.  And the employees are paid in
>anonymous ecash, which they don't pay taxes on since it is unreported
>income.
...
>Such companies would be illegal, with everyone involved subject to
>criminal penalties for tax evasion (and no doubt a myriad of other
>violations).  But because the anonymity is protected cryptographically,

The companies themselves don't have to be illegal, and the principals
and employees may have varying needs for pseudonymity, depending on
how they're organized.  On the other hand, the governments have different
possible responses to different approaches.

For instance, an Anguillan company Aliceco owned by
a non-American could sell software products, either its own (produced
by contractors from unspecified countries) or distributed for other
vendors (Bobware, in an unspecified country, delivered via the net.)
It wouldn't be illegal in Anguilla.  Its developers/subvendors might
be breaking local law by not reporting the digicash Aliceco paid them,
but that's not Aliceco's problem - especially if Aliceco bought/hired them
from Caribsoft, another Anguillan company.  And Caribsoft may not
know where they live - after all, _it_ doesn't have tax forms to fill out,
and it doesn't care where Fred@Foomail.fi or JaneDoe@mailbox.Jersey.uk lives.
If Yankees or US companies owned Aliceco and Caribsoft, they'd presumably
have to report it for taxes if it made money, but a local owner making
a few percent is in a different position.

Now, the US government _could_ declare a 50% import duty on imported software
(avoiding the uncollectability of income tax) which would of course be evaded.
The government could respond to this by requiring all software
to include a serial # and the TaxID number of the vendor 
(if the vendor is an importer, then she'd have to have Customs Receipts
or other documentation of US origin to expense her costs for tax purposes.)

In this environment, the employees would have to remain unknown to the US,
but might be known to the Aliceco  or Caribsoft.  Of course, Alice may be a Fed,
or Caribsoft employee Paul may be a Plant, so there are
some benefits to pseudonymity; depends on how paranoid you need to be.

Or they could declare Anguilla to be an Economic-Terrorist Enemy,
covered by the Trading With The Enemies (Especially Cuba) Act.
Restricting acceptance of foriegn digicash would be difficult.
#					Thanks;  Bill
# Bill Stewart, stewarts@ix.netcom.com, +1-415-442-2215
# goodtimes signature virus innoculation