From: Black Unicorn <unicorn@schloss.li>
Date: Sat, 4 May 1996 18:21:12 +0800
To: Michael Loomis <ml3e+@andrew.cmu.edu>
Subject: Re: CryptoAnarchy: What's wrong with this picture?
In-Reply-To: <ElWSW6y00iWWM1ZWIa@andrew.cmu.edu>
Message-ID: <Pine.SUN.3.93.960503185604.1770E-100000@polaris.mindport.net>
MIME-Version: 1.0
Content-Type: text/plain



On Fri, 3 May 1996, Michael Loomis wrote:

> Excerpts from internet.cypherpunks: 2-May-96 Re: CryptoAnarchy: What's
> w.. by Black Unicorn@schloss.li 
> > I must assume either
> > 
> > 1) He is not intimately familiar with the system of U.S. taxation (even if
> > he is pro-high-tax, calling the current system 'just about right' is
> > folly).
> 
> No tax system will ever been perfect, but  income taxation is a good
> system of taxation.

Bear in mind that the current system imposes more than just income tax and
that the United States, unlike most other countries, taxes worldwide
income and compensates with an immensely complicated foreign tax credit
system.

> Income taxation inevitably requires some accounting
> costs, but these costs should be going down with advances in computing
> technology and other technology.  The goal should be to minimize these
> costs.

Accounting costs as a result of income taxation do not bother me.
Accounting costs as a result of a deduction based, multi-tiered,
progressive, and supplimented system of income taxation are silly.  The
income tax system in the United States has been driven since the post war
period by the effort to implement policy through the congress' power to
tax rather then the simple need for funds.  Allowing special interest
groups to drive a system of taxation is hardly fitting the goal of
"minimizing these costs."  The income tax system in the United States thus
fails even your test.

Exercise for the reader:  How many de fact laws are implemented by an
tax which would be unconstitutional to pass directly?

> I would further suggest it is remarkably childish to think that
> a political system will not cause some unfairness in the tax code,
> because it is the nature of democracy to generate some unfairness.

I don't recall ever asserting this.  

> As
> long as the unfairness is kept within reasonable bounds as in the case
> of the 1986 tax reform, I don't see that this unfairness as a killing
> objection to income taxation.

Then the issue that divides us is the definition of fairness.

> Of course, unlike most of the readership
> of this list, I believe that democracy is a good thing.

That's a pretty arrogant (and fairly incorrect) assumption.

[...]

> sized government on them.  Outside of crypto-cyber-carrots, I have
> strong doubts that crypto of any form or sophistication will be able to
> circumvent consumption taxation.

Sorry, I just don't agree with you here.  If black markets exist, even
florish, without crypto, how exactly is it that you think they will not be
easier to run and maintain and shield from discovery in the presence of
encryption?

The amount of resources which would have to be dedicated to tax compliance
enforcement under your scheme would be staggering.  I don't doubt that
taxation (if it comes to this) will go down kicking and screaming, but if
you can think of a way to regulate offshore markets in information futures
without invading the country hosting the exchange (note that there is a
case that even this can be defended against by the market) I'd like to
hear it.

> Consumption taxation would, of course,
> include a tax on the amount of information coming into your computer.  I
> don't think that the government will have any problem determining the
> quantity of the information & since it will be encrypted anyway, I don't
> see the privacy worries.

You don't see the privacy worries in mandating data providers to count
bits and report to a central authority on their findings?

It's clear you're unconvertable.

We should take this discussion (if it continues) to e-mail.

---
My preferred and soon to be permanent e-mail address:unicorn@schloss.li
"In fact, had Bancroft not existed,       potestas scientiae in usu est
Franklin might have had to invent him."    in nihilum nil posse reverti
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