From: Sandy Sandfort <sandfort@crl.com>
Date: Wed, 31 Jul 1996 03:45:27 +0800
To: ichudov@algebra.com
Subject: Re: Taxes in the digicash world
In-Reply-To: <199607301117.GAA06799@manifold.algebra.com>
Message-ID: <Pine.SUN.3.91.960730081809.26670B-100000@crl13.crl.com>
MIME-Version: 1.0
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                          SANDY SANDFORT
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C'punks,

On Tue, 30 Jul 1996 ichudov@algebra.com asked:

> ...how can the government TECHNICALLY collect taxes...when
> transfers of money are protected by strong crypto[?]

Igor answered his own question with regard to trying to tax  
digital money transactions at the bank level:

> Of course these banks may be offshore, and then such collection
> becomes problemstic.

He then suggested:
 
> Another alternative that I see is property taxes and poll taxes
> or taxes on some commodities such as oil.  But incomes seem to
> be hard to track.

Under a totally anonymous digital money scheme, directly tracking 
income becomes effectively impossible.  One solution that is used
in countries with historically low rates of tax compliance 
(e.g., France) is to base taxation on apparent wealth.  Not very 
efficient.  

Commodity taxes--especially taxes on only one or a few 
commodities--create market distortions as people seek to minimize 
their tax load by commodity substitution (e.g., natural gas or
ethenol for oil) or the use of black market sources (e.g., 
bootleg cigarettes.)

Poll taxes are universally hated and trivially avoided.  Their
evil twin, head taxes, are likewise hated and only enforceable
with mandatory universal identification.  (In two months, the
Mafia will be selling perfect forgeries supplied by the ChiComs.)

If I were the government, I'd tax realty as my primary or only
source of income.  It *appears* "progressive" so it appeals to
the lower class, but it is passed along to everyone in the form
of higher commodity prices and rents.  Realty can't be picked up 
and moved to another jurisdiction like personal property or
people, so it is easier to hold as a tax hostage by government.


 S a n d y

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