From: "Douglas B. Renner" <dougr@skypoint-gw.globelle.com>
Date: Tue, 22 Oct 1996 11:15:26 -0700 (PDT)
To: Bert-Jaap Koops <E.J.Koops@kub.nl>
Subject: Re: Prof Shamir arrested
In-Reply-To: <86A6FCB1737@frw3.kub.nl>
Message-ID: <Pine.3.89.9610221404.B75-0100000@skypoint-gw.globelle.com>
MIME-Version: 1.0
Content-Type: text/plain




On Tue, 22 Oct 1996, Bert-Jaap Koops wrote:

> Excuse me if I don't react on this in detail. We have already 
> explained it, and there it stands: fraud means playing a game without 
> abiding by its rules. It's perfectly legitimate to establish a game 
> and to introduse rules of the game with it. If you want to play the 
  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
BIG Problem here.

> game, play by its rules, otherwise don't play it. If you play it 
> while cheating, though, you must bear the consequences ("go directly 
> to jail" ;-).
> 
> Bert-Jaap
> 

I sincerely wish the world were THAT simple - there would be fewer problems.

Very, very often particularly when international commerce is involved, 
there simply is a disagreement about how much tax is actually owed.

The laws of trade & taxation are so complex that there are often 
several ways of accomplishing the same transaction each with very
different tax liabilities.  Certain European import/export transactions 
involving multiple currencies can be incredibly complex.  Then there is 
always the VAT (Value Added Tax).

Even here in the states, where tax laws "should" be the most uniform, there 
is a fair amount of confusion and disagreement about what the ever-changing 
tax laws and reporting requirements of the individual states really 
mean.  In Tennessee, if a distributor sends a drop-shipment to an 
end-user as a service performed to a reseller, the distributor incurs a 
liability for state sales tax; even though the distributor's sale was 
tax exempt to the reseller who would have delivered it anyway.  The 
state collects twice!  Does sending mail or making a phone call into 
another state constitute a "Physical Prescence" which would incur a 
state sales tax?  North Dakota seems to think so.  What about an Internet 
prescence?

Taxing authorities _rarely_ have all the information required to 
enforce the details of their own tax laws... that doesn't stop them, of 
course.  They'll take an aggressive stance, and then it's up to *you* to 
prove them wrong.  In some cases, it may be effectively as if the 
business is "guilty until proven innocent."

If politics are involved, look out.
It sounds like Shamir got hit with a _very_ aggressive stance.  Of course
it must be less easy to defend your actions while confined.  Er, what
would crypto have to do with politics anyway?  (ahem!)

Here is the USA a few years back, we actually had a _retroactive_ change in 
the tax tables by Congress.  Isn't that nice...  A retroactive change in the 
law!  We've gotten accustomed to retroactive law changes by appellate 
courts - but this was a retroactive change by Congress.

When you _do_ know them, they may change.  There is big money in the 
changing of laws.  Those who enforce the rules may interpret them quite 
differently if money and/or politics are involved.  What does politics 
have to do with money anyway?  (ahem!)

If you have enough money, you can have the laws written to your favor, 
just like Donald Trump, Trammel Crow and dozens of other Real-Estate 
barons did when they joined George Bush's "Club-100" by contributing 
$100K and enjoying an immediate Commercial Real Estate tax cut when he 
got elected.  Looks like these folks definitely knew a good investment.  
But this is nothing.  We have a burgeoning lobbyist industry in 
Washington, and there's little or nothing anyone can do about it.

In short, I disagree very strongly that it is as simple as playing by the 
rules.  The first rule is that you cannot know all the rules.  Further, any 
rule you _do_ know may be subject to change.  You have to become an 
expert on what is likely to be static for your own purposes, and act 
within the limits of your own knowledge.  Self-knowledge being perhaps our 
greatest challenge, there are _bound_ to be problems on all sides.

Perhaps the widespread dissemination of strong crypto will ultimately 
have a scale-tilting effect on matters of taxation.

  
-Doug
"An interesting game.  The only winning move is not to play."  -War Games