From: jbugden@smtplink.alis.ca
Date: Wed, 13 Nov 1996 07:04:43 -0800 (PST)
To: cypherpunks@toad.com
Subject: RE: Taxation Thought Experiment
Message-ID: <9610138479.AA847908262@smtplink.alis.ca>
MIME-Version: 1.0
Content-Type: text/plain



>azur@netcom.com (Steve Schear) wrote:
>>The crypto-relevance is via crypto anarchy: we need to undermine the tax
>>system enough that _everyone_, not just us, loses faith in it.
>>
>>--Tim May
>>
>
>I've posed similar questions to friends and aquaintences.  The
>working-class stiffs (who can't easily hide from the IRS) feel taxes are an
>unwelcome but necessary burden in order to provide the blanket of
>government protection they feel exists.  They resent and oppose widespread
>tax fraud.  Self-employed tend to be more open to 'alternative' income
>structuring.
 
And in the meantime, it would seem prudent to use the existing system to maximum
advantage. In Canada, you can set up a personal trust called a Registered
Retirement Savings Plan (similar to an IRA?) wherein you can trade securities
without tax liability until you withdraw the money into your hands. As long as
you aren't trying to spend it, no taxes are owing. There is a withholding tax of
25% if you eventually leave the country, but the tax free compounding effect
over a decade or two will make this virtually irrelevant.
 
There are also tax credits for venture capital (especially if it relates to R&D)
or scientific research investments. Since we are in fields that likely are
related to this type of work, it seems that we would be able to take advantage
of these types of credit. In Canada, they can pay 80-90% of the related payroll.
Add NRC (National Research Council) grants available for R&D projects and you
can run a company with a dozen people for NO money.
 
This is not fantasy since I know at least two companies that do this. The only
caveat is that you need a good idea to start with. It is also not hard to have a
nominal 50+% marginal tax rate yet pay 15% net income taxes. Since I can use the
Canadian tax system to advantage, I'm not sure that I want to get rid of it just
yet.
 
So, while you are waiting for that anarchy, you may want to retain a good tax
accountant.
 
Ciao,
James
 
The grass is always greener over the septic tank.