From: Vincent Cate <vince@offshore.com.ai>
Date: Sat, 29 Mar 1997 04:38:56 -0800 (PST)
To: cypherpunks@toad.com
Subject: RE: Hard to Tax Scenario
Message-ID: <Pine.LNX.3.95.970329084225.8668A-100000@online.offshore.com.ai>
MIME-Version: 1.0
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> Robin Hanson, <hanson@hss.caltech.edu>, writes:
> 
> >   How well thought out is the notion that widespread crypto could
> >   allow a large fraction (>30%?) of the economy to avoid taxation?
> [...]
> > Imagine Ann is a doctor who wants to ply her trade without taxation.

The good doctor Ann is not in the easy 30%, unless she is selling a
medical book she wrote over the Internet, or something like that.
There will be people who are much easier to tax than others, and I 
think Ann is one of those.

Today painters, plumbers, etc often give big discounts for cash payments.
The reason is they do not want to report their earnings.

Today many many people on welfare do odd jobs and take their checks to
places with signs like "Checks cashed - no ID required - 6%".  They
probably actually show ID, but the merchant cashing the check does not
write down a social security number.  The guy on welfare does not have
this earning tied to his social security number.  This is a very good
thing for him, because if the government knew he earned $100 they would
take $95 off his welfare check.  So it is much like he is avoiding his 95%
tax bracket.  And it is amazing to me how many people think, "those evil
businesses, taking advantage of those poor people who are too stupid to
open a bank account and so pay 6% to cash checks".  This is rational self
interest at work here, not stupidity.

If you add the painters, welfare people, drug dealers, etc.  We could well
be close to 30% of the economy long before all the cypherpunks form
corporations in Anguilla. 

  - Vince Cate