From: Bill Stewart <stewarts@ix.netcom.com>
Date: Mon, 31 Mar 1997 02:15:06 -0800 (PST)
To: "James O'Toole" <otoole@LCS.MIT.EDU>
Subject: RE: Hard to Tax Scenario
In-Reply-To: <01BC3BDE.8901B420@slip-james.lcs.mit.edu>
Message-ID: <3.0.1.32.19970331021004.00629b58@popd.ix.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain


At 12:23 AM 3/29/97 -0500, James O'Toole wrote:
>However, Ann has another alternative, which large organizations will also
have. 
>Ann can operate completely non-anonymously, but bleed profits out of her
business
>through the use of anonymized business partners who exist solely to assist 
>Ann in hiding her profits.  Crypto might make this scheme more foolproof
for Ann, 
>by enabling her to anonymously own and operate a network of covert
subsidiaries 
>that she does business with openly, and which collect most of her profits,
> but which themselves are for some reason not vulnerable to the tax
authority.

For instance, patients using Ann's services pay their money to
Alice's Anguillan Health Care Clinic, Ltd., which just happens to 
have a branch employing Ann at some vaguely plausible salary.
Either her salary is enough to keep the IRS relatively non-suspicious,
which works even if Alice's Clinic gets paid by government-regulated
insurance plans, at the cost of some taxes, or she's paid piece-rates 
(perhaps below market, or perhaps cash patients don't always get recorded.)
Perhaps Sister Ann has taken a vow of poverty and the IRS believes her?*
Perhaps Ann's rent is paid to a company that's really owned by Alice's?
Does Ann really own Alice's Clinic?  Most of this is standard non-crypto
tax avoidance stuff, but digicash and encrypted records and communications
make it a bit more private and convenient.

Also, there _is_ a business for cash-paying customers, who may choose
to retain their anonymity, either taking their medical records with them
on smartcards, or being treated under aliases - poor people who don't
have insurance, non-insured privacy enthusiasts, people worried about
socially awkward diseases, people with gunshot wounds they don't want to
explain
to the authorities, etc.  

[*OK, they're more likely to believe her if Alice's Clinic charges
substantially below-market rates than if she's charging full price,
but the under-the-table clients can help with that problem.]

#			Thanks;  Bill
# Bill Stewart, +1-415-442-2215 stewarts@ix.netcom.com
# You can get PGP outside the US at ftp.ox.ac.uk/pub/crypto/pgp
#     (If this is a mailing list, please Cc: me on replies.  Thanks.)