6 ms·

By "legally gained cash" I mean that taxes have already been paid for it.

benmw333 7y ago
because "You didn't build that!"
jobigoud 7y ago
It's a trust but verify thing I believe. If the cash is anonymized, how can they know if the owner of this cash did in fact pay their taxes on it? Either they blindly trust everyone to properly declare all of their income, or they need to have some form of traceability.
- Aeolun 7y ago
  Once the cash is in the bank it becomes really hard to verify. It’s not like a ‘tax paid’ marker is added to every dollar in your account.
  - ta999999171 7y ago
    Nor could it, with the millions of rounds of taxes an average paper dollars will see.
    - Scoundreller 7y ago
      > Nor could it, with the millions of rounds of taxes an average paper dollars will see. Somebody said a computer can't do something, somebody prove them wrong!
      - TeMPOraL 7y ago
        If you want to make money stop being fungible, well, you probably could use computers for that. But is it a wise idea?
- bouncycastle 7y ago
  So everyone is assumed to be a criminal until proven otherwise?
  - RugnirViking 7y ago
    How else do you propose taxation is assured? Blind trust?
    - bouncycastle 7y ago
      Sure, why not? It has worked for many years before. The terms like "money laundering" are only recent and swept through without properly understanding the privacy implications (and probably didn't envisage the pervasiveness of modern electronic surveillance & data breaches in today's digital world). Anyhow, advancements in cryptographic Zero-knowledge proofs could hold the key in solving some of these problems (proof that funds are clean without reveling the source). Currently there are some scalability problems, but progress is being made so I'm hopeful. Wikipedia has a good write-up about the basics of ZKP https://en.wikipedia.org/wiki/Zero-knowledge_proof https://en.wikipedia.org/wiki/Zero-knowledge_proof
      - shakna 7y ago
        > Sure, why not? It has worked for many years before. Citation very much needed. It depends on what you mean by "working". There's references to tax evasion going back before the Roman Empire. For an example from the era of the Roman Empire, the topic of tax evasion is where the story of "give to Caesar what is his" (Mark 12:17) comes from. (I've found earlier Greek references going back to at least 300BC, but that's the easiest example to verify). The state works better when it has funds to deliver on those plans - though there are many other factors that can disrupt it such as incompetence and corruption. "Money laundering" may be a recent term, but it is not a recent concept. In fact some notable conquests on the ancient world wouldn't have been possible without concealing ill-gotten funds. It was a common tactic for avoiding paying tribute to a neighbour who defeated you.
        7y ago
- john_minsk 7y ago
  Risk based assessment. You look at macro parameters that businesses submit and if it flags you among other companies you dive deeper and request information from business itself. More friendly approach to If you find something fishy - you penalize business for different misconduct and signal them to be compliant in the future. In general big businesses/taxpayers will be compliant anyway (but use all the loopholes that exist in your tax law) While smaller businesses will have trouble to be compliant not because they don't want to, but because they can't have their accounting straight. So there is no good justification for government to scan every transaction without prior justification, since most actors want to be compliant anyway. I come from post USSR country and have a small fortune accumulated abroad. I don't have to pay taxes from this money, since I'm not a tax resident in my country at the moment. But since laws in my country work against regular people and some of them are prohibitive to work abroad/in modern digital way - the moment I transfer this money back home, our tax authority will pull some outdated law and the burden of proof will be on me (with my bank account frozen) I DON'T NEED THIS. So please, 1st world countries, don't send information on my hard earned money, to our 25 year strong socialist dictator.
Ericson2314 7y ago
Say there's a wealth tax? At no point can you be be sure it will never have tax implementations ever again.
- bouncycastle 7y ago
  I'm not talking about dodging taxes. Also, if there happens to be a new tax, I'll pay it, and I'm not a criminal, I just want some privacy.
  - sjwright 7y ago
    Well that nicely circles back to the OP article, which shows that privacy is either an illusion or a gamble, depending on your perspective.
    - squiggleblaz 7y ago
      Well, privacy has to be gamble. If I do something, I leave a trace. I might directly interact with someone (buying drugs, for instance) or it might be in the privacy of my own room. But I'm always gambling that (a) anyone who I interact with won't dob me in and (b) no third party will detect my actions. Obviously I hope my bank keeps a record of my assets with them. Perhaps they could merely keep my assets sealed in a box identified with a code and locked by a key, and they cannot open the box without the key, and I keep the only copy of that key. Perhaps the box is an encrypted database record and the key is a nice megabyte long random number which takes an hour to confirm. I can suppose it's secure (for the time being). And it's formally anonymous, since they don't even record that I posses the key. But I still leave a trace when I access it. It's an intrinsic risk. I also risk dying every time I walk out of my house. I do things that have risk involved because it is necessary. Risk is not an argument against an activity.
seppin 7y ago
Also, governments are finding new and creative ways to put new taxes on already legal money. So yeah, privacy matters.
- bouncycastle 7y ago
  It's not only that. It's about building a society that can be based on assumption of honesty and trust rather than surveillance and authoritarianism. At present, our electronic monetary system has morohed into something that resembles George Orwell's 1984.
- ajross 7y ago
  > Also, governments are finding new and creative ways to put new taxes on already legal money. Care to cite some? That's just a silly point. There's probably no area of regulatory theory more well travelled than taxation. Imagine a trick and someone has tried it, often thousands of years ago. And it's even incorrect as a practical matter in the modern USA, where government revenue as a share of GDP has been going steadily downward for like 70 years now, even in the face of decades of deficits. It's literally the policy position of the ruling party!
  - Mirioron 7y ago
    >And it's even incorrect as a practical matter in the modern USA, where government revenue as a share of GDP has been going steadily downward for like 70 years now Because government spending increased explosively before those 70 years. First, the government essentially took a loan from future generations through social security and second, there was an enormous war that the government mobilized the economy to fight. You would expect spending to go back down after both of them.
  - vonmoltke 7y ago
    > the modern USA, where government revenue as a share of GDP has been going steadily downward for like 70 years now It has? https://www.usgovernmentrevenue.com/revenue_chart_1900_2020USp_21s1li011mcn_F0f https://www.usgovernmentrevenue.com/revenue_chart_1900_2020U...
  - 7y ago
barrkel 7y ago
Money is a claim on future production, and you don't get to transfer that claim over other people's work without caveats, whether it's inheritance tax, limits on gifts, or wealth taxes.
- bouncycastle 7y ago
  Of course. I'm not talking about avoiding taxes, or skirting other laws. The issue here is simple privacy for the common law abiding people.
  - vintermann 7y ago
    What you own can never be an entirely private matter. It's fundamentally about your relation to everyone else in the world, things you are allowed to do that they aren't.
- kortilla 7y ago
  That’s certainly a popular view, but it’s not a given by any means. You will find plenty of people that think giving their children $100 should be possible without any government intervention or taxation. Unless you’re against that as well, we’re talking about arbitrary lines for when the government gets to wet its beak.
  - immawizard 7y ago
    There’s an arbitrary line between handshake and battery, yet most people and the law system can see the difference. Claiming there’s no qualitative difference between someone giving $100 dollar to their child as a birthday gift, and inheritance of billion dollars, seems like a weak argument.
    - kortilla 7y ago
      Then it should be obvious, no? Is $1 million ok? That’s a small single family home in Palo Alto in disrepair. So how about $5 mil? Nice larger lot home in Palo Alto that some dying parents bought in 1940. Not even retirement money in the bay but could be middle class retirement in Alaska. Where is your “obvious” line? Your handshake/battery analogy is shitty because it involves a victim and medical/first responder reports. We’re talking about setting some line where we feel as a society it’s morally ok to start taking money that has already been taxed strictly based on “that seems excessive” without any logical criteria.
ncallaway 7y ago
Then, by definition it's not anonymous because the authorities know that you have it. If you transfer it to someone else (legally) then there's going to be another taxable event, and the IRS will know you no longer have it. If you're trying to store cash anonymously from the public, there are many countries where that's possible. If you're trying to store cash anonymously from the government, there's not really a legal avenue for that.
- roenxi 7y ago
  > If you're trying to store cash anonymously from the government, there's not really a legal avenue for that. That is a succinct summary of the initial complaint. We're moving from a world where a buyer and vendor agreeing means something will happen to a world where buyer, vendor, bank and government all have to agree before something will happen. This is not a world that will cope well with change. There are big incentives for governments to get involved in every transaction (by definition, they don't agree with anything that they get involved with and block). But we get back to the classic problem that they are only bureaucratic humans and make a lot of mistakes. Also issues of regulatory capture. Although I'll throw in I'm interested in how much of an impact enforcing tax law has on the small and big pictures. One of China's competitive advantages is they claim a low tax rate as % of GDP, and most of the tax evasion I've seen personally is small businesses recycling money into the local economy. Changes to such dynamics will have far-reaching consequences.
  - vintermann 7y ago
    > We're moving from a world where a buyer and vendor agreeing means something will happen to a world where buyer, vendor, bank and government all have to agree before something will happen. No, we were never in that world. The only truly bilateral agreement is a gentlemen's agreement. Trust usually relies on certain facts being public, and visible to a whole lot of people besides the transacting parties. "Who owns what" is a pretty important set of facts to agree on publicly.
    - _0ffh 7y ago
ajross 7y ago
Validation of which requires a functioning pervasive VAT or similar mechanism to prevent laundering and fraud. There's no way to win here. Truly anonymous, or even mostly anonymous money is basically isomorphic to bitcoin: it's mostly fraud and illegality, with just enough privacy advocates (and a few dirty preppers) to make it look legitimate.
fulmicoton 7y ago
Some countries have a tax on wealth in addition to income tax. (Switzerland for instance, maybe US in a few years)
- auiya 7y ago
  These 4 European countries still have it [1]. Apparently it's difficult to enforce, probably for reasons touched on in this thread. [1]https://www.businessinsider.com/4-european-countries-wealth-tax-spain-norway-switzerland-belgium-2019-11 https://www.businessinsider.com/4-european-countries-wealth-...

because "You didn't build that!"

It's a trust but verify thing I believe. If the cash is anonymized, how can they know if the owner of this cash did in fact pay their taxes on it? Either they blindly trust everyone to properly declare all of their income, or they need to have some form of traceability.

Aeolun 7y ago
Once the cash is in the bank it becomes really hard to verify. It’s not like a ‘tax paid’ marker is added to every dollar in your account.
- ta999999171 7y ago
  Nor could it, with the millions of rounds of taxes an average paper dollars will see.
  - Scoundreller 7y ago
    > Nor could it, with the millions of rounds of taxes an average paper dollars will see. Somebody said a computer can't do something, somebody prove them wrong!
    - TeMPOraL 7y ago
      If you want to make money stop being fungible, well, you probably could use computers for that. But is it a wise idea?
bouncycastle 7y ago
So everyone is assumed to be a criminal until proven otherwise?
- RugnirViking 7y ago
  How else do you propose taxation is assured? Blind trust?
  - bouncycastle 7y ago
    Sure, why not? It has worked for many years before. The terms like "money laundering" are only recent and swept through without properly understanding the privacy implications (and probably didn't envisage the pervasiveness of modern electronic surveillance & data breaches in today's digital world). Anyhow, advancements in cryptographic Zero-knowledge proofs could hold the key in solving some of these problems (proof that funds are clean without reveling the source). Currently there are some scalability problems, but progress is being made so I'm hopeful. Wikipedia has a good write-up about the basics of ZKP https://en.wikipedia.org/wiki/Zero-knowledge_proof https://en.wikipedia.org/wiki/Zero-knowledge_proof
    - shakna 7y ago
      > Sure, why not? It has worked for many years before. Citation very much needed. It depends on what you mean by "working". There's references to tax evasion going back before the Roman Empire. For an example from the era of the Roman Empire, the topic of tax evasion is where the story of "give to Caesar what is his" (Mark 12:17) comes from. (I've found earlier Greek references going back to at least 300BC, but that's the easiest example to verify). The state works better when it has funds to deliver on those plans - though there are many other factors that can disrupt it such as incompetence and corruption. "Money laundering" may be a recent term, but it is not a recent concept. In fact some notable conquests on the ancient world wouldn't have been possible without concealing ill-gotten funds. It was a common tactic for avoiding paying tribute to a neighbour who defeated you.
      - 7y ago
john_minsk 7y ago
Risk based assessment. You look at macro parameters that businesses submit and if it flags you among other companies you dive deeper and request information from business itself. More friendly approach to If you find something fishy - you penalize business for different misconduct and signal them to be compliant in the future. In general big businesses/taxpayers will be compliant anyway (but use all the loopholes that exist in your tax law) While smaller businesses will have trouble to be compliant not because they don't want to, but because they can't have their accounting straight. So there is no good justification for government to scan every transaction without prior justification, since most actors want to be compliant anyway. I come from post USSR country and have a small fortune accumulated abroad. I don't have to pay taxes from this money, since I'm not a tax resident in my country at the moment. But since laws in my country work against regular people and some of them are prohibitive to work abroad/in modern digital way - the moment I transfer this money back home, our tax authority will pull some outdated law and the burden of proof will be on me (with my bank account frozen) I DON'T NEED THIS. So please, 1st world countries, don't send information on my hard earned money, to our 25 year strong socialist dictator.

Ericson2314 7y ago

Say there's a wealth tax? At no point can you be be sure it will never have tax implementations ever again.

bouncycastle 7y ago
I'm not talking about dodging taxes. Also, if there happens to be a new tax, I'll pay it, and I'm not a criminal, I just want some privacy.
- sjwright 7y ago
  Well that nicely circles back to the OP article, which shows that privacy is either an illusion or a gamble, depending on your perspective.
  - squiggleblaz 7y ago
    Well, privacy has to be gamble. If I do something, I leave a trace. I might directly interact with someone (buying drugs, for instance) or it might be in the privacy of my own room. But I'm always gambling that (a) anyone who I interact with won't dob me in and (b) no third party will detect my actions. Obviously I hope my bank keeps a record of my assets with them. Perhaps they could merely keep my assets sealed in a box identified with a code and locked by a key, and they cannot open the box without the key, and I keep the only copy of that key. Perhaps the box is an encrypted database record and the key is a nice megabyte long random number which takes an hour to confirm. I can suppose it's secure (for the time being). And it's formally anonymous, since they don't even record that I posses the key. But I still leave a trace when I access it. It's an intrinsic risk. I also risk dying every time I walk out of my house. I do things that have risk involved because it is necessary. Risk is not an argument against an activity.

seppin 7y ago

Also, governments are finding new and creative ways to put new taxes on already legal money. So yeah, privacy matters.

bouncycastle 7y ago
It's not only that. It's about building a society that can be based on assumption of honesty and trust rather than surveillance and authoritarianism. At present, our electronic monetary system has morohed into something that resembles George Orwell's 1984.
ajross 7y ago
> Also, governments are finding new and creative ways to put new taxes on already legal money. Care to cite some? That's just a silly point. There's probably no area of regulatory theory more well travelled than taxation. Imagine a trick and someone has tried it, often thousands of years ago. And it's even incorrect as a practical matter in the modern USA, where government revenue as a share of GDP has been going steadily downward for like 70 years now, even in the face of decades of deficits. It's literally the policy position of the ruling party!
- Mirioron 7y ago
  >And it's even incorrect as a practical matter in the modern USA, where government revenue as a share of GDP has been going steadily downward for like 70 years now Because government spending increased explosively before those 70 years. First, the government essentially took a loan from future generations through social security and second, there was an enormous war that the government mobilized the economy to fight. You would expect spending to go back down after both of them.
- vonmoltke 7y ago
  > the modern USA, where government revenue as a share of GDP has been going steadily downward for like 70 years now It has? https://www.usgovernmentrevenue.com/revenue_chart_1900_2020USp_21s1li011mcn_F0f https://www.usgovernmentrevenue.com/revenue_chart_1900_2020U...
- 7y ago

barrkel 7y ago

Money is a claim on future production, and you don't get to transfer that claim over other people's work without caveats, whether it's inheritance tax, limits on gifts, or wealth taxes.

bouncycastle 7y ago
Of course. I'm not talking about avoiding taxes, or skirting other laws. The issue here is simple privacy for the common law abiding people.
- vintermann 7y ago
  What you own can never be an entirely private matter. It's fundamentally about your relation to everyone else in the world, things you are allowed to do that they aren't.
kortilla 7y ago
That’s certainly a popular view, but it’s not a given by any means. You will find plenty of people that think giving their children $100 should be possible without any government intervention or taxation. Unless you’re against that as well, we’re talking about arbitrary lines for when the government gets to wet its beak.
- immawizard 7y ago
  There’s an arbitrary line between handshake and battery, yet most people and the law system can see the difference. Claiming there’s no qualitative difference between someone giving $100 dollar to their child as a birthday gift, and inheritance of billion dollars, seems like a weak argument.
  - kortilla 7y ago
    Then it should be obvious, no? Is $1 million ok? That’s a small single family home in Palo Alto in disrepair. So how about $5 mil? Nice larger lot home in Palo Alto that some dying parents bought in 1940. Not even retirement money in the bay but could be middle class retirement in Alaska. Where is your “obvious” line? Your handshake/battery analogy is shitty because it involves a victim and medical/first responder reports. We’re talking about setting some line where we feel as a society it’s morally ok to start taking money that has already been taxed strictly based on “that seems excessive” without any logical criteria.

ncallaway 7y ago

Then, by definition it's not anonymous because the authorities know that you have it. If you transfer it to someone else (legally) then there's going to be another taxable event, and the IRS will know you no longer have it. If you're trying to store cash anonymously from the public, there are many countries where that's possible. If you're trying to store cash anonymously from the government, there's not really a legal avenue for that.

roenxi 7y ago
> If you're trying to store cash anonymously from the government, there's not really a legal avenue for that. That is a succinct summary of the initial complaint. We're moving from a world where a buyer and vendor agreeing means something will happen to a world where buyer, vendor, bank and government all have to agree before something will happen. This is not a world that will cope well with change. There are big incentives for governments to get involved in every transaction (by definition, they don't agree with anything that they get involved with and block). But we get back to the classic problem that they are only bureaucratic humans and make a lot of mistakes. Also issues of regulatory capture. Although I'll throw in I'm interested in how much of an impact enforcing tax law has on the small and big pictures. One of China's competitive advantages is they claim a low tax rate as % of GDP, and most of the tax evasion I've seen personally is small businesses recycling money into the local economy. Changes to such dynamics will have far-reaching consequences.
- vintermann 7y ago
  > We're moving from a world where a buyer and vendor agreeing means something will happen to a world where buyer, vendor, bank and government all have to agree before something will happen. No, we were never in that world. The only truly bilateral agreement is a gentlemen's agreement. Trust usually relies on certain facts being public, and visible to a whole lot of people besides the transacting parties. "Who owns what" is a pretty important set of facts to agree on publicly.
  - _0ffh 7y ago

ajross 7y ago

Validation of which requires a functioning pervasive VAT or similar mechanism to prevent laundering and fraud. There's no way to win here. Truly anonymous, or even mostly anonymous money is basically isomorphic to bitcoin: it's mostly fraud and illegality, with just enough privacy advocates (and a few dirty preppers) to make it look legitimate.

fulmicoton 7y ago

Some countries have a tax on wealth in addition to income tax. (Switzerland for instance, maybe US in a few years)

auiya 7y ago
These 4 European countries still have it [1]. Apparently it's difficult to enforce, probably for reasons touched on in this thread. [1]https://www.businessinsider.com/4-european-countries-wealth-tax-spain-norway-switzerland-belgium-2019-11 https://www.businessinsider.com/4-european-countries-wealth-...