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I think the problem here is, how would a $FEDERAL_AGENCY know how much bitcoins does one have? The 'no' may come at a point when they ask this question and it m

by snitko 13y ago

I think the problem here is, how would a $FEDERAL_AGENCY know how much bitcoins does one have? The 'no' may come at a point when they ask this question and it may come in the form of "I don't have any, now go and prove otherwise".

patio11 13y ago
In approximately the same way they'd know how much money, dope, or shares of Toyota you have: by asking other people you did business with, counting it, convincing you to accept it from them, or otherwise bringing the routine practice of law enforcement to bear against you.
- malandrew 13y ago
  What stops someone from creating a legal business entity in another country with excellent tax laws and simply managing all business transactions for that entity in Bitcoin. At that point the Bitcoin is not an asset of yours, but an asset of that legal entity. Obviously, when you repatriate that money or that entity buys something for you (because you control it), then you would have to pay taxes on the cash value of what was purchased for you. However for every other traditionally tax intermediate transaction, what can the government really do? The fact that bitcoin is extranational must open up a lot of completely legal loopholes for avoiding taxes on everything except when you repatriate money in one form or another.
  - chc 13y ago
    What stops them doing this with any other currency? The point here is that Bitcoin isn't really special.
    - malandrew 13y ago
      The fact that you get to completely avoid the US banking system or any other national banking system. Bitcoin can operate 100% extra-nationally. Let's say person A registers a company in country X but live in country Y and person B also registers a company in country X, but also lives in country Y. Now person A can control the business of his company to do business with the company of person B without ever triggering a taxable event for either person A or B in country Y, until either A or B try to repatriate the money into country Y, at which time it is taxed as income.
      - chc 13y ago
        How is that significant, though? The fact that the money isn't in any specific national banking system doesn't change the laws that you and your business are subject to unless you happen to find a country whose laws only care about property that's in the banking system.
        malandrew 13y ago
        It's significant for every type of business that transacts in services that don't necessarily require repatriation until distribution of profits. All purchases and sales of services occurring between two "extra-national" corporate entities are essentially tax free. Only when profits and wages are distributed to individuals would taxes be levied.
  - dragonwriter 13y ago
    > The fact that bitcoin is extranational must open up a lot of completely legal loopholes for avoiding taxes on everything except when you repatriate money in one form or another. I don't see why being "extranational" would do this, and would find this argument much more convincing by pointing to actual loopholes that this applied to. If it does, and it becomes a problem, those loopholes will be closed.
ebrenes 13y ago
I'm not even sure that's a problem. When faced with increased cost on their side governments generally just shift that cost back onto the individuals complicating matters for them. Look at drugs, the government isn't losing much sleep over that, they just add more trials, requisites and regulations that drug companies have to jump in order to bring their products to market. At any rate, like patio11 said it's no different than trying to trace cash only transactions. The bigger problem with Bitcoin is that since these are electronic transactions they're a bit easier to trace/log and store than those occurring in meat space, as evidenced by the NSA programs and others.

by snitko 13y ago

patio11 13y ago

In approximately the same way they'd know how much money, dope, or shares of Toyota you have: by asking other people you did business with, counting it, convincing you to accept it from them, or otherwise bringing the routine practice of law enforcement to bear against you.

malandrew 13y ago
What stops someone from creating a legal business entity in another country with excellent tax laws and simply managing all business transactions for that entity in Bitcoin. At that point the Bitcoin is not an asset of yours, but an asset of that legal entity. Obviously, when you repatriate that money or that entity buys something for you (because you control it), then you would have to pay taxes on the cash value of what was purchased for you. However for every other traditionally tax intermediate transaction, what can the government really do? The fact that bitcoin is extranational must open up a lot of completely legal loopholes for avoiding taxes on everything except when you repatriate money in one form or another.
- chc 13y ago
  What stops them doing this with any other currency? The point here is that Bitcoin isn't really special.
  - malandrew 13y ago
    The fact that you get to completely avoid the US banking system or any other national banking system. Bitcoin can operate 100% extra-nationally. Let's say person A registers a company in country X but live in country Y and person B also registers a company in country X, but also lives in country Y. Now person A can control the business of his company to do business with the company of person B without ever triggering a taxable event for either person A or B in country Y, until either A or B try to repatriate the money into country Y, at which time it is taxed as income.
    - chc 13y ago
      How is that significant, though? The fact that the money isn't in any specific national banking system doesn't change the laws that you and your business are subject to unless you happen to find a country whose laws only care about property that's in the banking system.
      - malandrew 13y ago
        It's significant for every type of business that transacts in services that don't necessarily require repatriation until distribution of profits. All purchases and sales of services occurring between two "extra-national" corporate entities are essentially tax free. Only when profits and wages are distributed to individuals would taxes be levied.
- dragonwriter 13y ago
  > The fact that bitcoin is extranational must open up a lot of completely legal loopholes for avoiding taxes on everything except when you repatriate money in one form or another. I don't see why being "extranational" would do this, and would find this argument much more convincing by pointing to actual loopholes that this applied to. If it does, and it becomes a problem, those loopholes will be closed.

ebrenes 13y ago

I'm not even sure that's a problem. When faced with increased cost on their side governments generally just shift that cost back onto the individuals complicating matters for them. Look at drugs, the government isn't losing much sleep over that, they just add more trials, requisites and regulations that drug companies have to jump in order to bring their products to market. At any rate, like patio11 said it's no different than trying to trace cash only transactions. The bigger problem with Bitcoin is that since these are electronic transactions they're a bit easier to trace/log and store than those occurring in meat space, as evidenced by the NSA programs and others.