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The ability to seize money doesn't seem necessary for taxation to work. For example, the government could simply throw you in jail or seize your physical asset

The ability to seize money doesn't seem necessary for taxation to work. For example, the government could simply throw you in jail or seize your physical assets if you fail to pay taxes.

klez 13y ago
The point is that seizing physical assets and keeping you in prison costs a lot more than collecting money.
- XorNot 13y ago
  Yeah but it costs you everything.
- pessimizer 13y ago
  All you have to do is set an example, though. Most people who don't want to pay taxes pay their taxes every year without ever having to be jailed.
  - oleganza 13y ago
    Because government can cheaply seize their assets from their bank accounts without much hassle. When 90% of wealth is owned outside of the banks, you'd need to go door to door without clear idea how much you can possibly extract. After every successful seizure people only get smarter and protect their wealth even tougher.
    - rainsford 13y ago
      Cheap enforcement isn't necessary because the government can create enough disincentive that most people will simply pay the tax. The whole point of the lack of anonymity in Bitcoin is that the government CAN have an idea of how much money you owe in taxes and they can simply throw you in jail (or take your house, car, etc) until you pay. Yes, that's pretty expensive for the government, but they don't have to do it to everyone. Faced with those consequences, most people would just pay.
    - pessimizer 13y ago
      You don't have to extract a dime. Shoot people who fail to pay whatever you estimate they should, even if they would have had to borrow or steal in order to make the payment - inability to pay would be no excuse. Make sure the payment is a reasonable, manageable amount if someone, for example, consents to being monitored, or opens their books to whatever extent the "attacker" would like. If they don't consent, greatly overestimate their income, maybe even as a statutory default assumption of income. You wouldn't have to shoot very many people at all to maintain whatever amount of control you wanted over other people's lives.
oleganza 13y ago
To support cops and prisons, government will need to pay in money that they have to seize in the first place. Currently governments do not have any money at all, they have to print it every day to pay their bills. When economy switches to bitcoin, cops will switch occupation well before government finds efficient way to collect bitcoins to pay them. Simply because private sector will be much wealthier by that time.
- rainsford 13y ago
  No economy is going to switch to Bitcoin completely overnight (assuming such a switch happens at all), there is plenty of time to figure out how to collect taxes on Bitcoin income before the government needs those taxes to function.
- pessimizer 13y ago
  >To support cops and prisons, government will need to pay in money that they have to seize in the first place. Why? A government could declare Beanie Babies the dominant currency if they wanted. All they have to do is say that you have to pay your taxes in Beanie Babies, and that all of their court judgments are only settleable in Beanie Babies. You will be rushing to buy treasuries denominated in Beanie Babies and paying for them in bitcoin.

The ability to seize money doesn't seem necessary for taxation to work. For example, the government could simply throw you in jail or seize your physical assets if you fail to pay taxes.

klez 13y ago

The point is that seizing physical assets and keeping you in prison costs a lot more than collecting money.

XorNot 13y ago
Yeah but it costs you everything.
pessimizer 13y ago
All you have to do is set an example, though. Most people who don't want to pay taxes pay their taxes every year without ever having to be jailed.
- oleganza 13y ago
  Because government can cheaply seize their assets from their bank accounts without much hassle. When 90% of wealth is owned outside of the banks, you'd need to go door to door without clear idea how much you can possibly extract. After every successful seizure people only get smarter and protect their wealth even tougher.
  - rainsford 13y ago
    Cheap enforcement isn't necessary because the government can create enough disincentive that most people will simply pay the tax. The whole point of the lack of anonymity in Bitcoin is that the government CAN have an idea of how much money you owe in taxes and they can simply throw you in jail (or take your house, car, etc) until you pay. Yes, that's pretty expensive for the government, but they don't have to do it to everyone. Faced with those consequences, most people would just pay.
  - pessimizer 13y ago
    You don't have to extract a dime. Shoot people who fail to pay whatever you estimate they should, even if they would have had to borrow or steal in order to make the payment - inability to pay would be no excuse. Make sure the payment is a reasonable, manageable amount if someone, for example, consents to being monitored, or opens their books to whatever extent the "attacker" would like. If they don't consent, greatly overestimate their income, maybe even as a statutory default assumption of income. You wouldn't have to shoot very many people at all to maintain whatever amount of control you wanted over other people's lives.

oleganza 13y ago

To support cops and prisons, government will need to pay in money that they have to seize in the first place. Currently governments do not have any money at all, they have to print it every day to pay their bills. When economy switches to bitcoin, cops will switch occupation well before government finds efficient way to collect bitcoins to pay them. Simply because private sector will be much wealthier by that time.

rainsford 13y ago
No economy is going to switch to Bitcoin completely overnight (assuming such a switch happens at all), there is plenty of time to figure out how to collect taxes on Bitcoin income before the government needs those taxes to function.
pessimizer 13y ago
>To support cops and prisons, government will need to pay in money that they have to seize in the first place. Why? A government could declare Beanie Babies the dominant currency if they wanted. All they have to do is say that you have to pay your taxes in Beanie Babies, and that all of their court judgments are only settleable in Beanie Babies. You will be rushing to buy treasuries denominated in Beanie Babies and paying for them in bitcoin.