Rick Falkvinge, founder of the Pirate Party movement, argues that Bitcoin will make income taxation impossible as monetary transactions become invisible to the government. He proposes to replace income taxes with a value added tax, and a basic income scheme to take the lowest earners into account.
The VAT is actually a sensible choice here, because it is relatively easy to enforce: much of the enforcement happens “for free” as a result of transactions among suppliers, and between them and retailers. (For instance, a retailer using e-currency has some incentive to report her transactions to the government in order to get a refund for the VAT she pays to her suppliers.) There are other possibilities, though: the land tax is especially attractive because it has zero excess burden, and all governments keep track of land ownership rights as part of their basic functions.
However, I’m not sure that it makes sense to scrap income tax as a response to e-currency, because the income tax is mostly a tax on labor income, and it is also quite easy to enforce such taxes by auditing employers.
It is true that some transactions that are legally taxable will go unreported, but most of these are the kind we would want to leave untaxed in the first place, such as transactions involving second-hand goods or informal exchanges of services.
I disagreed with falkvinge’s dismissal of land tax.
He’s chosen VAT. I think that wherever it’s easy to hide income, it should be easy to hide sales as well. Implementation of his ideas can become really difficult.
This reply is ambiguous. Are your referring to Falkvinge’s or Milton’s arguments?
Anyway, I find replies of the kind “someone else has already made this point better, duh” pointless and annoying. If they’d include a pointer to the earlier discussion, that’d be useful. But otherwise it’s just saying “I’m better than you because I happened to hear about this subject earlier than you did, hah!”.
I don’t find it pointless and annoying at all if the person in question actually made the point in a much more thorough way. playing the non-strongest version of arguments off against each other is a waste of everyone’s time.
Google negative income tax and read the article...
Naz I think you are a little off though. the negative income tax is an implementation of a few possible implementations of a basic income system. Friedman liked it because it was better then normal welfair or the progressive tax we have. He wanted a flat tax. He did not particuly want the NIT, he wanted less welfair overhead and a flat tax.
If you do not have an income tax you can not use a negative income tax to implement a basic income.
Falkvinge is coming from the other direction. He is saying we will be forced to have a flat tax (VAT) because of bitcoin and that in order to still have wellfair we will need to implement a basic income, his citizens income.
http://falkvinge.net/2011/05/19/the-information-policy-case-for-flat-tax-and-basic-income/
Rick Falkvinge, founder of the Pirate Party movement, argues that Bitcoin will make income taxation impossible as monetary transactions become invisible to the government. He proposes to replace income taxes with a value added tax, and a basic income scheme to take the lowest earners into account.
The VAT is actually a sensible choice here, because it is relatively easy to enforce: much of the enforcement happens “for free” as a result of transactions among suppliers, and between them and retailers. (For instance, a retailer using e-currency has some incentive to report her transactions to the government in order to get a refund for the VAT she pays to her suppliers.) There are other possibilities, though: the land tax is especially attractive because it has zero excess burden, and all governments keep track of land ownership rights as part of their basic functions.
However, I’m not sure that it makes sense to scrap income tax as a response to e-currency, because the income tax is mostly a tax on labor income, and it is also quite easy to enforce such taxes by auditing employers.
It is true that some transactions that are legally taxable will go unreported, but most of these are the kind we would want to leave untaxed in the first place, such as transactions involving second-hand goods or informal exchanges of services.
I disagreed with falkvinge’s dismissal of land tax.
He’s chosen VAT. I think that wherever it’s easy to hide income, it should be easy to hide sales as well. Implementation of his ideas can become really difficult.
he’s just poorly recreating Milton Friedman’s arguments about the negative income tax.
I’m not familiar with Milton Friedman’s arguments, but were they really based on the premise of an anonymous currency?
the arguments for basic income aren’t directly related.
This reply is ambiguous. Are your referring to Falkvinge’s or Milton’s arguments?
Anyway, I find replies of the kind “someone else has already made this point better, duh” pointless and annoying. If they’d include a pointer to the earlier discussion, that’d be useful. But otherwise it’s just saying “I’m better than you because I happened to hear about this subject earlier than you did, hah!”.
I don’t find it pointless and annoying at all if the person in question actually made the point in a much more thorough way. playing the non-strongest version of arguments off against each other is a waste of everyone’s time.
The problem is not including a link to said arguments.
Google negative income tax and read the article...
Naz I think you are a little off though. the negative income tax is an implementation of a few possible implementations of a basic income system. Friedman liked it because it was better then normal welfair or the progressive tax we have. He wanted a flat tax. He did not particuly want the NIT, he wanted less welfair overhead and a flat tax.
If you do not have an income tax you can not use a negative income tax to implement a basic income.
Falkvinge is coming from the other direction. He is saying we will be forced to have a flat tax (VAT) because of bitcoin and that in order to still have wellfair we will need to implement a basic income, his citizens income.
It is all crazy talk though.