Now, I don't think anyone really likes taxes, but it is also unlikely that they are suddenly going to disappear. What I do wonder though is, that if we were going to move to a better economy, the taxation system has to be one of the things that changes radically from the current hodgepodge of loopholes that only a narrow subset of the world by population, but the majority of the wealth, can take advantage of.
There is such a massive asymmetry in how an individual or a corporation, the poor or the very wealthy are able to as manage there various forms of incomes and, not to mention all of the tax benefits for investors, who are often investing into vehicles that the average person has no access to begin with.
But, what if rather than all of the various tiers and potential for creative accounting evasion, there was just a flat tax on all income and expenditures. For example, let's say it was the same as the corporate tax in many places of 20%, so no matter what you earned or what you bought, it was going to be the same for all, corporations and individuals, investments, inheritances, buying bread or buying planes.
Firstly, I think this would make it all far, far simpler to manage, but it will also make it extremely clear when someone isn't paying their "fair share", as all will be paying the same. This cleans up a lot of the ambiguity and complexity around taxing systems and most importantly, shuts a lot of the "loopholes" that the majority of wealth can use, but no one else.
But, what about the other side of the equation? The earning side? I think this is interesting to consider front he perspective of tax also, as when there are various tiers and ways to decrease tax liability creatively, there is far more incentive to affect what earnings look like. I remember when I was younger there were people who would reject (postpone) a pay increase because it would push them into the next tax bracket and actually leave them with less in their pocket. Even now in many places, a second job is taxed at a higher rate than a main job. This is quite ludicrous if you think even slightly about it, especially now that there is a shortage of labor in many sectors.
Why discourage people from earning more?
This is of course salient for crypto earnings at the moment too, where many countries seem to tax it at a higher rate than pretty much anything else. However, if there was a uniform flat tax, people would be encouraged to earn what they can, wherever they can and use it, rather than try to hide it. What this essentially does is brings about more of a "free market" in terms of earning and taxation, so that people and the "entities" are on an even footing. Well, it is obvious why this would not fly through legislation, unlike taxing earners even more.
But, what it would do for the countries that do it, would be attract more wealth to be earned within, stay within and be spent within their borders. This in itself would be incentive enough for many of at least the smaller countries to make a change, as we can see that some are starting to do for crypto already.
Attracting wealth from outside the borders to inside, is a massive boon that has in the past come through goods and service exports and tourism, but crypto gives a new channel to do this and can effectively allow for economic "leakage" from countries, in the same way that many Indians would work abroad and send cash home in envelopes to their families. That money went "offshore" (illegally), making it unavailable locally.
But, this is the thing, illegal or not when people feel that they are being forced or they think they can get away with it, they will find the loopholes and use them. As I mentioned though, often in tax codes there are so many legal ways for the wealthy to take advantage of, that those who do it illegally really are showing their true colors. But, the incentive is there, it is never enough.
Now, doing this would set up all kinds of disruptions, but would soon lead to a far simpler system where most participants feel that they are fairly treated in comparison to everyone and everything (corporations are considered by law as entities so they can own assets - it is a tax thing) else. This means that there is simplicity and a better experience.
While tax is seen as untenable by many people, it isn't going to be, given up easily or disappear quickly. However, there are better ways to manage it in the interim that improves conditions for everyone (majority) financially and encourages people to work and earn more, not less. This free market sets up for a healthier lifestyle for many people, or at least one that they have agency in choosing how they live, without being punished for wanting to earn and spend a little more.
I am not a tax expert by any measure, but just "getting rid of them" isn't going to happen.
Unless everyone does it together at scale.
Until then, we have to try and improve what we have.
Taraz
[ Gen1: Hive ]
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The thought of crypto and taxes makes my brain hurt. Obviously treating them like shares and paying tax on the crypto that you realise/convert to fiat sounds fair to me... but that doesn't really cover buying goods or services straight from crypto... on the other hand, recording every transaction is so incredibly painful... and with such volatile assets how do you know when to tax them? It's so hard.
I honestly don't mind the idea of the GST (Goods and services tax) where you're paying tax on what you spend. Obviously it's not perfect... but it does mean that lower income people pay less in taxes. It does mean that rich people hoarding money isn't taxed, but if they were to buy other assets then it would. It would put the effort to work it out on the sellers of goods and services, which seems fine to me.
The very upsetting aspect is when companies like H&R Block lobby the government to keep convoluted tax laws and processes to keep themselves in business. So terrible.
I like the GST model. 25% and no other taxes. Can't see it being adopted, though. The point isn't fundraising, its control.
They take from everyone, then give back to the obedient.
If I remember correctly, I think the Australian Federal Government had little to no power over the individual Australian states until they took over income tax... I'm not sure we would have had much of a Federal Government without that particular move... and now they can pretty much tell the states what to do.
In the US we're paying Federal Tax and State Tax... the individual states set their own tax rate (and there is also property tax on top) so they have greater autonomy. I actually like the states having more resources and ability to make their own laws, it means people can (theoretically) move to a state that suits their financial goals and ideology.
The closer your government, the better. Some want it a few thousand miles away; I want it at my dining room table.
Have you ever considered running? You'd honestly be amazing.
That's very kind. It's unfortunately a well-worn path. Lots of liberty minded people have tried it over the years and they're either completely ineffective at securing real, lasting change; or they're corrupted by it and end up just as bad as the others.
I'm going to continue focusing on projects like this. If we can give people an alternative to government issued money and convince them to use it; Gresham's law will starve the nation state out of existence.
That makes sense. Instead of trying to fix the system from within, creating a superior, more equitable system to replace it. Definitely a project worthy of our time.
Would make sense, right? I don't even mind the government level tax, but it should come with full transparency. Government spending should be blockchained and always equal zero. Then, there should be a percentage of it where the user gets to decide what is supported.
So much this!
I've been thinking about blockchained Government so much recently. As far as I can see it, it would end the party system instantly and make consequences immediate for elected officials who don't do their jobs.
It would change everything - which is why they fear crypto. Once people are acccustomed to transparency and handling their own wealth - their next sight is on governance. Look at Hive as an example of what could be and while this is DPoS, that "stake" could be any number of factors applied through a smart contract. Rather than voting for an individual or even a party, you vote across a spectrum and the job gets given to the most qualified etc - it makes politicians hired bureaucrats again, not celebrities.
I'm constantly appalled with how much money is spent on campaigning in the US. It's astronomical and obviously affects policy decisions, etc... imagine if the money spent on convincing people you were going to fix the problems, was just spent on fixing the problems.
I'd think we'd still see some levels of it, "Vote Smith on Proposal 8573" but we'd also get to see proof of Smith's track record, successes, failures, etc... something that just doesn't seem to be a factor whatsoever in today's politics.
Imagine if there was a proposal system similar to Hive for some expenditures where a percentage of support had to be reached based on stake. How many would be willing to pay out of their private wallets for the next war?
It's damn near impossible. Just for curating, dozens of micropayments every day. Add to that earning dribs and drabs of DEC playing Splinterlands, buying/selling/renting cards, daily quests where you might earn credits, potions, or cards, Hive-Engine transaction that can easily be dozens a day. And that’s just parts of the Hive ecosystem.
Yeah... we might eventually all have to move to Portugal where crypto is untaxed... just because it's easier.
The problem with GST in Finland is, it is so variable on different items and is applied in weird ways. For example, if I buy something from outside the EU (and Finland in many cases), I get double taxed and, it depends on what I buy. For example, let's say I buy a T-shirt and a pair of shoes - the T-shirt has something like an 18% tax, the shoes 28% - and then, it depends on what it is made out of.... it is all silly here - Finland is the land of tax.
The crypto tax is mental...
The start of the loophole level that puts a price most can't pay to access the loopholes.
Ooof!
Is it taxed at the moment of purchase? Or do you have to work it out annually?
I personally don't mind slight differences in tax rates for different items, Lambos and Private Jets taxed at a higher percentage than milk and bread, sure... but what you're describing would drive me bonkers.
As it comes into the country. If it is over 100€ (maybe 150), it goes straight to customs and they won't release it until it is paid.
Taxes are needed to run a government. They need to pay for their services like police, market regulation, infrastructure, and so on. The main reason taxes feel so painful is because the government is inefficient. It is like paying for a service from a bad company, that is also a monopoly. You don't get your money word and you must pay every time.
The tax code is indeed very complex and thus full of loopholes, only accessible to the ones with resources to navigate the complexity. A simpler tax code makes it fair. I believe the government should only tax on the things they can actively regulate an influence.
VAT should be the only tax that exists, because the government regulates the market. They ensure that sellers are honest and provide not lethal goods and services and provide a market for them to transform goods add them value and sell them further back into the market. VAT is a fix rate, and that is good enough as it taxes on the Volume you interact with the market. If you interact with the market a lot your tax bill will be higher, but you are indeed benefiting the most with the market.
On the other extreme Income tax is the most unfair, it is increased on your income. Which indeed discourages people to sharpen their skill, productivity and earn more. Which then precisely drives people to stagnate as a worker and make them susceptible to unemployment. Income tax should disappear and be turned into VAT, in the end you have studied, sharpened your skills and transform those into some value for your employer. It would be fair, it would stay a fix rate, giving you a predictable outlook of your takes and allow you to dare to earn more instead of being hit by a tax bracket.
Having only VAT would make taxes so much easier, for everyone people and companies and it would be fair. It would also encourage a healthy marketplace, as people would only spend into the market when they find something they like.
Being taxed on you income as a person or profits as a company it just mad as it discourages you from earning. Yes, companies have the benefit to be taxed on profits after expenses, and many try to have zero profits. People don't have that option, we get taxed on income. If you are taxed on VAT, profits would be better allocated for your future expenses when you find a good buy/investment and it incentivizes the market to offer you something you would trade your money for.
I think there should be full transparency on government spending, down to the individual dollar. If there is "black money" for special operations, it can be labelled as such, but the in and out should always equal zero. Blockchain it all.
Yes, this is what I think the "endgame" of tax should be, but it isn't going to happen unless there is the pressure to do so.
I think it would encourage spending also, rather than just investing for more gain at the higher end. It would create a different dynamic for wealth creation and expenditure.
Also, I don't get to choose which country I pay my tax in, I have to pay it where I earn it. Companies can earn locally, but choose to pay internationally somewhere else, like Ireland. I think in Australia, Google earned something like 8 billion locally, but paid less than a percent of it in tax.
My wife is a tax professional but trade, although not in the personal sphere of expertise, I can tell you that the tax companies in America are definitely some of the ones that fight this notion the hardest. They are paid to do all kinds of crazy shit to hide money and reduce the burden. Then you combine the offshore stuff and it gets better. We are considering starting our own company so we can take tax benefits. Shit even perhaps registering something in Ireland or something. Screw taxes! Lol
I wonder if the system was simple, transparent and "provably fair" - would people be so upset? Probably not, because they will be able to affect the system itself - the complexity and lack of opacity is the issue.
Yes. It won't be a bright line change though, it is going to have to move gradually and incrementally - see it within our life time?
As long as we're not designated Surplus to requirements in the meantime, I'm sure we will.
The blockchain is doing to the Nation state what digital photography did to Kodak. Slowly at first, then all at once.
We could see an online/anonymous rights enforcement agency.
You pay them an annual fee in Monero, and they'll livestream the abduction and execution of any policeman, prosecutor, judge or warden who arrests, charges or imprisons you for a victimless crime.
Most of the Nation state's resources go toward convincing us it's completely viable and will be around forever, like any other ponzi scheme on the brink of collapse.
I think the earnings model is good. If you earned it, it goes on your income statement. That being said Aussie income tax for me is significantly high 😞 ah well what can I do.
Americans have a fat lower CGT which is amazing something like 7% someone was saying. Where as in Australia it's 50% but can come down to 25% if you've held for over 12 months.
The individual tax in US is actually higher than most places, but they get less benefit for it - "greatest country on earth" :D
I personally believe that loopholes will always be invented especially in the crypto-sphere.
Tax I believe is a good thing whe utilized in the right way, cant say for sure about other countries but here in Nigeria it's a different story and the government cant tax what it doesn't understand, so they just banned the whole crypto thing here.
Just a way of saying if the can't benefit from it then no one can, and just as crypto is meant to be decentralized and about finding loop hole we got p2p at it's highest, now we can easily trade crypt without involving the banks, idk what they might still try to do about this in the future but I think crypto being decentralized should not be taxed by anyone, the government doesn't have to be dictating everything for it's citizens all the time.
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The difference is, on the blockchain, every at any level can access them (depending on the blockchain rules itself).
Paying taxes in places like Nigeria is obviously supporting a lot of corruption, right? But, this is just a spectrum of all government activity - corruption of various kinds exists everywhere. Banning crypto is one of the craziest things they have done, but from a corruption and control level, it makes sense - they want the loopholes open for them, not to empower everyone.
100% true.
I agree with you, corruption exist in all kind of forms and its different for every country and states all over the world.
That's the selfish type of devil we have as government funny thing is they can't fully understand how it works neither do they have the knowledge of what blockchain means, it will be hard for them to comprehend such tech. Most are just bunch of old folks who don't want to empower they younger ones. They only make money to send their families to other countries and settle there after they are done with their embezzlement.
sorry about my rants, but its a different story now that crypto has been around. I believe more privatization will definitely be a gamechanger
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I don't hate taxes but what i had is my money getting wasted on people who don't deserve it like politicians
Transparent government activity is the answer - but, they will not do this willingly, it has to be pressure from the people.
A progressive taxation scale has its pros and cons. As far as I remember, taxes were invented by the ancient Arabs in the 5th century AD. And since then there has been a debate about the best schemes. Unfortunately, the interests of the individual and the state do not always coincide.
This is the major problem, unless in a dictatorship.... until the revolution.
I think tax is one of the best ways to improve a country's growth. If it is gone about the right way and it is believed to be fair, a lot of the citizens wouldn't think too much about it. But then when it's starts becoming outrageous and overbearing, everyone would certainly want to evade it. They'll surely be fear, when you realize that the more you earn, the more taxes they get from you, it just becomes tiresome.
For the cryptosphere, taxing wouldn't be a bad thing if its gone about the right way. But then I feel it'll give government Access to people's earnings. If you have no idea what an individual earns you'll certainly not know the percentage of tax to ask from him, I dunno if I'm getting it right though. It'll become all worrisome and a lot of people wouldn't really be comfortable with crypto transactions anymore. I think there's always a wise way to do things, I hope they find it out and implement it.
Glad I stumbled on this post ❤️✅
THis is the issue, isn't it? I think even if all government activity was fully transparent and publicly auditable (at least from the financial perspective), it would improve things - but no government will agree to that - even though they are employed directly by the people they hide the information from. Funny, eh?
If you think about how AMMs and yields work, it is all based on smart contracts - why can't tax be the same?
Ludicrous tax laws implemented throughout the world, quite honestly why not place a firm tax on all of 40% - 50%. We pay more in hidden taxes on everything we purchase, earn, inherit, only the rich who afford tax accountants may benefit.
Great divide is happening, no longer colour or religion, it is going to be rich against poor!
And how it is going to be handled is, Centralized versus Decentralized systems.
Really hope decentralized kicks butt, we have been led around by the nose for far too long!
Seriously though...one big food for thought
It is a strange conflict.
The best tax payers are pitty permanent employees. Goverment withhold taxes from their wages, then company pay the rest. However, the best tax evaders are companies. There are many tricks that can be done in balance sheets for tax evasions. Thus, we are not equal.
Yep, creative accounting at its best....
Well, to be honest, I thoroughly don't know about the crypto and the taxes. But I also think there is not any harm if we pay a valid tax to it. What do you say?
I don't mind the paying of taxes on what we spend.
It's all a percentage anyway, so it makes sense that it would be flat. I mean you are paying less if you make less but still the same rate as everyone else. It certainly seems more fair even if some would argue it isn't equitable. I actually would probably do two taxes though. A flat one for income and then a flat one for sales. Just because paying a 20% tax on a gallon of milk seems crazy.
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two makes sense in this regard - I just used the 20% as a placeholder :)