Hacker News Reader

Comment by indian2018 | Hacker News Reader

indian2018·

One missing part of this puzzle is tax evasion. Cash transactions allow people to avoid tax . On paper sale price can be lower thus lower tax for registration and transfer charges to govt and then pay the difference directly to the seller. Thus evade some tax.

View on HN

That is the argument made by banks. It's gibberish. If you got rid of cash, people could still trade in arbitrary commodities (gold/silver/gemstones), favors, quid pro quo, hard currency of other countries, drugs, etc. Meanwhile the government can catch you evading taxes regardless because you're claiming $10,000/year in income while living in a five million dollar house and driving a $70,000 car.

Selling real estate for half in cash and half in bank deposits (wire transfer or whatever) is just a lot more convenient than half in bank deposits and half in commodities that aren't nearly as liquid.

You can then take that cash with you to your next real estate purchase, or maybe break it up over time -- maybe take less cash out when you deposit your paychecks, maybe buy larger small items with cash, maybe pay for part of your car with cash, etc.

You're saying bullion (exchangeable for the spot price at any pawn shop), or US dollars or Euros, are materially less liquid than the local currency? There are many countries where the vendors prefer USD to the local currency.

And the only reason the local currency is so liquid is because there is one. If you got rid of it, people would start using something else and it would have the same liquidity because then it's the thing that people accept.

Reply on news.ycombinator.com