By "legally gained cash" I mean that taxes have already been paid for it.
If you transfer it to someone else (legally) then there's going to be another taxable event, and the IRS will know you no longer have it.
If you're trying to store cash anonymously from the public, there are many countries where that's possible. If you're trying to store cash anonymously from the government, there's not really a legal avenue for that.
That is a succinct summary of the initial complaint.
We're moving from a world where a buyer and vendor agreeing means something will happen to a world where buyer, vendor, bank and government all have to agree before something will happen. This is not a world that will cope well with change.
There are big incentives for governments to get involved in every transaction (by definition, they don't agree with anything that they get involved with and block). But we get back to the classic problem that they are only bureaucratic humans and make a lot of mistakes. Also issues of regulatory capture.
Although I'll throw in I'm interested in how much of an impact enforcing tax law has on the small and big pictures. One of China's competitive advantages is they claim a low tax rate as % of GDP, and most of the tax evasion I've seen personally is small businesses recycling money into the local economy. Changes to such dynamics will have far-reaching consequences.
No, we were never in that world. The only truly bilateral agreement is a gentlemen's agreement.
Trust usually relies on certain facts being public, and visible to a whole lot of people besides the transacting parties. "Who owns what" is a pretty important set of facts to agree on publicly.
And even if there's some assertion that an unknown someone owns something, _why_ should we respect it? Shouldn't we as a society just take it, and ask the owner to show himself if he minds? That seems a very reasonable solution to problems like tax paradises and shell companies if you ask me.
I would disagree in one key way. The initial complaint focused on this as a recent change. "it seems the normal people lost their privacy _nowadays_ at the expense..."
Certainly this is true from a technology perspective. No argument there.
But I don't think this is in any way novel from a _legal_ perspective.
Governments have, since at least roman times, taxed individuals based on the quantity of things they possessed or based on transactions. As long as it has been this way, the government has had a legal right to know your financial standing.
So, if the argument is that we're in novel _legal_ ground, I disagree. If the argument is that we're in a status quo legal ground, but in novel _technical_ and _enforcement_ ground, I'd agree.
Somebody said a computer can't do something, somebody prove them wrong!
The terms like "money laundering" are only recent and swept through without properly understanding the privacy implications (and probably didn't envisage the pervasiveness of modern electronic surveillance & data breaches in today's digital world).
Anyhow, advancements in cryptographic Zero-knowledge proofs could hold the key in solving some of these problems (proof that funds are clean without reveling the source). Currently there are some scalability problems, but progress is being made so I'm hopeful. Wikipedia has a good write-up about the basics of ZKP https://en.wikipedia.org/wiki/Zero-knowledge_proof
Citation very much needed. It depends on what you mean by "working".
There's references to tax evasion going back before the Roman Empire. For an example from the era of the Roman Empire, the topic of tax evasion is where the story of "give to Caesar what is his" (Mark 12:17) comes from. (I've found earlier Greek references going back to at least 300BC, but that's the easiest example to verify).
The state works better when it has funds to deliver on those plans - though there are many other factors that can disrupt it such as incompetence and corruption.
"Money laundering" may be a recent term, but it is not a recent concept. In fact some notable conquests on the ancient world wouldn't have been possible without concealing ill-gotten funds. It was a common tactic for avoiding paying tribute to a neighbour who defeated you.
Here's one example to ponder about: if we had this kind of surveillance earlier, would things like the Civil Rights Movement and generally the 60's counterculture come about? I.e. the era of "sex and drugs and rock'n'roll"? If only the authorities had the tools that they have today, oh boy! Don't like the liberation of sex? Is rock'n'roll the Devi's music? Fine. We'll close your PayPal account.
Privacy is very important for having a free society and freedom of expression. Financial privacy should be no exception.
You can apply the same style of reasoning to end-to-end encryption. Various actors are aiming for total surveillance in that area too, it is most likely a terrible idea and we have precedent that the world works reasonably well without it.
> Sure, why not? It has worked for many years before.
Taxing on trust alone is exactly where this little thread started.
If you measure anything, infant mortality, poverty, murder rates, diseases, nutrition, education, which of them fit any sensible definition of 'well'?
In my case, "worked well" meant something like a mix of: a) the world did not end, and b) everyday life in developed societies (which previously did not have total financial surveillance, but are now eager to achieve it) was more or less the same then as it is today.
In fact, to expand on b), it seems to me (admittedly from a completely intuitive and unquantified perspective) that we are quickly losing civil liberties today and that this aspect was better in the past.
as i understand, the "overwhelming majority" (lower and middle class) are not the focus of the problem here as they rarely use tax havens to circumvent taxes anyway (it's probably not cost effective). this is all about those who have the funds and motives to circumvent taxation, who happen to be a minority - even thought they're not a minority when it comes to taxable income; the 1% or whatever.
as for the rest of your argument, i don't completely agree. while you're probably right in practice, i.e. the authorities would have used their tools against those movements, the goals of those movements were different. the civil rights movement was probably illegal at the time but the goal was to change the laws to make it legal. same for sex. no millionaire wants to make tax evasion legal, as that would affect all tax payers, even those of the lower and middle class. they want that only for themselves.
i agree that (hard) drugs are probably a comparable example - it's illegal and puts a strain on society. on the other hand, use of hard addicting drugs can be categorized as an illness. so should we label money hoarding and tax evasion an illness? offer treatment options? allow them supervised safe spaces to evade taxes so we can offer them help?
i'm not convinced that financial privacy whould be no exception. there must be limits if it affects the others. i also don't think environmental pollution should be an issue of privacy - you shouldn't be able to pollute the air and claim it's nobodys business, as your factory stands on your own private plot of land.
Not to mention CGT been tweaked to ineffectiveness by previous governments by excluding assets from its calculations, notably housing, which has skewed CGT away from its original purpose and it's now more of a stick to whack at industries that aren't cozy with the current government.
In fact in many countries CGT is only used to refer to the LOWER version of the tax ... after all you should pay income tax whether you make your income digging ditches, house flipping, or day trading
He's spending more on everything than you are.
That doesn't even things up, of course, but then neither does the current system. It would arguably be closer to even.
The beauty of a universal sales tax (as an alternative to income tax), in addition to the fact that the wealthy consume more of everything, is that a transaction tax is more difficult to lobby loopholes into.
And, of course, it potentially doesn't need as large (read expensive) a bureaucracy to manage and enforce it.
It also removes the burden of record keeping/reporting from consumers and payroll tax from employers.
A lot of people have spent time thinking about the idea. One example: https://fairtax.org/
It's not a problem free solution of course, but neither is the current one. Someday a proposal for a transaction tax might even make it out of committee.
According to [1] Warren Buffett's house is worth .001% of his total wealth, at $652,619.
And for Warren Buffet to pay sales tax proportional to someone with $500,000 in assets buying a $50,000 car, he'd have to buy the world's most expensive car - a $5 million Koenigsegg of which only 3 were ever made - 1700 times over.
[1] https://www.businessinsider.com/warren-buffett-modest-home-b...
It's a bit like a straw man fallacy.
It happens a lot less often on HN though in my experience.
Right after the bit you quoted I noted that WB buying an expensive car doesn't even things out.
The idea of sales tax as a replacement for income tax isn't new or lacking rigor. Over the years it's had a lot of support from both economists and politicians. The math, at least on the surface, does work.
Personally, I haven't spent enough time looking at it to have a lot of conviction one way or the other about it's viability.
But it's an interesting idea that isn't invalidated by comparing cars.
Land ownership is registered for good public purposes which does not unreasonably destroy privacy concerns - it's usually obvious who (person or business) controls the land anyway (who should a tenant pay the rent to? who gets to decide if you can be a tenant?) and it gives people a great deal of confidence that they know that whoever is recorded in the government land registry as having a right to sell the property actually has that right. The common law approach of having to hold a series of documents that identify a continuous line of owners going back to some unconfirmable initial grant by a long dead king is not in the interest of the purchaser of the land.
Moreover, the market distortions taxing land (as the primary source of government income) will have are generally positive. A person can no longer buy a house in the hope that the land it sits on will double in value. They can only buy a house in the hope that they are capable of making a profit out of it; the land purchase merely gives them the right to improve it.
The same advantages may be visible for taxation of share holdings: instead of simply trying to profit from someone else's actions, you would buy shares because you think the dividends will exceed other income sources for the same purchase. It may be legitimate to have anonymous share holdings which require active detective work, so it's possible this would be an unreasonable invasion of privacy.
I know I've said that we shouldn't do public policy by taxes but taxing wealth instead of income probably isn't easy. We can tax income because one person's income is another person's expense if I understand how this works.
The answer seems to be that how well it works varies heavily on what the asset.
That's really not the case if the asset is owned by an opaque offshore company or trust - it's then pretty much impossible to know who the beneficial owner actually is.
You can make use of Adverse Possession to take ownership of land. The owner must reclaim their property, (and prove their ownership) or loose all rights to it. Unfortunately in UK squatting in a residential property is a crime, amusingly adverse possession still applies - you could claim someone's house but go to jail.
It's a weak threat though, most luxury apartment blocks used for 'investment' have security, you need to reside continuously for 10 years, they will send the owner a letter, etc.
I would like to see the principle of 'use it or lose-it' for limited public goods like land.
Either we accept there will always be a few bad apples or everyone has to prove they aren't one of them.
Most of the problems in democracies seem to exist, possibly magnified, in the alternatives.
So is the problem that our decider selection process is flawed and puts up deciders who don't think deeply, or is it (more likely) that whoever you put into that position is likely to come up with the same answers, because they tend to answer important questions, and then to provide a different justification because it sells better?
In a representative democracy, as opposed to a direct democracy, yes. In much of the US, we have a bit of both, in practice.
But even in the case of representative democracy, as long as deciders are judged based on (proposed or actual) actions, our decisions about the deciders will be based on what we think about those actions. To whatever degree it's a problem that we don't think too deeply about things, it will be a problem in a representative democracy by virtue of deciders thinking deeply about what people generally will think more than what will actually give the outcomes people generally want (where those differ - which is at least "sometimes" by the nature of our premise).
The saying is "A few bad apples spoil the barrel", meaning "be vigilant about bad apples and get rid of them ASAP." I'm baffled and frustrated by the tendency to use "a few bad apples" as if the saying were "a few bad apples are no big deal, get rid of them if you happen to notice."
I actually don't think reasoning from vague analogy and folk wisdom is all that great an idea, but reasoning from the reverse is probably worse.
Feel plenty free to make the case that we should tolerate some level of misconduct - I might agree. But please don't refer to those involved as "a few bad apples" while you do it.
I was just using it as a way of expressing the issue at the centre of aiming to have a zero tolerance society.
Not tolerating misconduct will always lead to ever increasing intrusion into our lives and people that choose not to take part where they can will automatically be viewed with suspicion for it because the ignorant assumption is only people with something to hide would do that.
It's picking a nit - I acknowledged that in the very first sentence of my response.
Argue for what you want to argue for - I probably agree. Just don't use that phrase that way. Or do - just know that you will be annoying me (and apparently others - my comment got more upvotes than it deserved) and distracting at least some of your audience from your argument.
How would you have worded an analogy that you would consider more appropriate?
I think that's wrong on principle but they don't see anything wrong with it.
Whether you agree with it or not, money laundering laws usually go in this direction.
If you find something fishy - you penalize business for different misconduct and signal them to be compliant in the future.
In general big businesses/taxpayers will be compliant anyway (but use all the loopholes that exist in your tax law)
While smaller businesses will have trouble to be compliant not because they don't want to, but because they can't have their accounting straight.
So there is no good justification for government to scan every transaction without prior justification, since most actors want to be compliant anyway.
I come from post USSR country and have a small fortune accumulated abroad. I don't have to pay taxes from this money, since I'm not a tax resident in my country at the moment. But since laws in my country work against regular people and some of them are prohibitive to work abroad/in modern digital way - the moment I transfer this money back home, our tax authority will pull some outdated law and the burden of proof will be on me (with my bank account frozen)
I DON'T NEED THIS.
So please, 1st world countries, don't send information on my hard earned money, to our 25 year strong socialist dictator.
So how about $5 mil? Nice larger lot home in Palo Alto that some dying parents bought in 1940. Not even retirement money in the bay but could be middle class retirement in Alaska.
Where is your “obvious” line? Your handshake/battery analogy is shitty because it involves a victim and medical/first responder reports.
We’re talking about setting some line where we feel as a society it’s morally ok to start taking money that has already been taxed strictly based on “that seems excessive” without any logical criteria.
Truly anonymous, or even mostly anonymous money is basically isomorphic to bitcoin: it's mostly fraud and illegality, with just enough privacy advocates (and a few dirty preppers) to make it look legitimate.
[1]https://www.businessinsider.com/4-european-countries-wealth-...
I just want some privacy.
Obviously I hope my bank keeps a record of my assets with them. Perhaps they could merely keep my assets sealed in a box identified with a code and locked by a key, and they cannot open the box without the key, and I keep the only copy of that key. Perhaps the box is an encrypted database record and the key is a nice megabyte long random number which takes an hour to confirm. I can suppose it's secure (for the time being). And it's formally anonymous, since they don't even record that I posses the key.
But I still leave a trace when I access it. It's an intrinsic risk. I also risk dying every time I walk out of my house. I do things that have risk involved because it is necessary. Risk is not an argument against an activity.
So yeah, privacy matters.
It's about building a society that can be based on assumption of honesty and trust rather than surveillance and authoritarianism. At present, our electronic monetary system has morohed into something that resembles George Orwell's 1984.
Care to cite some? That's just a silly point. There's probably no area of regulatory theory more well travelled than taxation. Imagine a trick and someone has tried it, often thousands of years ago.
And it's even incorrect as a practical matter in the modern USA, where government revenue as a share of GDP has been going steadily downward for like 70 years now, even in the face of decades of deficits. It's literally the policy position of the ruling party!
Because government spending increased explosively before those 70 years. First, the government essentially took a loan from future generations through social security and second, there was an enormous war that the government mobilized the economy to fight. You would expect spending to go back down after both of them.
It has?
https://www.usgovernmentrevenue.com/revenue_chart_1900_2020U...
In addition to the soft tax of excessive inflation mentioned by the other poster, Elizabeth Warren and Bernie Sanders have proposed wealth taxes.
https://www.businessinsider.com/wealth-tax-definition-explai...
You can agree with that or not morally, but it is by definition a tax on already legal (and taxed during income) money.
My biggest issue with a wealth tax on the super-wealthy is that it would quickly morph into a wealth tax on everyone above lower-middle class.
Old article but the numbers have scaled proportionately...
"If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That’s only a third of this year’s deficit. Our national debt would continue to explode." [0]
[0] https://www.forbes.com/sites/danbigman/2012/04/03/john-stoss...
Addressing that discontinuity is exactly what a wealth tax is about. I'm not completely sold on it myself (they're very hard to administer and a giant moral hazard), but don't allow yourself to be fooled into thinking it's a dumb or discredited idea. There's a real problem, and wealth taxes represent a real, if imperfect, solution.