I have a question about taxing and how easy it is to find me.
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But seriously, how can Bitcoin become ubiquitous without dealing with the tax issue? If it ends up displacing USD or whatever currency is in the country of interest, then the government would essentially get no funding because it is nearly impossible for them to figure out who owns which bitcoins, how me depositing to my "savings" wallet is any different from a commercial exchange, and if specific bitcoins are still even "in" the country or not.
Like it or not, at least some taxation is necessary, so I'm trying to see how bitcoin can succeed when the global scope and decentralization makes it practically impossible to tax? (If this information is out there, please let me know. I've pretty much been reading about bitcoins all week and this doesn't seem addressed.)
The bitcoin economy will grow and prosper precisely because it has the potential to facilitate a parallel economy that can also operate beyond the scope of taxation. All types of transactions will be attracted to a taxation-free zone because throughout history no- to low-tax zones have always thrived against their counterparts (Hong Kong, US in the 1800s). This parallel economy will know no political borders so it will not even be clear which taxation authority has the jurisdiction over the economic participant(s).
Even if the proper jurisdictional taxation entity could be reasonably determined, they would still be faced with applying a tax to a reusable proof-of-work 'puzzle'. Firstly, how do you tax a mathematical puzzle without giving it monetary legitimacy? How do you determine the political borders of the recipient key (if recipient is careful)? How do you determine the total amount to tax if bitcoin laundries and mixers are used? Today, an individual can work for bitcoin in anonymous fashion from an undetected geographic location and then spend bitcoin or anonymously trade out of bitcoin. I don't really see that changing. I'd be more worried about an authoritarian shutdown of the IRC network.