it appears to me that bitcoin allows tax evasion and black markets to function on such a breathtaking scale that if bitcoin persists and expands into common use then I anticipate, like tomatoes in winter, the withering of formal governmental power in its current form
I don’t think this is true.
Let me list some points in random order.
Cash allows tax evasion and black markets to function. In the years BET (Before Electronic Transactions) cash and similar pieces of paper were very very popular and they did not destroy governments.
Bitcoin is not anonymous. It’s pseudonymous with transactions being always public. An actor with state-level resources (e.g. the NSA) would likely be able to track sufficiently large amounts of BTC.
Governments have official currencies. There are enough coercive pieces in there so that you can’t just run a whole economy on bitcoins and simply ignore the official currency. This means there must be exchanges and they will be very very important. These exchanges are / will be under full effect of government regulations.
Non-virtual businesses cannot and will not just pretend not to exist and so not owe any taxes (e.g. payroll taxes). Tiny businesses can try to stay under the radar, medium and large businesses can not.
Consider a typical contemporary office worker. He gets a salary, say, in USD. His employer reports that salary to the government so that the government withholds a variety of taxes. Let’s say that worker now gets his salary in bitcoins—how does it improve his capability to evade taxes? His salary is still reported to the government.
I think the potential society-level impact of Bitcoin has been seriously overestimated.
I don’t think this is true.
Let me list some points in random order.
Cash allows tax evasion and black markets to function. In the years BET (Before Electronic Transactions) cash and similar pieces of paper were very very popular and they did not destroy governments.
Bitcoin is not anonymous. It’s pseudonymous with transactions being always public. An actor with state-level resources (e.g. the NSA) would likely be able to track sufficiently large amounts of BTC.
Governments have official currencies. There are enough coercive pieces in there so that you can’t just run a whole economy on bitcoins and simply ignore the official currency. This means there must be exchanges and they will be very very important. These exchanges are / will be under full effect of government regulations.
Non-virtual businesses cannot and will not just pretend not to exist and so not owe any taxes (e.g. payroll taxes). Tiny businesses can try to stay under the radar, medium and large businesses can not.
Consider a typical contemporary office worker. He gets a salary, say, in USD. His employer reports that salary to the government so that the government withholds a variety of taxes. Let’s say that worker now gets his salary in bitcoins—how does it improve his capability to evade taxes? His salary is still reported to the government.
I think the potential society-level impact of Bitcoin has been seriously overestimated.