It could be that I’m wrong in my reasoning, but 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 (based as it is on tax collection
Do you know how they catch tax evaders in Italy? They go to the harbour and look at the yachts. edit: and pretending to be poor to cheat taxes completely defeats the point of being rich. Granted, some people will do that, but they effectively eliminate themselves from the economy, as if those coins disappeared, raising the value of all other coins. They pay nearly 100% tax rate. It would be worthwhile to encourage that kind of behaviour, it’s good for the environment, and it taxes more than any government taxes.
The budget has to be in defecit, or else the whole system falls apart. That’s the modern system of fiat money—it’s based on continued issuance through deficit spending. Just not too much deficit or you end up in hyperinflation.
Do you know how they catch tax evaders in Italy? They go to the harbour and look at the yachts. edit: and pretending to be poor to cheat taxes completely defeats the point of being rich. Granted, some people will do that, but they effectively eliminate themselves from the economy, as if those coins disappeared, raising the value of all other coins. They pay nearly 100% tax rate. It would be worthwhile to encourage that kind of behaviour, it’s good for the environment, and it taxes more than any government taxes.
You could spend the tax-evaded income on the black market, since you’re hiding contraband from the police anyway.
However they do it, it’s not terribly effective, tax evasion being about 18% of the Italian GDP.
Still quite enough to run the government. One doesn’t even have to try that hard.
Actually we’ve been running deficit for as long as I can find data for, except for about a decade in the 1990s.
But then, who hasn’t? The US?
(edit: Speaking of which, US has the tax law that is effectively anti-progressive on the high range—every big company exploits loopholes)
Good point.
The budget has to be in defecit, or else the whole system falls apart. That’s the modern system of fiat money—it’s based on continued issuance through deficit spending. Just not too much deficit or you end up in hyperinflation.
They mostly don’t. ba-dum tsssh