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British Prime Minister Theresa May and Indian Prime Minister Narendra Modi are among the world leaders who've expressed alarm at the rise of virtual cash to move money offshore. The U.S. Congress held hearings this month, and Treasury Secretary Steven Mnuchin called on the world's 20 biggest economies to work together to make sure cryptocurrencies don't "become the next Swiss bank account." The concern comes after a successful international crackdown on tax havens in traditional banking.
"Every country is scrambling to come up with an answer," said Drake, who serves on the boards of 25 public and private companies. "There needs to be a regulated structure that won't kill the industry."
The earliest adopters of the practice were criminals, and their involvement has risen steadily, according to a three-year study by the Foundation for Defense of Democracies, a non-partisan Washington think tank. Next came users like Drake, who said he follows U.S. law by reporting his companies' holdings. Drake said better oversight would help legitimize the industry.
(Score: 5, Insightful) by bradley13 on Wednesday January 31 2018, @11:40AM (12 children)
There's an underlying assumption here - one that we really should question: Do governments have the right to know all of the details of your personal finances? Why?
The only - absolutely only - reason that this is necessary, is for taxation.
However, the more important question is this: Why should the government not require probable cause? For anything else, if the government suspects you of wrongdoing, it gets a warrant in order to invade your privacy. Why should taxation be different? If you claim to owe no taxes, but drive a Ferrari, the government has probable cause. Otherwise, not, so none of their business.
"But so many people would cheat!" Which is undoubtedly true. That indicates, to me, that governments have chosen a poor tax model. Other models are possible. Just as an example: if the government only funded itself through VAT, it would be completely unnecessary for governments to know people's financial details.
Everyone is somebody else's weirdo.
(Score: 5, Touché) by Virindi on Wednesday January 31 2018, @11:51AM
What are you talking about?!???
Knowing everything about everyone is an end in itself! The fact that the tax model "just so happens" to need this, what a happy coincidence! :)
(Score: 1, Insightful) by Anonymous Coward on Wednesday January 31 2018, @12:00PM (1 child)
or forget taxes and just use VAT for everything, ALL THE TIME?
imagine the energy saving ...
(Score: 2) by realDonaldTrump on Friday February 02 2018, @01:37AM
The VAT is a tax. It's a terrible, terrible tax. At Trump Golf Scotland we pay it on everything we sell! It's a big reason why the EU is failing badly.
(Score: 4, Interesting) by Geezer on Wednesday January 31 2018, @12:13PM (3 children)
I quite agree, but there's more to it. Governments see cryptocurrencies as just another form of cash flow indistinguishable from banking or commerce.
I'm unfamiliar with the tax mechanics in other countries, but the requirements involved in merely filing tax forms in the US is an exercise in data gathering. A Form 1040 filing is an annual profile update. If the Treasury bureaucrats feel like it, they have investigative prerogatives that require no probable cause beyond a mere hunch or a grudge. Never annoy or defy the IRS has long been the word.
To claim a personal tax deduction, one must file detailed supporting paperwork. Medical bills, real estate transactions, capital gains from investments, and employment expenses are some of the more common windows into the life of the average long-form taxpayer. They penalize simplified "EZ" tax form filers by simply not allowing certain deductions.
The US tax code is also the government's financial carrot and stick when it comes to behavior modification.
You are correct that a VAT, or even a so-called "flat tax" system, would obviate the need for such detailed intrusiveness. However, as a matter of Realpolitik, have you ever known any government to willingly give up any form of surveillance or coercion?
(Score: 1) by bobthecimmerian on Wednesday January 31 2018, @02:22PM (2 children)
You say that, but for example with the tax code changes in the US in 2018 the government will be collecting less information from most citizens than it did before. The standard deductions double, and my family is one of the tens of millions in which our annual itemized deductions won't add up to the doubled standard deduction. I'll just file with the standard deduction, so the government will no longer have right on one form my state taxes, mortgage interest, medical expenses in excess of some percentage of adjusted gross income (I forget the percent), student loan payments, and so forth. So that's good.
On the downside, if our household gross income was $50k lower our US federal income taxes for 2018 would be $1,000-$3,000 lower than they were for 2017. And if our gross income was $100k higher our US federal income taxes for 2018 would be $9,000 lower than they were for 2017. But at our income level, the loss of the personal exemption more than offsets the reduced tax brackets so we'll pay $1,000-$3,000 more in taxes for 2018 than we did for 2017. I'm less annoyed by the slight bump in our taxes than I am by the fact that the tax liability for my boss and her boss and so forth all of the way up the corporate food chain are dropping while mine is going up.
(Score: 2) by Runaway1956 on Wednesday January 31 2018, @11:04PM (1 child)
Yes, and that is just crazy. If a graduated tax is justified, at all, why not graduate it from top to bottom, in a uniform manner? The rich can get away with paying nothing, or very nearly nothing. The poor pay nothing, and usually get free money back. The working people near the middle get the shaft. And, double shafted if they dare to work overtime! My first year out of high school, I learned that working any more than 53 hours actually meant taking home LESS MONEY. I can't remember the numbers now, but I got diminishing returns between 45 and 50 hours - from 50 to 53 I took home the same money that I would have taken home at 48 or 49. At 53 hours, my net take home paycheck got SMALLER!
That cutoff has moved a little over the years, but it's still there. Work too many hours, and you actually paying the government for the privilege of working. Unless, maybe, at the end of the year, you have dependents to claim that help to get it all back.
(Score: 1) by bobthecimmerian on Thursday February 01 2018, @12:16PM
The 2018 tax changes in the US double the standard deduction but eliminate deductions for dependents. That's why my taxes are going up, I have four kids.
To be fair, our household income is somewhat north of 100k. If it was 100k we would be getting a small tax cut and if it was 50k we would be getting a significant one. But if my wife and I were doctors the tax break is enormous.
(Score: 2) by crafoo on Wednesday January 31 2018, @02:13PM
Thank you. This is what we should be discussing. The answer is NO. They do not. Free men conduct business as they wish and without the need for "big daddy and mommy" oversight. If you are a suspected criminal and they have a warrant? Fine, obviously in that particular case they need to follow the money. But that isn't an excuse to force everyone under surveillance. No, that's the point at which they have to start doing police work. It's hard work and it takes warm bodies with able minds. That is what freedom demands. That is part of the price we will pay. Yes, this also means they will need to prioritize their targets. Again, this is probably for the best.
(Score: 1, Interesting) by Anonymous Coward on Wednesday January 31 2018, @02:40PM (1 child)
I guess you care more about financial privacy than crime. Here is an alternative proposal: Every financial transaction should be published for full transparency. Corporate ownership rules should make it clear who controls and benefits from shell companies.
(Score: 2) by Runaway1956 on Wednesday January 31 2018, @11:09PM
That's kinda cool - for corporations. Make everything transparent, I don't care. But, you and me? We are private citizens. We don't make payroll, we don't pollute the environment, we don't shuffle hazardous materials from one plant to another, we don't contribute much if any to noise and light pollution, we don't discriminate against groups of people with our hiring practices - on and on it goes. I'm a private citizen, and it is none of my congress critter's business whether I made $10,000, $100,000, or $1,000,000 this year. On the other hand, IT IS MY BUSINESS how much money HE MADE.
(Score: 0) by Anonymous Coward on Wednesday January 31 2018, @02:47PM
> For anything else, if the government suspects you of wrongdoing, it gets a warrant in order to invade your privacy.
:/
(Score: 0) by Anonymous Coward on Wednesday January 31 2018, @02:49PM
Assuming you are American living in Switzerland. How is it having to report on your local account activity, and having hassles finding a bank willing to open an account for a person of suspected US citizenship. Even if you renounce your citizenship, you can never escape that due to your place of birth.