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The original was posted on /r/monero by /u/ElectionOk60 on 2024-02-16 13:12:10.
TL;DR:
A pipe dream which probably will never happen.
With privacy coin technology, we can decouple the government's need to know your business While making sure everyone pays their fair share.
By having taxation being done through a transaction fee on all transactions, not only will we have a fairer tax system, With those who spend more paying more and those who spend less paying less, the automatic nature means the government no longer needs to know your business to fund the governance of a society.
This allows governments and financial privacy to coexist.
Full Text
Throughout history and time in Memorial, The powers that be That govern over the people of a state or empire have always had an interest in the wealth and earnings of their populations.
One aspect of this is because governments want to know what their people are doing. Whether that is a genuine interest in steering the direction of governance To better serve their people, Or out of a need to gather intelligence to direct enforcement of the various laws that have been put in place. But there are investigatory, Civic, and Enforcement agencies for this very thing That can do their job without seeing cash flows, So why are the government so obsessed over seeing where money is coming and going, and the very nature of its movement?
Well, this question can simply be answered through an old saying. There are two things that are certain in life. Death and Taxes.
Now, we can get into an argument that taxation is theft. And in an ideal world, you would be correct. Why should you have to fork over a percentage of your income over to a power of governance, especially if all you want to do is live and let live. But the complicated reality of the situation is that we live in a society, And we are not the only ones. There are multiple societies on this planet, which are all tugging on one another to have their values and interests put at the forefront of global politics. Some even possess massive firepower to make Thy will be done through the means of might is right.
The reality of the situation is that the libertarian dream cannot come to bear, As you need a state to have a monopoly on force to not only defend its citizens From external threats, But to also enact and enforce the rule of law against those who wish to do harm to others for self enrichment. There is also the undeniable fact that there are certain projects that just would not be done without government funding, As the private sector would never even touch it with a 10 foot pole unless some groundwork was done in Moonshot projects to prove minimal feasibility. Computers, space and Nuclear technology Are such examples of Projects that took off after government Funding laid their foundations.
If we concede that taxation is indeed a necessary Inconvenience in society to fund the many big picture services Of public Interest. Such as defense, law enforcement, the judiciary, Civic infrastructure, safety nets to ensure that citizens don't starve and Moon shot funding projects. We come up against an uncomfortable reality. Your business is always the government's business.
In order to effectively and fairly tax and make sure everyone is paying their fair share, as governed under the law. It is a necessary evil for the government to have an eye into the patterns of cash flows within their economy. Add in complicated tax laws and certain reliefs and levees for certain scenarios, is also the government's business on why that money is moving as well...
So the question becomes this. how can governments coexist with the idea of anonymous money? Is there a way to decouple the governments need to know your business In order to effectively tax, While also shielding citizens rights to privacy and freedom from the potential of tyrannical political pressures, should money move in ways the current status quo dislikes?
I have been toying with this idea in my head, and I believe the answer is yes.
Thanks to the advent of cryptocurrencies and in particularly the technology behind Monero, I believe We have the groundwork for a foundation shaking innovation In both the peoples and the government's relationship with money. Increasing both fairness and civil liberties at the same time.
The principle that underpins this whole proposal is the following. Anyone who is doing well in society can only do so Thanks to society. The more that someone benefits from it, the more they should pay. However, anyone who is not doing well has been failed by society, And thus should not pay as much into its upkeep.
This is basically what we have already agreed as a society with income tax. The more you earn, the more you pay, the less you earn, the less you pay.
However, this has become extremely perverted through the fact that you have a lot of the population that don't pay anything at all, this is despite the fact that there are many services society is providing them. On the opposite end, there are many well off Individuals and institutions that hardly pay their fair share of tax, thanks to loopholes An incentive structures Jerry rigged into an increasingly complex tax System, all layered on top of each other throughout the centuries. Theoretically, anyone can use these loopholes, But you have to have the money to pay someone To pass you through them without The tax authority's wrath.
If we take the basic premise Of what we have decided is fair, There is a very simple solution To fixing both ends of the spectrum, while also significantly reducing the complexity of taxation, and opens the door once again to regaining our financial privacy.
What if, instead of tax being based on income, we instead flip the book and tax Expenditure. This fundamental premise is already superfluous throughout the Crypto landscape. Every transaction comes with a fee, and that fee maintains and pays for the upkeep of the underlying system. There are no exceptions, There are no loopholes. Every time money moves, a percentage is taken in fees Depending on how strained the underlying infrastructure is at that moment.
It automatically has Built in fairness by default. Those who have the means and thus spend more, pay more. Those with little means and thus spend less, pay less.
Through this one simple trick of this simple tax system, based on money movement not on income, we completely detach the government's need to know everybody's business. It doesn't matter why money is moving or Who the money is moving between. All that matters is that the money moved and the powers of governance within our society get their cut to maintain its various civic systems.
Another side effect of this also means that criminal enterprises that make a lot of revenue, automatically start paying money into the system... This will, ironically, bring funds of the black market into the coffers of the authorities, Bringing resources to the judicial and enforcement agencies which can do their job Effectively without the need to see the financial flows as mentioned earlier.
Because of this, it means that privacy coin technologies such as Monero could form the basis of a central bank digital currency, With the fee being adjusted based on The requirements of government expenditure, to pay for the civic services that underpin the running of society.
