How are you going to tax a medium of barter? You can't, for it you try then it's legitimized and the government has put a value on it.
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Enraged Bitcoin Fans Smash iPhones Over Apple Snub
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How are you going to tax a medium of barter? You can't, for it you try then it's legitimized and the government has put a value on it.
It's not a "medium of barter" according to the Securities Exchange Commission. They say it is a financial instrument.
http://www.thenewamerican.com/economy/sectors/item/16985-government-is-taking-steps-to-regulate-bitcoin
I'm not sure what you mean by the government would be "legitimizing" it. I don't believe any government has tried to avoid this.
Governments want tax revenue. If you want to live off the grid and operate in the underground economy then yeah, you can avoid taxes with bitcoin. You can also do that with cash. Probably more easily.
If you run a legit business or if you use one of the various bitcoin exchanges and go back and forth between cash, you will be taxed and regulated if the government wants to do it. And I guarantee they will if the bitcoin economy grows to anything significant.
The government will not be able to regulate bitcoin, tree bark or wampum, because they don't control it. They could get the NSA to hack the cypher, but they can't tax something there is inherently no value to.
The only thing the government can do is charge the operators of bitcoin with money laundering that is if the operators can be found.
The only thing they can't control is the creation of it. They can certainly control how it is used, just like any financial instrument. That is regulation.
Does fiat currency have any inherent value? They certainly tax fiat currency
That's simply not true. All you need to do is require bitcoin exchanges to issue a 1099C to every client and report their holdings to the IRS. Just like every other exchange. It's really that simple.
Only if bitcoin, tree bark or wampum is used on shore.
Isn't fiat currency gov't backed? edit: meant to say anything the gov't backs is fiat money as the requirement to back dollars via silver or gold disappeared a loooong time ago. This comment is a bit of red-herring as we tend to think of a dollar as dollar because the US treasury says so. That's good enough for me.
That is assuming bitcoin, tree bark or wampum exchanges are on shore. And how do you value something that is not tied in any official capacity to some currency or index?
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This is also true for USD or any fiat currency. It doesn't mean that it can't be regulated.
Yes but that doesn't give a dollar inherent value. It's value is derived from the government backing.
ETA: Your original comment was that bitcoin can't be taxed because it has no inherent value. I pointed out that this is also true for fiat currency.
How is the government-given value of the USD more taxable than the market-given value of bitcoin?
The same way it's valued today...by using the various dollar/bitcoin exchange rates provided by bitcoin exchanges.
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Bitcoin, wampum or tree bark is not a fiat currency. Yes, I agree a law can be enacted for anything, but a law has to also be enforceable.
The US Treasury gives a dollar an inherent value, relative to other fiat currencies and to goods and services. The foreign exchange market gives every currency a value against every other currency.
Who gives bitcoin, wampum or tree bark a value against goods and services.
Yes, a bitcoin exchange dictates the exchange rate (just like I would dictate the exchange rate between wampum and US dollars), but when you want to cash out of bitcoins to US dollars, not sure how to do that? (edit: I do agree anything can be tied to anything arbitrarily, but unless it's government backed it's worthless except as a barter medium)
I didn't say it was.
Why is a law regulating bitcoin any less enforceable than the laws regulating USD?
The market.
Why do you believe that only financial instruments that are government-backed can be regulated by the government? Stocks are not government-backed but they are certainly regulated by the federal government.
I don't own any bitcoins and I never have, but the way I understand it is that you can exchange them for dollars just like you would any other currency.
Let me ask you this. Company A acquires company B. Company A, instead of using cash, uses shares of its own stock to make the purchase.
Was value exchanged here? Does company B not have to pay taxes on this transaction?
ETA: I have to run but I will be back later
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You implied it should be.
The answer seems obvious to me.
The issuance of stocks is a regulated process. Stocks have no inherent value but are best types of illustrations of supply and demand. However, you purchase a stock, you do so with a fiat currency and when you sell a stock you get a fiat currency in return.
Typical exchanges of this type use stock with a value backed by a fiat currency. Do you think the shareholders would be willing to be paid in wampum? (or bitcoin or tree bark) It always comes down to some valuation against a fiat currency.
Transactions of this type are regulated based on the value (again against a fiat currency) as to whether or not taxes applies is an answer best left to financial experts.
I think you misunderstood something I wrote. I never implied that bitcoin is a fiat currency.
You'll have to spell it out for me then because I am missing something.
How would, for example, it be any harder to make exchanges report bitcoin transactions and holdings to the IRS?
And when you exchange your bitcoin for fiat so you can do things like pay your bills, you get the same result. There is no difference.
But this would be true if the medium of exchange is bitcoin. It doesn't matter how you measure the value of your bitcoin or wampum or tree bark. My example was to illustrate that any medium of exchange can be taxed and regulated if a government has the desire to do so.
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Will never happen, the whole scenario. You cannot tax something that cannot be valued. I dont care how many liberal websites publish editorials, taxing what is essentially wampum will never happen because the concept will be big only within certain peoples minds and until the hash is broken.
Watch none of them get their free Nexus and now they're all without a phone. I wonder if Apple will still replace these for $199 OOW Repair. Probably not.
From MSN.COM (and I'm sure other outlets):
"MOSCOW - Russian authorities have issued warnings against using Bitcoin, saying the virtual currency could be used for money laundering or financing terrorism and that treating it as a parallel currency is illegal.
"Systems for anonymous payments and cyber currencies that have gained considerable circulation - including the most well-known, Bitcoin - are money substitutes and cannot be used by individuals or legal entities," the Russian Prosecutor General's Office said on February6.
It added that Russian law stipulates that the rouble is the sole official currency and that introducing any other monetary units or substitutes was illegal."
So basically in Russia wampum and tree bark are out also.
I would think in the US those who turn bitcoin(wampum/tree bark) into US dollars could be arrested for money laundering, that is if it even happens on-shore.
"MOSCOW - Russian authorities have issued warnings against using Bitcoin, saying the virtual currency could be used for money laundering or financing terrorism and that treating it as a parallel currency is illegal.
"Systems for anonymous payments and cyber currencies that have gained considerable circulation - including the most well-known, Bitcoin - are money substitutes and cannot be used by individuals or legal entities," the Russian Prosecutor General's Office said on February6.
It added that Russian law stipulates that the rouble is the sole official currency and that introducing any other monetary units or substitutes was illegal."
So basically in Russia wampum and tree bark are out also.
I would think in the US those who turn bitcoin(wampum/tree bark) into US dollars could be arrested for money laundering, that is if it even happens on-shore.
I really don't know why you keep saying this after I've proven that bitcoin can be valued. It has a dollar price that you can go look up right now.
We'll just have to agree to disagree I suppose.
Actually I guess you're right, the gov't in it's infinite wisdom can pass a law to tax tea leaves. So I'll concede this argument.
What IF scenario...
Hypothetically, what if a future terrorist incident on US soil was financed with the use of Bitcoins with an iPhone App?
However remote, does anyone who owns a company, let alone the world's most valuable tech company, willing to take that sort of PR risk? Not to mention, the litany of government and its agency investigations with potential fines.
Hypothetically, what if a future terrorist incident on US soil was financed with the use of Bitcoins with an iPhone App?
However remote, does anyone who owns a company, let alone the world's most valuable tech company, willing to take that sort of PR risk? Not to mention, the litany of government and its agency investigations with potential fines.
Let them destroy their iPhones, it just proves even more that Bitcoin is currency for people wanting to live within their own ideas of how our laws should work.
In my eyes, they are as greedy as the guys who continue to think that pirating is justifiable because the entertainment and other various industries don't deserve their money when they deliver a "crap" product. You're still using it six months later, is it not still the "crap" you originally said it was not worth buying?
In my eyes, they are as greedy as the guys who continue to think that pirating is justifiable because the entertainment and other various industries don't deserve their money when they deliver a "crap" product. You're still using it six months later, is it not still the "crap" you originally said it was not worth buying?