[ExI] tyranny by 16th amendment

[Dan]

On Thursday, May 23, 2013 11:38 PM Gordon <gts_2000 at yahoo.com> wrote:
>> So if I use bitcoins, am I not inviting an IRS audit?
> 
> You posed this question once before, to which I replied that
> trading in bitcoins is about as untraceable as trading in
> baseball cards. Unlike stocks and bonds, for example, the IRS
> currently has no way to know that you bought or sold bitcoins.
> (With stocks and bonds, your broker must report your cost basis
> when you sell. Not so with bitcoins, currently. Bitcoin investors
> are on the honor system.)

My guess would be that they'd look at the dollar side of the transaction. The initial input of dollars (or other government currencies) would be traceable, no? Also, any withdrawals into government currencies would also be traceable, no? Or, on that side, they might simply audit you. Right now, I believe the US and many other nations, too, have laws and policies regarding tracing funds -- many stuff that was created to track drug and terrorist money, but, as expected, (by anyone who knows history) there's been "mission creep." I don't see why, if Bitcoin becomes a big deal with the feds or the IRS (or HMRC or whatever tax authorities exist), governments wouldn't simply apply these to tax Bitcoin users.

And governments could simply pass more laws or put into effect policies that cover Bitcoin -- maybe calling for records to be kept lest stiff fines be levied and jail sentences imposed. I'm very enthusiastic about Bitcoin, but recall the failure of the Liberty Dollar. I think too many people have a very benign view of government or an overly romantic view of what their alternatives might do. (I think there's often a one-step approach in considering these things: people just consider the first step and not how others, including the authorities, might react. It's kind of like playing chess just thinking of your master plan to get to checkmate without consider your opponents varying reactions.)

Regards,


Dan
 See my SF short story "Residue":
http://www.amazon.com/Residue-ebook/dp/B00BS3T0RM/ -- US
http://www.amazon.co.uk/dp/B00BS3T0RM -- UK
http://www.amazon.ca/dp/B00BS3T0RM -- Canada
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