RE: Cryptocurrencies, Government and Tax Collection. Let's Talk.
I am not against taxes. In my country cryptocurrencies are treated as assets. This means you only pay taxes when you buy and sell them within one year. Good for hodler like me. And keeping a transaction record is basic not only for taxes but for having an eye on the profitability in general. But I am aware of the fact that there must be a basic contribution of every human being to the wellbeing of the community (for education, healthcare, innovation and peacekeeping). But our tax system is way to complicated and unfair. I would probably agree to my computer being used for mining a "tax-coin", initiated by the government, as long as my cpu is not ABUSED and I am not able to work with my computer in the usual way. ;) In other words, taxes are neccessary, or we may call it „community fees“, but the declaration system is outdated and the payment system to complicated. It’s time for the government to put effort into this new technology, but not by harming users.
Ok, I'm not willing to go that far (letting big govt use my CPU). I'd take my machine off-line before I let those scumbags have free reign on my motherboard!
Just saying that if you made a profit on your crypto, and it's almost impossible that you didn't if you got in early, expect to pay some taxes on the profits. It's not worth the risk.
The biggest thing standing in the way of a tax windfall for governments is the complexity that they have put on the trading of them. I am sure many citizens do not report earnings because they simply don't know how, or do know how and think it is way to complicated. The biggest problem is the "moving target". You buy Bitcoin and then a few seconds, minutes or days later you buy an alt coin. You bought the Bitcoin with fiat, so you have a base price, but by the time you purchase the alt coin the price of Bitcoin has changed. This is especially true if you use limit orders. I have had orders processed, not because my strike price was hit, but rather the Bitcoin or Ether's I used changed in value.
To me a sensible means to tax would be to only look at trades that involved fiat or large trades for property. So you could buy a thousand dollars in bitcoin and then you could trade it in the crypto world to your hearts desire without taxation. But when you decided to convert back to "real money", you would have to pay the capital gains tax. This would be by converting the alt coins back into Bitcoin (or Ethers) and then deducting the purchase price of the original Bitcoin. Later if you run out of 'base Bitcoin' dollars, all coins sold would be considered to be 100% profit.
Example; From the original $1,000 you spent on bitcoins you now have $3,000. in alt coins. You decide to sell half or $1,500. You convert to Bitcoin and then sell it for dollars. You know have $500 in capital gain that can be taxed. Now you let the remainder ride and it goes to $4000. You decide to cash out. At this point you would no longer have a base price as you already used it, so all $4000 would be subject to taxation.
It is my understanding that US government is looking at exempting form capital gains the first $600 if used to purchase something. So no more "latte tax", but if you were to buy a house or a Lambo then that would be taxed based on the gain. Assuming of course there was an increase in value in the underlying crypto.
I only suggest this as it could be done virtually immediately if the government acts. This would make life easier for investors and bring in much needed tax revenue to income starved governments. But I completely agree the best method of taxation is one that is not based on self declaration. I have often felt that stock transactions should be charged a fee based upon the amount of stock traded, and dump the capitol gains. This would be much simpler and would reward investing over day trading.
"You" don't pay taxes for roads, protection, healthcare or as "community fee". That's what "you" tell yourself. "You" pay taxes because you don't want to be robbed, kidnapped, caged, and if you further resist, murdered.
You are right. But you are describing me just the other side of the coin. :D
I'm describing slavery. Taxation is slavery in which the slaves have stockholm syndrome and make up all kinds of nice stories on why it's good that they are being oppressed, controlled, extorted, taken hostage, by a small group of owners with guns .