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RE: Cryptocurrencies, Government and Tax Collection. Let's Talk.

in #cryptocurrency7 years ago (edited)

Considering that almost everyone buys bitcoin with their own money, after taxes are taken from their pay check, I don't see any difference between BTC and a Roth account. Roth accounts are basically investment accounts that are paid for after taxes. We can get into the details, but my argument is simply that. Buying BTC is not much different than buying into a Roth IRA and I've already paid taxes when my income was taxed. If the gov wants to tax any gains on BTC they should also tax gains on Roth accounts because they are funded in the exact same way. But as Roth accounts are protected by law, and BTC is protected by cryptography, the Gov is out of luck on this one.

This would be very different if you earn bitcoin as income as opposed to buying it. In that case, you are required to pay income tax regardless of which currency or medium you receive your income. For example, you may be an American citizen working in Japan earning Yen, in such case, your income is subject to American income tax and what you pay is calculated in dollars.

In short, The taxes should be in accordance with how you acquire your BTC. If that's how the tax man sees it, all the better for those of us who buy it rather than earn it.

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The issue is that when you earn your income in cryptocurrencies, it is easier to hide that from the government.

True, and unfortunately for them they have the burden of proof as to whether or not we actually own/have access to XYZ cryptos. The IRS can't just come to your door and say "you made money on a crypto network and we want our cut." They have to prove it first. Ultimately this whole revolution will force governments to establish a different tax model all-together, perhaps a toll/ fee and license based tax system similar to what many libertarians say is fairer. After all why should I be forced to pay for a bridge that I never use (even vicariously)?