Everyone works on incentives and when it comes to crypto earnings, because the it is earned largely outside of the tracked economy, the incentive is to keep it that way. However, taxes aren't going to disappear and they are only going to get more precise, but is there a benefit for a country not to tax crypto?
Well, this depends on the country and its economy, as it might be better to attract spending of crypto locally, than have that spending move to other locations or not be spent at all. The reason is that for especially the smaller country economies, the earnings from crypto are not being generated locally, meaning that they act like an export income for the country, without there needing to be all of the "export" activity required.
For example, I export my skills globally on Hive as content and earn some tokens in return. These tokens only have value if someone is willing to buy them, so I take them out to an exchange to sell, but the people who buy are spread globally. If I spend that income, it is essentially drawing value from other country's economies into where I spend my earnings, kind of like how tourism benefits the tourist destination, by extracting earnings from the countries from which it was earned. It is trade. But, if there is too much punishment for running the export business due to tax, people either won't run it, suppress expenditure or if possible, circumnavigate having to pay the tax.
However, being able to attract that wealth into the country and encourage it to be spent, will see local businesses benefit from increased patronage value and, it get taxed through the consumer taxes on goods and services. The difference is, there is more incentive to use it rather than hide it and as such, there would be a great deal more incentive to earn globally and spend locally.
This becomes even more important as we go forward into an economy where there is increasing need and drive to build alternate and supplementary income streams, as many of those options will be internet-based and therefore global. This gives an opportunity (especially for the smaller national economies) to increase their earnings per capita, as more people will be able to earn from external sources, rather than earn from generating income within the borders.
Global earnings at any significant level have been the domain of large business that can export and develop the supply chain, but with the advent and propagation of platform-based earnings such as Hive, that enables individual "entrepreneurs" access to a global paying audience, there could very well be far more local earners bring money into the country, without having to be an employee of a conglomerate, which largely doesn't pay a tax where they earn the income anyway.
While the earnings per capita of each "global earner" might be less than the companies, there is actually quite a difference in impact, because it is direct income distributed to individual consumers who are far more likely to spend locally than a corporation. The corporation employees people who do spend locally, but all profits (including that of reducing tax through accounting practices) will largely go offshore into investment vehicles that increase wealth of the few.
At a practical level, incentivizing and encouraging external earners could have a profound effect on the future of a country, as not only does it bring more income in, but it allows for those earners to have a better quality of life and through the distribution of wealth, the wealth gap that causes so many conflicts directly and indirectly, will start to close. This empowers the people to a far greater degree, but still keeps them connected to their "roots", rather than the current practice of seeing how much stress they can take, before they with or uproot themselves and travel for better conditions.
One potential outcome that could come through the development of a large and diverse crypto economy is the option for many people to move globally, while earning, maintaining and retaining much of their wealth. It means that people will "vote with their feet" at a country level and it is never in the best interest of a nation's economy to drive the largest earners to find new homes in other places.
This means that in order to retain a healthy population that participants in building a healthy economy, governments are going to have to attract, engage and provide for the population, otherwise they will travel on. Yes, they could take the other route to, where they force people to stay, force them to pay on their earnings and bleed them dry - but that will result in the people choosing not to earn, as the cost to do so becomes too high.
While this is just a potential short term approach, what is quite clear is that the tax ecosystem employed at the national levels around the world are inadequate at serving the people or the government. All they really do is enable the corporations to extract and funnel more wealth out from one location and into another where they are able to maximize profits. This will eventually lead to wholesale collapse of economies through highly centralized wealth points, leaving inadequate ability to serve locally, even though there is enough wealth to do so. Distribution matters.
So, regardless of what happens with crypto, there has to be tax disruption that redistributes wealth in some way, otherwise the inevitability of collapse is confirmed and everyone suffers, even those who right now, have it all.
Crypto is a catalyst for change that through the layers of finance and economy, will impact on every facet of society that is important to us as local communities all the way out to the global whole. In time, when we look back, we here now won't be seen as early adopters, we will be instigators and agents of a completely different way in which the entire human population manages itself by finding new ways to negotiate and collaborate together.
It is a scary proposition for those in power to enable those without to build and own for themselves, but to not do so, will be certain death, and very painful in the process. But, power wants to hold onto power, so it is up to us, as the incentive for a better life experience, is common to us all who live and breath as humans.
We are going to have to earn it.
Taraz
[ Gen1: Hive ]
Posted Using LeoFinance Beta
I remember when eCommerce really started to kick off. One of the biggest benefits of the whole thing was the fact that you didn't have to pay taxes on any of your purchases. It is still that way to some degree, but for the most part they found a way to tax it now. We will or are seeing similar with Crypto.
Posted Using LeoFinance Beta
Or in Finland, get double taxed if coming from outside the EU. Tax on purchase and then, tax at customs. A $100 pair of shoes from the US has something like 20% tax on it? That is put in the cost of the shoe online. So, once here, the 100 plus the shipping costs of what is normally 35 dollars gets taxed at around 28% again. So, 37 dollars more tax on top....
Yikes! That is pretty horrible.
Posted Using LeoFinance Beta
In any discussion or attempt to develop crypto they start by saying "illegal" It seems that they do not see the amount of embezzlement and bribery under the name of the law.
Most crime is in US dollars.
Don't mind if I borrow this as I have been arguing here with some tax reformers about allowing external funds into the country for people to spend here.
Borrow away :)
Spoken like a true communist.
Can't help it - I bleed red.
Then, from your content, I can say that cryptocurrencies might help to decrease a country's current deficit.
I think so - especially if they are a smaller economy that can't compete in other ways.
It could lead to more ordinary people learning how to "offshore there crypto. I can see in the future an offshore crypto bank service growing. Many ATM's charge a 3.5% fee to use them if you are not a member of the bank the machine serves. So a bank sets up, works with the current ATM machine owners and adds their card to the network. They charge a 1.5% deposit fee and then it does not matter where in the world the person lives if there is an ATM machine they crypto holder has access to their money.
It gives everyone some capabilities of the conglomerates to "creatively account"
nd yes, I suspect there are going to be many ways to "go global with crypto. Will be interesting times.
Many tokens are designed to be deflationary while country currencies are inflationary. This incentivizes people to work for crypto, too. Though I'm not sure if the counterincentive to then hold it discourages people from participating in their local economy with it.
Great points about crypto allowing people to move more freely and how that should raise all places in competition. I've never thought about that before.
Especially if once they go to fiat, they are going to face a 35% tax.
It is one of the most important value propositions. There is a reason why China are against it :)
Yes because Crypto earnings is what people use in their surviving life's and crypto is also helping the country in it's best way......
So I will say Crypto earnings is great.... Let's all keep Earning from CRYPTOCURRENCY
okay!
Crypto helping people more than countries so governments do not like this, but powe of people will control if they understand how to grow their economy using cryptocurrency in this case everyone will change his mind.
The challenge is really in the training - as most people want to be rich in dollars - so cash out to spend it.
Crypto is still not acceptable where I come from Nigeria to be precise because they believe it's a way of making or saving money illegally and everyone involved in it is regarded as criminal. I just hope for a better future in the country.
What happens if you are caught?
You will be arrested
This post has been manually curated by @bhattg from Indiaunited community. Join us on our Discord Server.
Do you know that you can earn a passive income by delegating your Leo power to @india-leo account? We share 100 % of the curation rewards with the delegators.
Please contribute to the community by upvoting this comment and posts made by @indiaunited.
I feel if the people in power could understand this they would really create more growth in their economy especially African countries
that's truth crypto economy is awesome because it creates a lot of opportunities for everyone to make money and travel to anywhere around the world as they earn globally. though some countries don't allow their citizens to participate in crypto investment. with time the world will accept crypto globally.
I never even thought of this,it's still puzzling the effect it would have on the country but surely individuals would seek a new Haven as you mentioned.
This is so true, right now one of the main reasons my country is still surviving is those who bring money from outside the country. Their is also a saying that which called an aivice, it goes this way, for everyone to survive we all need at least one person from each family outside the country especially in asia or UK 🇬🇧. This is how it is and I am planning to leave next year, that's why I have to fins a wag to earn a living everyday on Hive.
Posted Using LeoFinance Beta