Tag Archives: taxes

Will Bitcoin End the Reign of Government?

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When my daughter was just starting primary school, she would look inside a book for the pictures before reading the text. She was old enough to read without pictures, but she wanted to get a quick synopsis before diving in. “Look, Dad! a bunny is carrying a giant clock into a rabbit hole.”

White Rabbt-01This is my first article without pictures. At least none of Bitcoin, because the copper coin metaphors are tired and inaccurate. At the user level, owning bitcoin is simply your stake in a widely distributed ledger. Ownership exists only as strings of secret code and public code. There is no physical coin.

Since the only pictures in this post show a white rabbit with a big clock, let me give you the quick synopsis: The answer is “No”. Bitcoin will not end government, nor its ability to tax, spend—or even enforce compliance.

But there is an irony: Most lawmakers and regulators have not yet figured this out. They perceive a great threat to their national interests. That’s why Andreas M. Antonopoulos runs around the world. He briefs prime ministers, cabinets and legislators with the noble purpose of demystifying and de-boogieing Bitcoin.

Does Bitcoin Help Tax Cheats?

As the original Wild Duck, I tend to be perceived as a Libertarian. (It’s a label of which I am not all together comfortable—but I like that it places my ethos far from the ‘Tea Party’). While I hope that my government doesn’t believe fear is a necessary motivator, I understand the need for taxpayer reporting, measurement and compliance. After all, it’s human nature to dislike paying taxes. Many individuals dodge taxes, if the perceived risk of being caught is low. Sociologists also point out that people are willing to cheat a system, if they perceive it to be sufficiently big or impersonal—i.e that their individual contribution is meaningless.

[ASIDE]: For this reason, Akamai Technologies ends their free-soda-&-snack policy whenever an office grows beyond 30 people (I learned this during a job interview a few years ago). People who would normally respect the policy begin pocketing free sodas for their home or friends, if (a) they no longer know everyone, or (b) they perceive the extra burden is just a drop in the corporate bucket, and not a burden on their office peers.

I suspect that most early proponents of Bitcoin are partially motivated by a desire for low taxes and privacy. While I don’t feel that these individuals are bad for the cause (after all, I am one), I feel that it is unfortunate that they appear to be the overwhelming majority of users & supporters. Let’s dismiss, for the moment, the fraction of voices that want to completely end government and taxation…If you believe in any taxes at all, then government needs compliancy mechanisms, including methods that measure, verify and ultimately arbitrate or prosecute offenders. (Don’t blame me…I’m not even the messenger here. Just an observer).

My point is that in their effort to control a country’s monetary supply (and the interbank loan rate, etc) and in their effort to ensure taxpayer compliance, a great many governments view Bitcoin as a threat. In the past, I felt that my job was to evangelize the public on the benefits of cryptocurrency, and to a great extent, that’s what CRYPSA is all about. But in recent months, I have become confident that Bitcoin will become ubiquitous. It doesn’t need me to be an evangelist. The freight train is now rolling downhill. But…

Andreas Antonopoulos-01s
But as an engineer, author, speaker and occasional consultant, I have found a new calling. Like Andreas Antonopoulos (my idol), I have found a calling in de-boogieing Bitcoin to lawmakers and regulators. I demonstrate that (a) cryptocurrency represents far more of an opportunity than a threat to a national interests, and (b) the future is coming at ya’.
So, either: Stand pat; Get out of the way; or Hop on!

I can give an audience filled with old-school conservatives compelling reasons to “hop on”. Ultimately, blockchain technology coupled with true, permissionless, p2p transactions will shake up established mechanisms and enforcement protocols. They will force new ways of thinking. But cryptocurrency will not end the reign of government—nor even end the ability to tax, enforce and spend. It will simply change the way they do these things. It will also change the way we conduct polls, vote, arbitrate disputes, perform scientific research and much more.

Bitcoin and the blockchain are not just technologies. They transform the way in which many tasks are performed. But it’s not just about efficiency. These technologies offer mechanisms to level the playing field. TWhite Rabbt-02hey bring fairness and representation to processes that were opaque and perhaps even relied on the excuse of opaqueness.

Ultimately, Bitcoin may render certain government departments redundant. Nations will begin to question their need to directly control monetary policy. The impact at the department level is no reason to fear Bitcoin. Overall, it represents great opportunity and not a threat. In my opinion, the changes will benefit everyone.

Bitcoin is not an us-against-them instrument. It is win-win. Of course, perception counts. Misunderstanding potential and confusing it for a threat is a fundamental problem. Wild Duck and CRYPSA share a passion to help make it a very short-term problem.

Complicated tax return? Thank TurboTax

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Actually, there are two ways in which TurboTax complicates the process of filing your taxes. One is downright nefarious—and the other, just plain stupid.   Continue below cartoon…

Tax Complexity-1

♦ The Nefarious

It’s one thing for a company that builds a business on tax simplification to make their own product more complex. (That’s the topic of the next section, below). But, it’s a completely different animal when a company that helps taxpayers navigate an unnecessarily complex tax code launches a fake grassroots letter-writing campaign that covertly lobbies that same government to maintain complexity and maintain filing fees.

Read about and weep. It is nothing less than a mob-inspired, profit strategy. This is not a faux pas. It is a stick-it-in your eye, anti-consumer behavior without precedent! Intuit sought to preserve their niche of simplifying your life by secretly pushing government to keep it complex and to require a knight-in-shining armor to unwinding the complexity.

♦ The Stupid & Greedy

Tax Complexity-2aThis year, TurboTax has effectively blocked prospective customers  from figuring out which TurboTax product suits their tax situation. Intuit has not only stripped TurboTax Deluxe of important filing returns. Their flagship product can no longer be used to electronically file Schedule D, for capital gains and losses; Schedule E, for rental real estate, royalties and distributions from partnerships; Schedule C, for profit and loss from a sole proprietorship business; or Schedule F, for farm income. This year, those who need to file a Schedule D or E must trade up to TurboTax Premier, while a Schedule C or F requires the even more expensive TurboTax Home & Business.

But wait! The highest end product sells for more than a hundred dollars. It is more suited to corporations, trusts and foundations. Don’t think that you need the many features of TurboTax Home & Business? No problem. Now, you can choose from a dozen filing form combinations. This not-quite à la carte approach virtually ensures that you will have no way of knowing which products to buy until after you prepare your taxes.

That decision can be blamed on simple greed in the boardroom and a phalanx of idiots in the marketing department. WildDucks can Infer the rest from my letter to Intuit General Manager, Sasan Goodarzi.

Greetings, Mr. Goodarzi,

I don’t earn a lot, but I dabble in many things: Self employment income, dividends, royalties, a Family Limited Partnership, a trust, rental property, an inherited IRA and deductions carried forward from past partnerships and business ventures.
I have used TurboTax Dexuxe + State since 1993. I want very much to continue using that product, even if the cost rises…
  • Earlier this week, I walked into my local OfficeMax and was confronted with your new hyper-bifurcated product lineup. (A stunningly complex array of options with at least 3 times as many products as on your revised web site today!!).
  • I immediately realized that you were asking prospective customers to make a very complex purchase decision. I had no idea which product to buy.
  • I checked the comparison check list on the product display and discovered that the only way to ensure that I was covering all of my bases would be to purchase your most premium home and business product.

TurboTax DeluxeFor loyal users of TurboTax Deluxe, the cost jump is from $39 (discount price with 1-state option) to over $120. In my view, this is outrageous.

And so I purchased HR Block Tax Deluxe 2014 + State for $22.49 after promo discount at Newegg.com.

I considered your last-second compromise offer of a one-time $25 rebate. For me, it seemed insulting. You were asking me to either make a very complex decision (one that I could only evaluate after completing my tax returns), or pay $90 more and apply for a $25 rebate. What kind of offer is that? Not one that I would jump at.

TurboTax was once a premium product in a small field of competitors. Your newest offer is reasonable, but it is simply too late! My advice for next time: Simply raise the price, if you feel that the competitive marketplace can sustain the cost bump. For the past 20 years, the discount retail cost of TT deluxe + state (after coupons and store promo) has drifted downward from about $60 to $39. Sometimes, I can even get it for $29. It is reasonable to adjust the discounted cost upward to $49 or even $59 (equivalent MSRP = $84).

But instead, you chose a complex marketing option that mirrors the current problem with our tax code.  To fan the fire, news services are reporting that your company has secretly lobbied to maintain a complex tax code.

You are entitled to a price increase.  But you botched the execution. You lost a long time customer (and one who has purchased TurboTax for employees and partners).

~Ellery Davies
  Formerly, a faithful TurboTax customer

A backward glance at Ron Paul

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Here at A Wild Duck, politics is one of our Raison d’être. It appears on every page in the masthead, above the menu bar.

But regular ducks know that we never push a candidate. They also know that our social opinions lean sufficiently to the left (privacy, personal freedom, pro-choice) such that we would probably have little to say about the Republican Party presidential nominee in the US race for president.

But Ron Paul is no regular Republican. In fact, it’s not clear that he is a Republican at all. Other than a penchant for fiscal restraint, he doesn’t talk-the-talk or walk-the-walk.

My father died late last year. He was in his mid 90s. In his last months, we talked about the coming 2012 US presidential election. As it became gradually more difficulty to get out of bed, we watched a lot of political interviews and wonks.

Dad voted for Obama in 2008, but more recently, he was a Ron Paul supporter. He didn’t feel that Paul had a chance, and so he was also very interested in the Republican debates. Could one of the other Republican candidates counter his concern that Obama, an articulate man of integrity and principles, was leaning too much toward a socialist view of economics?

Dad felt strongly that despite Ron Paul’s appearance at the debates, the networks were shutting him out of the spotlight: Less discussion of his ideas and fewer interviews & features than warranted for a US Representative serving on and off for 35 years.*

Ron Paul was offered a speaking slot at the RNC, but he refused the two conditions of his invitation: That he give Mitt Romney his full-fledged (unqualified) endorsement and that his script be vetted by the Romney campaign. He refused, of course. Ron Paul can’t be bought, bribed, cajoled, or won over. What he stands for is clear, unwavering and is stated with surprising simplicity.

What does Ron Paul stand for?  Check out this RNC tribute video.

Ron Paul: Consistent on the deficit and a need for limited government

Ron Paul is a strict constitutionalist. He has always stood for smaller government, lower taxes, less redistribution of wealth, dismantling the Federal Reserve Bank and respect for individual privacy. He believes that the US is too quick to borrow, tax, spend and raise the debt ceiling.

He doesn’t associate with the “conservative-right” blending of religion and intolerance that is baked into the RNC platform, but there is controversy about his failure to denounce support from white supremacists, xenophobes and other racists groups. (Links omitted intentionally–Readers can Google these issues). This is apparent in a Newsletter that he published early in his political career, but that he now claims was written without his supervision.

Then, there is Israel…Paul wants to cut off aid to the American ally completely. But then, he is an isolationist in general. He doesn’t want US taxpayers to support any extra-territorial missions. Finally, his staff members state that he is very uncomfortable in the presence of homosexuals, but feels strongly that they should be able to live with the same privileges and freedoms that all Americans take for granted.

If Ron Paul were still in the running for a party nomination, the possibility of latent racism or anti-Semitism would merit serious digging. On his economic positions, he shines. He embodies the Holy Grail that–for me–has always been so elusive: Paul is an economic conservative and a social liberal.

The video tribute includes one of my favorite Ron Paul quotes: “Living beyond our means forces us to live beneath our means.” It also includes a statement by his son, US Senator Rand Paul. He explains that Washington lobbyists don’t stop by Ron Paul’s House office, because they know that he can’t be bought. If true, it makes a powerful point about lobbyists. I would hope that at least a few of them believe in the legitimacy of their arguments and the nobility of purpose. Why don’t they visit their own representative simply to present a persuasive argument based on its merits and their own sense of duty, logic or emotions?

I don’t know if Ron Paul could ever be US president. Even if his message resonates 4 years from now, his age would certainly be a negative factor in the 2016 election. But I wish that he were the current Republican candidate running against Obama. Paul -vs- Obama. Both candidates are articulate, with clear principles, and yet a profound difference in beliefs. That would be a very interesting contest!

Here at A Wild Duck, we still don’t endorse candidates. That’s why we held back this OpEd until the Republican National Convention. But we certainly like Ron Paul. Here is a man who stands for something on which most Americans agree, and yet few of their representatives have the backbone to explain with its full ramifications. At a time when China and Arab countries are owed so much from future generations, isn’t it time to sound the alarm bell? Isn’t it time to suck in the gut, hunker down and take personal responsibility for our debts and productivity?

* Ron Paul has been a member of the US House of Representatives during 4 decades: 1976-77, 1979-85, 1997-present.

Ellery Davies is chief editor of A Wild Duck. He hasn’t discussed a Republican candidate or politician since the Reagan era—perhaps to avoid personal attacks on character or platform.      -g.a.