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RE: Taxes destroy all of us rich or poor
Maybe if you can get the real humans there to understand the plight the IRS is in, they may have some empathy and perhaps maybe the IRS could be more proactive about reporting to Congress the dilemma that for example the recent tax reform added. But I’m not optimistic about the morass being able to reform itself. I think the Western nations are devolving into an irreversible clusterfuck. But I will do everything I can on my end. As I said, I have an idea for a reward design that will have attributes that might make it non-taxable. I will blog about that in the future.
Disclaimer: IANAL and I am not giving tax nor legal advice.
The greater the numbers affected (forced into non-compliance) the better. That's how the situation will get sorted out. If only a few can be singled out, then it means that the morass continues with business as usual. It can't do this forever though. I expect collapse (hopefully not a hard crash) early in the next decade. If you get your money out of the bank you'll be better prepared to protect yourself against panicked IRS officials who see their ship of state sinking and will be in a powerful bargaining position. Just make sure you stay locked and loaded because you can't bargain from a position of weakness.
PS - the safety is in the numbers. I never said that there would be nothing to worry about, but to be realistic, the IRS will be most interested in the top crypto earners, not those running Steemit accounts with pitiful rewards such as us. They are in the business of generating as much profit as they can for government which means that they will probably leave small fry such as ourselves alone. They have much bigger problems to worry about at the moment.
We are in complete agreement on this point.
Although if we design a system that can side-step the aspect of being forced into non-compliance that would be even better.
I agree but with caveats because many of us earning “pitiful rewards” now will end up becoming wealthy because we’re investing those rewards in crypto. Our sector has another 10 – 1000 times gain over the years ahead depending which projects one is invested in. Actually I think 10,000 times gain is possible for a few who are early in the right project(s). But even at an average of 100 times gain ahead (assuming invested in a small marketcap project with YUGE growth potential), many Steemians could become wealthy (although frankly I think STEEM may underperform because of the corruption1).
We may be the only ones left with capital in any coming economic collapse, so one presumes the IRS would go where the money is, because that is what bank robbers, politicians, and all other thieves do.
And in any case, I think most of us would prefer to have a system similar to best aspects of Steem (minus the broken aspects of the design and the corruption), but where the rewards are not taxable (because of differences in design of the system) so that we don’t have to worry about it. You probably do not conceive how it could possible to design a system where the rewards do not qualify as taxable income. I have a surprise up my sleeve.
I don’t think the tax aspect would be a sufficient reason alone to switch to such a system and move away from Steem. I think there would also need to be other compelling advantages.
1 I linked to some of the flaws and corruption in my blog. It’s also possible to do money laundering on Steem by funding numerous sockpuppets then having them upvote legitimate accounts so that the funds aren’t directly attributed to the dirty money because rewards are minted from new money supply. So that might cause increased demand and liquidity for STEEM. I have not written about this latter form of activity before and I do not think very many people are aware of it. This money laundering facet of Steem is another aspect that I think might end up putting Americans in danger for using the Steem platform. Bloggers could be getting themselves entangled in dirty money and have a difficult time proving they weren’t complicit.
As a business owner (almost fully retired), I have quite a bit of experience in tax law and have had to file the long form 1040 for decades. A few of those tax employees are my relatives.
Keep in mind that it won't just be Steemit users affected by this, but the entire crypto space. I just wrote an article about how this chaos is likely to play out.
I forgot to mention that the prison sentences for getting inadvertently caught up in money laundering are rather severe:
https://en.wikipedia.org/wiki/Money_laundering#Criminal_sanctions
https://en.wikipedia.org/wiki/Money_Laundering_Control_Act
How does one prove they weren’t involved if we’re receiving rewards from the activity? Might the money launderers mix their laundering rewards with rewards to innocent blog authors so as to make it more difficult to pin the criminals down or to provide more popular outrage and resistance.
Banks launder money constantly, just like they do
counterfeitingquantative easing. I remember the case of Charlie Shrem not too long ago.W.r.t the above, I was under the impression that both the block reward and transaction fees were locked into the Coinbase transaction of the next block, not spendable for about 100+ confirmations or so (not sure I remember this exactly right). Once the block reward is gone or becomes less incentives significant than transaction fees, wouldn't extension of the amount of time for collection fix such gaming of the system? It's been about 9 months or so since I referenced Mastering Bitcoin by Andreas Antonopoulos (now I believe you have to pay on one of the sites to access it).
The idea here is if you have a period of say 2 weeks to a month that by the time you cash out your forked version of the rewards, bitcoin's value has gone to zero and there's nothing to collect because the Nash equilibrium here would be the expectation that everyone else would do the same (am I using Nash right?). I would think this would disincentivise forking.
If I am not mistaken, you’re proposing that by locking up the transaction fees earned for the standard 600 blocks, same as is already the case for the coinbase minted rewards, then you posit no one would want to cheat because the system would not converge on consensus (or confirmations would become very slow) and everyone would lose their value.
But that is refuted in the research paper. Even Vitalik wrote about how about altruism-prime is an undersupplied public good. I refer you to Vitalik’s explanation. IOW, if you do not cheat, the others will, so you also have to cheat. There’s no Nash Equilibrium, which is precisely the point. I believe that is a Prisoner’s dilemma. Everyone must defect, which is also what has happened to Steem’s reward system.
I like this explanation of Nash Equilibrium.
I agree that people cheat sometimes. Therefore, we shouldn't just hope that people stop cheating systems.
Let me know when you've documented your procedures. Are you a developer?
I was a prolific developer.
Whether I still am is not proven.
Are you a prolific programmer?
I will want to run those designs by you given your level of expertise/experience with U.S.A. tax law and compliance. And your connections within the IRS. Thank you.
I first started programming in Basic around 1976, then in college in the early 80's in Pascal. Then I didn't do anything with it until 1995 after which I've been a full time programmer running my software business. I guess you could say I'm prolific, but in a field few have respect for. I was good at math and astronomy, so when Robert Schmidt translated several Hellenistic era astrological techniques from ancient Greek in 1995, I had a new mission.
I've written over 50 components for the Delphi IDE (Embarcadero Technologies), but I just use these to OOP my code. I've probably written over a million lines of code in my life (refactored down to about 400K lines). That's probably not that much given my age. I'm more interested in blockchain tech now. Just finished @ivanli's blockchain academy and enrolled in the coding section for early June.
My cousin Bobby North, worked as Pulaski town clerk (recently retired) and knows the property tax situation I'm in with the farm that goes back to the civil war. I've had the same tax firm helping with my business taxes for over 25 years now. George Harris (tax accountant - deceased) used to help me out with this. Now Kim Ritter has taken over. She advised me on a program that I wrote to calculate estimated taxes (state and federal).
PS - I've been in this space since I bought my first bitcoin Valentines day 2017. Kicked myself for not paying attention to Satoshi when I first heard about bitcoin several years ago when I was looking for payment processors for my business (but thought it was just another Paypal). Finally read the white paper a couple weeks after that and then everything changed. I started reading Mastering Bitcoin by Andreas Antonopoulos and have been down this new rabbit hole ever since. I'd still consider myself a n00b in the crypto space, but my tech background has helped a lot with understanding the details under the hood.
If you want to add me on LinkedIn, we can chat sometimes. The LinkedIn chat software sucks, but I haven’t been able to select a better one that everyone else is likely to use.
I started fiddling with a TRS-80 in the late 1970s and then BASIC on an Apple II in the summer after high school in 1983. I also had access to another brand of Zilog Z80 desktop, a Commodore 64, a Mac, an Atari St, and an IBM PC in the 1980s. You must be a few years older than me. I will be 53 in June.
Sorry, I haven't used my LinkedIn account since 2007. I've been using Discord a bit but am not really that familiar with it.
Someone else mentioned Discord to me but it seemed complex when I went to the website and haven’t had time to investigate it. If you want to chat with my privately about the project I am working on, you may install http://crypto.cat and send a buddy request for my username ECASH.