Re: Digital warfare

["Perry E. Metzger" <pmetzger@lehman.com>]

Jim McCoy says:
> If you have the ability to send message that is private there is nothing to
> prevent that message from being a digital cheque for payment of services.
> The "underground economy" is probably a lot larger than you would imagine,

It is currently estimated that at least 10 MILLION people a year fail
to file income tax returns, and that another 10 MILLION file returns
that are partially or wholely fraudulent. The government would like
you to believe that this is rare, so they don't make much of it, but
the fact remains that your odds of being prosecuted for tax fraud or
failing to file are miniscule. They pick famous people every year to
go after like Leona Helmsley to get publicity, but they really don't
have the resources to go after more than a couple thousand people a
year. A large fraction of the economy in our country is completely
underground already.

> and given the current political climate you might be able to get a lot
> farther with the masses by telling them that digital money will give them
> the ability to tell the IRS where to stick thier noses than pretending it
> would never happen in the "crypto-enlightened age" and have an opponent
> bring it up as a point against strong crypto.

This I disagree with. Even people who commit tax fraud every day are
horrified by the notion of other people committing it. Its strange,
but its a product of our "sanction of the victim" culture. The result
of this is that even people who would in the back of their mind love
to be able to commit tax fraud with no chance of being caught will not
support infrastructure that makes it possible.

This is not to say, though, that their support is needed. Countries
around the world have turned tax evasion and secret banking into
national industries. Look at the Swiss, for example. Computer networks
will make private electronic funds transfer systems, and the capacity
to take advantage of offshore banks, ubiquitous. The only way to stop
it, even if it were to become illegal, would be massive tapping of all
data transactions on a scale that could literally not be sustained
without bankrupting the government. Imagine trying to hire a staff to
monitor all binary data crossing international lines even at todays data
rates -- then imagine if those rates went up by three orders of
magnitude.

Quite simply, whether governments like it or not, income taxation is
pretty much doomed. Either they have to move to operating entirely on
the level of tangible property and tangible consumption taxation, or
they will starve.

Perry