Or, you could just stop paying tribute to the thieving SOB guv'mnt henchmen.
Unless you are a government employee or are exercising some other "privileged activity," there is no statutory requirement to pay a tax. And, there is certainly no moral requirement.
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The logic of taxing Steemit currently displayed here, if implemented officially, is ridiculous. Their only argument for taxing it is apparently Steem has a price. Facebook likes can be bought from click farms, so everyone who gets free likes better start filing. Same with tweets and Reddit karma. I hear you can buy gold in World of Warcraft. I guess everyone who ever looted a mob now has a taxable gain. Doesn't matter that it's locked into a game (or Steem Power is locked into a platform). We say it is taxable, so it must be.
Prostitutes still charge, right? Lord, I must have a huge taxable gain of un-purchased sex I need to start auditing. I knew buying that ButtCoin (patent pending) would come back to bite me eventually.
Don't even get me started on market depth. You couldn't sell 1 million (or some other arbitrary number, depending on the order book) Steem without tanking the price, so 1 million Steem @ a current "price of $1" is not worth anywhere near $1 million. Under this logic, they'd try to tax you on that though. You're totally screwed if they tax you on it @ $2 and the market tanks before you can even physically remove it to pay the taxes they are demanding. If price tanks far enough, you could be in the hole.
It would make more sense to consider it a capital gain, but then you have to set a cost-basis. However, income tax rates, for self-employed, are ludicrous, and IMO make no sense given the other issues.
Oh, and I guarantee you the "elite" would be funneling all this through a trust or LLC and paying 10% or less on all of it, minus expenses. The only reason @jerrybanfield and @mynameisbrian have to worry about paying it this way, is because they are the "little guy", relatively speaking, and will be threatened and potentially crushed otherwise. Regardless of the legality or constitutionality of any of it.
Lets not forget about those wonderful CS:GO weapon skins worth thousands of dollars! All those 8-16 year olds playing the game should be in jail for tax evasion!!
This is why non-crazy tax law usually doesn't tax things until you actually realize a cash gain. Thus, you would only owe tax on your CS:GO skins if you started selling them for profit and made money money, annually, than the minimum taxable level. You would also be open to a lot of deductions, and could form an LLC to pay yourself hourly for the work and deduct that too.
In other words, while it might be crappy, it would be a whole lot less crappy than this insanity.
Yeah this makes the most sense I think. The problem is that if everyone accepts crypto then a lot of people simply wont go back to using cash. And an even larger number of people probably wont even have bank accounts anyway.
But what do the lawyers and tax professionals say? Do they say we owe taxes on our CS:GO skins? I mean I don't know how to interpret the law. Is the IRS going to crack down on gamers?
Yes, we do owe money on CS skins and WoW Gold, if we allow them to change the tax law to tax us at the point of non-monetary gain. If we allow Steem to be taxed, before we actually make a cash gain on it, then that exact same logic will justify jailing anyone who receives anything that is convertible via the free market to money (so, every item in the history of existence) and does not voluntarily pay about 35% self-employment taxes. That will include every online game's currency in history, and any other salable items.
I bet even Reddit Karma has a price you can purchase it for for astro-turfing purposes. That would make every "I can haz cheezburger" post an unrecorded taxable gain.
That's the law you are legitimizing when you pay taxes when you receive Steem.
Yeah exactly, so what is the situation? The IRS needs to clarify or at least tell us where the line is. Their 2014 guidance was good for 2014 when it was only Bitcoin and only cryptocurrency, but the situation has evolved.
This is the exact confusion I have with regard to how to deal with Steemit taxes. I know we must pay something but don't know the best way to calculate it. So why is Steem different if it's not directly traded for fiat? As you said, you can buy Facebook likes or really any account with fiat or Bitcoin, but you cannot directly cash out your Steem dollars into the USD and your Steem Power cannot be purchased with fiat.
LOL, epic.
wasn't there a ruling recently about BTC not being treated as a currency?
It's in a pretty heavy state of legal flux atm. You've got the new proposed bill to more or less try and criminalize it. You've got past federal judges calling it both currency and property in loosely-related cases (theft, etc.). And no doubt all sorts of stuff I personally missed and can't recall here.
The exact legal status is still jurisdiction dependent and subject to interpretation. I wouldn't want to have to work any cases on it. There's not much precedent to look at, relatively speaking, and most if it is open to interpretation.
the more money is involved the more likely taken on. I'm sure a federal ruling will come within the decade.
Not paying taxes isn't really an option. People posting as if it's an option to just ignore the IRS are setting people p to get arrested. Don't listen to these posts.
So, is this how you "promote a more secure, free, and happy society?"
And what does the risk of getting arrested have to do with promoting freedom?
Is your "security" worth the chains you apparently willingly wear?
I agree with you completely that it is not an option to "just ignore the IRS." The reality is that one must vigilantly defend themselves against that terrorist organization.
"Not paying taxes" is really an option for anyone with the courage and intelligence to investigate the matter. I'm reminded of this famous quote:
If you don't mind getting arrested, and having your life savings confiscated, go ahead and be an activist against the IRS. I'm interested in promoting a more secure, free, and happy society, but also in an intelligent way. It's not very smart to take unnecessary risks which can and likely will destroy your life unless you don't want a secure, free, and happy future for yourself.
Do you expect everyone to be self sacrificing?
In my opinion the smartest course of action for us to take is to do it similar to Bill Gates, and make and keep as much money as we can in our field whilst simultaneously writing and calling our congressmen to push them to change certain lines in the tax code. There is a right way to solve these problems and it doesn't involve breaking or ignoring the laws or the enforcers of those laws.
The best way to make and keep your money is to comply with the IRS. By being a taxpayer you also have the right to contact your representatives and I would suggest that by keeping your taxpayer/citizenship status you can do more to promote the ideals and better world than by alienating or criminalizing yourself.
Thank you for a thoughtful and gracious response.
However, it is clear that we obviously disagree, possibly irreconcilably. I do admire men like Simon Black who seem to have managed great success while "avoiding" taxation for the most part.
Self sacrificing or not, I do expect everyone to be moral, not to rob me, and not to support those who do. In my considered opinion, the tax code is an irredeemable monstrosity. However, for those who have studied it, it does have significant and considerable loopholes that are exploited by the wealthy and wise.
At the most fundamental level, "tax codes" and the crooks - call them congressmen or whatever you care to - who promulgate them - bear no relationship to "law" whatsoever. "Legalizing" evil is an oxymoron. I don't care how many "legislators" sign a document purporting to legalize theft, or how many judges and cops "enforce" such theft, it is still immoral robbery. The entire lot of them "just doing their jobs" are the criminals. I also find it difficult to respect those who empower them with their tacit approval.
The driving force behind the development of Bitcoin, other cryptocurrencies, and blockchain based distributed organizations, is the hope of wresting immoral power out of the hands of governments. Devising ways to tax these developments is like fastening boat anchors to jet aircraft. Go ahead and do so for yourself if you must, but I'll be leaving those impediments off of mine...
Idealist vs realist perspective
I cannot argue on the basis of moral and immoral. I can only argue on the grounds of risk reduction, safety, smart decisions which have a higher probability of predictable outcomes. This is no different than with investing where some people are willing to bet their life savings on a particular cryptocurrency and let the chips fall while others choose to never take such a crazy risk.
Neither of these individuals are wrong. Each individual has to decide for themselves which risks are worth taking, which investment strategy they believe is likely to work for them and to achieve their goals. The only thing I state in my comment is that if your goal is to keep your money and avoid jail then compliance is really the only behavior pattern which leads to predictable desired behavior from the law enforcers. It's possible to go the route of non-compliance but then the behavior of the law enforces can become unpredictable and uncertainties can arise. If the goal is to be happy and enjoy your wealth, if you manage to acquire property, then having to look over your shoulder and be paranoid is not aligned with that for most people.
Taxes are unavoidable
Taxes cannot be avoided no matter how we feel about the entities taxing us. If the US government did not exist there would still be taxes and the only difference would be who you're paying the taxes to. In what part of the world are there no taxes at all? Even in Afghanistan the Taliban taxes the farmers, and in any civilization, society, or large group, there is a strong tendency for there to emerge a system of taxes also known as fees for protection. The shop owner would be paying the local gang if not the IRS. If it has to be paid (even Jesus Christ admitted that), then paying gives peace of mind.
I posted in my blog just recently that the smartest tactic is to contact our congressmen and let's get our representatives to reduce the risks on Steemit account holders. To start we could reduce the complexity of the tax code so that only exchange into fiat is a taxable event and all crypto to crypto trades non-taxable. This would allow the industry to thrive and go mainstream (compliance is required for mainstream adoption), and you can promote a lot of security, freedom, and happiness, if you have adoption. If you take a hard line radical approach you never get mainstream adoption and the majority of people will never benefit from your toy, and just think about how the Internet would have been if it never made it out of the university level of awareness?
For the record, I think a lot of the laws are unfair, I think the tax code is impossible for an ordinary human to understand, but I recognize that the laws are real, they can effect my life, the tax code is real and can effect my life, and these are risks to be mitigated and compliance is the cheapest option for the vast majority of people (myself included).
References
Thank you again for your interesting, comprehensive, and gracious responses. :)
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You don't stop the mafia by paying them. The more you pay them, the more they have to use against you. It's people who bend over and spread their cheeks every time they are told to who are the problems in this world.
Control freaks and thieves can't win unless the majority volunteer to be slaves.
so glad we don't have those issues here in the UK. I don't even think they have written crypto into tax yet.
There is tax on crypto in the UK and initial tax documentation back in 2014
arrrrrrr...................fuck