Topic: 'Bitcoin is Inflation-hedge' - 'Haha, we just Tax you, that's the same' - page 2. (Read 345 times)

Fear of being robbed by the government is much greater than the fear of having assets that the government does not know about.

If you want to declare your holdings, you can do so in parts. Send a smaller amount to a new wallet and declare it. If asked for the source, you can say you mined it in the past when it was worth zero.
You are not legally required to remember all the wallets you have used in the past, so you can continue to declare other wallets in the future as you recall, you can say coins were sent to new wallet due to security reasons.
(This will only work with Monero.)

The government not knowing how much you have is the greatest power you hold over these crooks.
If fear is a factor in your finances, it's game over for you.

Yea, well, if i would have chosen to hide my crypto from the government and just not declared taxes, then i think i would live in constant fear to being found out and put into prison for years, like a drug dealer that has a lot of money but has to find all kinds of super-complicated constructs to be able to hide that and still spend some.

So then you have eg 10 million usd in crypto and you eg can't buy a house cause then government would know you have money that you didn't declare. I guess best way then would be to leave the country and join another one with no taxes on crypto. I also decided against that, i wanna be close to my family, friends, homecity.

Not buying Bitcoin on CEX? That's super cypherpunk, i guess people did only do that peer to peer buying with paypal in 2011 and 2012.

If a government can tax your bitcoins that means YOU didn't understand what Bitcoin is and you weren't buying Bitcoin, you were buying something to get rich quick. When you use centralized exchanges and comply with their KYC crap and give them all your information and "confess" to what you have, you are using Bitcoin wrong.

Bitcoin was created to give financial sovereignty, something you won't be able to have when registering with a CEX and complying with their KYC. Without it, the government won't be able to tax you!

Bitcoin is not created to be a hedge against inflation, that is just the side effect of the fiat system being flawed. When they print money, they ensure that the only money in existence (ie. Bitcoin) with a capped supply goes up in value therefore making it a good hedge against the fiat inflation.

That’s a common misconception in cryptocurrency circles.

Not everything rare increases in value; it must have certain qualities to stand out. Otherwise, it's just another old Lada headed for the scrapyard.

It's unrealistic for an asset to grow at the same rate every year - taxes would eat away your gains.
Imagine if you had to give a portion of your gold to the government every year - insane!

They will - simply because they can.

Leaving the country to avoid taxes is cost-effective only for millionaires.

I call that the non-deflated tax scam. To give an exaggerated example, let's suppose that in your country, as happened a couple of years ago, during one year inflation rises 10%. Let's also suppose that someone buys $100K in bitcoin and when the year ends sells it for $105K. The IRS will want to charge you 10% of that $5K of supposed profit when in reality, due to inflation caused by the government, the real purchasing power of the $105K is $94.5K and therefore you have not made any profit.

This, moreover, is taking into account the official inflation data which is manipulated downwards, but well, we have to base it on something.

In general a CPI of 10% is extraordinary and if it is maintained at an average of 3%, you will have made profits instead of losses, what happens is that they will be charging you more than they should according to the real purchasing power.

Inflation and taxation are different things. Bitcoin is inflationary, not deflationary till 2140 after all 21million bitcoins mined by miners and all total supply exists. Now it is inflationary but its inflation rate is smaller than fiat currencies and the rate can not be changed by anyone, any government.

About taxation, governments can tax their citizens but do you think higher tax rate on Bitcoin makes it the same like fiat currencies. I don't think so, honestly because purchasing power of Bitcoin increases with time, like its value growth, so it can outweigh tax rate on Bitcoin investment and gain while you will not get any profit by holding fiat currencies.

Compares them in whatever criteria, Bitcoin is better than fiat currencies, not the same.

Let's use an example in Italy.

Let's say your annual income is €50,000, which mean you need to pay (28,000 x 23%)+(21,999 x 35%)=  €14,140 for income tax.

Now you have €35,860 and you choose to hold it, if the inflation rate is 4%, in the next year your money will worth €34,067.

But, if you invest that in Bitcoin and the price rise for 20%, your money will worth €43,032 excluding tax, the capital gains tax in Italy is flat 26%. You need to pay €7,172 x 26% = €1,865, your end balance is €41,167.

Without investing in Bitcoin = €34,067
With investing in Bitcoin = €41,167

How does it's the same?

OP is not saying bitcoin or cryptocurrencies generally will not be taxed. What he is saying is that those coins (bitcoin specifically) will not be taxed if you do not sell it. That is how taxes are as unrealized profits are not taxed.

If you read about how rich men get richer, you will find out that what OP talked about is correct. Even rich men can go to the extent of borrowing money because they do not want to sell their property to pay tax because the interest rate on the money they borrow is less than the tax they want to pay if they sell their property.

Bitcoin gives you options, so even if the level of inflation went very high and governments taxed bitcoin holders at a very high rate, so much money in your wallets gives you the option to leave the country where you live to a different one that charges you low or no taxes on your bitcoin holdings, so this is only a problem to the small holders and not to those that benefit the most from the scenario the OP is bringing up.

Like you said, as long as you don't sell, you should be good to go and the only concern would be inflation. Now, here's how I like to look at it: It would be a lot worse for people that do not own bitcoin because whatever fiat money they have get destroyed by inflation but with bitcoin, you still have upside potential (probably downside potential too if entry is super high). So Bitcoin actually gives an edge vs other people that don't use or hold Bitcoin.

Taxes and inflation will forever be a thing. Likewise Bitcoin.

Your thinking could be wrong as well. So what's the point of worrying over something that we ain't sure that it will happen. What if there are still crazy gains? Why not live in the present and allow bitcoin to sort itself out when we get to that late majority adoption stage you are talking about. And you don't even know when that stage will happen. Bitcoin is still growing, and we don't know when the late majority will happen. Bitcoin is heading towards two decades now, but it still feels like it was invented yesterday. So it might take many years or more for the stage you are talking about to happen, and who knows how many of us might be alive to witness that stage.

Apart from inflation and taxes on asset ownership, of course we can't avoid it as long as there are policies that regulate asset ownership, be it bitcoin or other crypto when you sell it and convert it to fiat which the country where you live sets the regulations. But try to choose whether it is better to pay tax on asset income or the country does not set asset regulations? in other words, crypto asset ownership is illegal. So rather than complaining about the tax percentage, out there there are countries that still set illegal laws against assets such as bitcoin.

You basically created an argument and the counter argument for why it doesn't work exactly that way.

Taxes are not a substitute for inflation, you will be taxed whether or not inflation eats into your holdings, so being taxed does not negate the fact that with bitcoin the value of your savings will not be constantly shrinking.

Taxes also work differently depending on where you live, there is no universal percentage you pay and in some countries Bitcoin isn't taxed at all.

Paying of tax have been into existence over centuries, we have to pay it for the government to be able to make use of all payments on tax for the welfare and development of the society in which we live in, we cannot compare paying tax to that of an inflation, they are two different things, bitcoin conquered them all and you can just make use of this digital currency without having to struggle in paying tax and evading inflation.

I am just thinking:
Yea, governments cannot print more Bitcoin. So yea, i am 'save from inflation'.

But: they just tax my profits.
That's basically the same?

1. They print fiat.
2. Every rare good on earth rises in price. Also Bitcoin.
But perhaps the buying-power keeps even exactly the same (cause everything costs more). Buying-power could even shrink while price rises in fiat terms.
3. But then they tax my 'profit', eg 28%

Imagine i always hold my buying power because Bitcoin rises with inflation, but whenever i sell Bitcoin i gotta pay those eg 28% of my profits.
Does it really matter if the state takes away my money by inflation or by taxes?

Inflation makes it that basically your assets rise and rise in dollar terms, buying power stays the same, but i have 'high profits' that have to be taxed.
I guess worst case i could imagine very high inflation, basically nearly all my principal is profit and then i get 40% taxed on it.

Once Bitcoin is in late mayority of adoption stage i think there will be no more cracy gains, it will just be a bit better than gold, keeping up with inflation. The more inflation, the more taxes you pay. So basically eg with 40% tax you are only saved from around 60% of the fiat-inflation.


Counter:
I guess taxes are cheaper than inflation. (eg 30% tax means i guess you are saved from around 70% of the inflation)
You only get taxed if you sell (unless they really go for taxing unrealized gains).
I guess governments cannot practically rise taxes superhigh cause people flee the country or smth.
I guess taxing crypto different then other asset classes hopefully doesn't fly.
Stocks and real estate are also taxed, still people who hold stocks and real estate are doing much much better with inflation than non-holders.