(This is a resend. I think Vortex got confused with my first attempt to send this . Sorry for any duplicates)
* * * * Under the current fixed monetary system, governments TAX citizens by taking little slices of the pie – and occasionally BIG slices. At the end of the year most of us end up filling out a tax form. Through a complicated system of checks and balances (some which are referred to as "loopholes") we end up "donating" a portion of our hard-earned earnings to Big Brother. Alas, most of us end up handing over thousands of dollars every year. There are other methodologies governments use to extract money from its citizens, such as licenses and special fees. Sales taxes are also another popular form of taxation most state governments have implemented in one way or another. When we decide to purchase an advertised product we tend to notice that it eventually ends up costing quite a bit more after sales taxes and other fees have been appended. Sticker shock! This traditional ritual of institutionalized extortion which has been going on for thousands of years invariably irritates many who have come to the conclusion that Big Brother has a tendency to steal more of their lunch money than they would like to "donate". It often becomes a favorite past time for many irate citizens to accuse the government as being the cause of our current economic hardships. They demand... they subsequently elect another batch of opportunistic officials who promise to do their bidding - to stop steeling so much of their hard-earned money. Alas, all too often, it's like electing another fox to guard the henhouse. Is there a way to make these extortion practices less painful for beleaguered citizens? Perhaps there is - under a Virtual Currency system. Here is proposal, Version One (Version Two will follow in a separate post). In our example we will assume our government (our fiefdom) is socialistic in nature. In many socialistic countries equivalent Income Taxes tend to eat up 50 percent of gross income. (Incidentally, we're also using a 50% taxation demarcation amount because it simplifies the math that ensues!) If a person grossed, for example, 100,100 credits in a year, the implication is that he would owe the government 50,000 credits at the end of the year in Income Tax. To many this is a hefty tax "penalty". Are there less painful methodologies for government to extort taxes from its citizens? What if we attempted to collect an equivalent 50% Income Tax but as a sales tax? Unfortunately, the collection of sales taxes would be far worse to stomach! If an equivalent SALES TAX were implemented, the tax would have to be pegged at 100%, not 50%. A product initially selling for 100 credits would have to collect a total of 200 credits from the buyer simply in order to pay the 100 credit (100%) sales tax. Again, how can we make these hefty taxation percentages appear to be less painful to swallow? Under the Virtual Currency (VC) system, the "extraction" of taxes could be performed in a more subtle or covert manner. Because VC implies that virtual cash is spontaneously generated at the point where two entities successfully perform a transaction, where a needed service between each individual is completed, it's also the perfect action point where government bureaucracies can spontaneously generate a percentage of credits for themselves, as tax. Ok... Ok... I know. ! Some of you are immediately fretting. In fact, for some readers might even feel such a tax collection procedure sounds a highly suspicious, perhaps even phony. But please read on! Again, let's use the simplistic as well as previously used chiropractic example to show how taxes would be collected under one proposed Virtual Currency system. Regardless of whether the customer pays for the chiropractic session entirely out of his personal reserve of credits or not, keep in mind the fact that the chiropractor WILL receive the total amount of credits he "charges" for performing a useful service. As far as society is concerned our chiropractor has "sold" a necessary product to a customer who needed the essential service. Meanwhile, when the chiropractor "receives" his 50 credits, complements of CC (which incidentally represents a branch of government bureaucracy) CC spontaneously generates an additional 50 credits that are automatically added to its own personal government coffers. "BUT WHO REALLY PAID THE 50 CREDITS, THE 100% SALES TAX!" I can hear many screaming out in disbelief. "Aren't you making money out of nothing!" they argue. "Isn't that monetarily irresponsible? Isn't that INFLATIONARY?" On the surface, yes, it would seem to be both irresponsible and inflationary. There is however a subtle but essential mechanism operating within the Virtual Currency system that is in truth actively managing the seemingly spontaneous generation of sales tax credits. It is a simple mathematical value and "extraction formula" that is conveniently hidden from the eyes of both the seller and the buyer of every economic transaction they engage in. It's a simple "compression/decompressions" mechanism that PAYs the tax and, believe it or not, the "payment" comes directly from the credits that were transferred between seller and buyer. "But how?" you might ask in disbelief. Where did the additional 50 credits come from? I shall now clarify. One of the unique characteristics of a Virtual Currency system is the fact that the observed value of a credit is not necessarily the credit's internal value insofar as the government is concerned. What I mean by that is the fact that in the case of our hypothetical chiropractic session, while 50 credits appears to be the actual amount transferred between a seller and a customer, in fact, 100 CREDITS HAD ACTUALLY BEEN REGISTERED as having been generated and subsequently portioned out between Computer Central, (CC) and between the seller and customer. Let’s take another example, where a 100% federal sales tax is in effect (or where a 50% income tax exists) the implication is that, while sellers and customers only see 100 credits (as observed between each other), in the eyes of the government they see 200 credits, the actual true pegged value of "100" credits. Therefore, when sellers and buyers complete a transaction worth 100 credits CC determines the actual true value of the 100 credits, which is actually 200 credits. CC automatically collects, or “decompresses”, the hidden 100 credits out of the 200 credits that CC had actually generated. The implication is that every single virtual credit has a hidden built-in (compressed within) sales tax added-value which in our example doubles the observed value. However, and this is crucial, only the government can extract (or decompress) the true value of a credit. The decompression can only happen when financial transactions between sellers and buyers are registered through CC. Admittedly, such a shell-game seems deceptive. IT IS IN FACT DECEPTIVE, DELIBERATELY SO! I expect many might think such a system is in truth nothing more than a clever gimmick – a tricky slight-of-hand card trick. I don't think so. Internally, insofar as the economy is concerned there is still a fixed logical consistency in the amount of credits being transferred between CC, a seller of products, and a buyer of products. The "value" of Virtual Currency is still "fixed" or "allocated accordingly" in the virtual sense. The only difference is that the value of virtual currency is pegged at a different relative value depending on whether credits are perceived as being "transferred" between the seller and buyer, versus credits being transferred between the seller & buyer AND the government. Why would we want to implement such a crazy idea???? I'll give the reader just one good reason: It would effectively shield both the seller and buyer from the psychological pain of consciously being aware of the fact that they are still paying substantial taxes to the government. Granted, it's an illusion, but I think a clever useful illusion. Out of sight... out of mind. At this point I would like to ask skeptical readers who might harbor serious reservations to explain why they suspect such a VC taxation procedure would be considered unworkable. I would only ask the reader to please keep in mind the amount of taxes that are currently being extracted from citizens in a few developed socialistic countries such as in northern Europe, where income taxes can approach 50% of earned income. What's the difference? Regards, Steven Vincent Johnson www.OrionWorks.com www.zazzle.com/orionworks
