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WebWorld 20
by Bubba Rom Dos 17 Dec '03

17 Dec '03

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Dilbert on Smartcards
by Bill Stewart 17 Dec '03

17 Dec '03

The March 21 Dilbert is on http://www.unitedmedia.com/comics/dilbert/ Friday; to see it later, look in http://www.unitedmedia.com/comics/dilbert/archive/ # Thanks; Bill # Bill Stewart, +1-415-442-2215 stewarts(a)ix.netcom.com # You can get PGP outside the US at ftp.ox.ac.uk/pub/crypto/pgp # (If this is a mailing list, please Cc: me on replies. Thanks.)

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Re: remailer spam throttle
by Hal Finney 17 Dec '03

17 Dec '03

dlv(a)bwalk.dm.com (Dr.Dimitri Vulis KOTM) writes: > With the present scheme, if a remailer is "raided", it has precious little > interesting stuff on it at any one time. Now consider the scenario: > > X sends 1000 copies of child porn/seditious libel to 100 people believed not > to be using remailers right now. The remailer keeps the 100 e-mails onits > hard disk and e-mails each receipient a ping, inviting them to agree to the > disclaimer terms and to retrieve their anonymous e-mail. The first recipient > to retrieve the e-mail gets upset and contacts the feds. The feds figure, the > remailer still has the 99 other e-mails and the information on who's supposed > to receive them in its queue; why not seize it and take a look. This is a potential problem, but there are some other considerations. First, there is no particular reason why one recipient of some email from the remailer should know or even suspect that other people have the same email waiting. Then, to defend against raids like this, the material could be separately encrypted to each recipient. There would be no way to know that material sent to one recipient matched material sent to someone else. The raiders would just find a bunch of encrypted files. Of course, if it were a sting operation, with the recipients being lured or entrapped into requesting information they shouldn't, then the sender might avoid using these countermeasures. However, there wouldn't really be any need to use a remailer for a sting operation like this, it could be done just by offering the material from an ordinary address. More generally, I think we need to keep in mind what a remailer does and what it doesn't do. The essential function of the remailer is to provide anonymity via mixing messages. It does not provide confidentiality of message contents. That has to be taken care of by encryption. And, as I wrote yesterday, it doesn't (can't) keep secret who the people are who send and receive anonymous mail. All it can do is to disguise which particular people send and receive to each other. The same is true of a DC-net or a perfect Chaumian mixnet. These systems do not disguise their particpants, or protect the confidentiality of their message contents; they only hide the knowledge of who is talking to whom. Having said that, I do like some aspects of this idea: > There's a big distributed database of pgp keys on the several keyservers. > Add a bit to the database specifying whether the key owner wants to receive > anonymous e-mail. By default set it to true for the existing addresses. (The "default true" is going to allow the same kinds of abuse which we have seen in the past. Some remailers may be able to tolerate this, but as we have seen, many can't.) > When the final remailer in the chain wants to send someone an anonymous > message, it attempts to retrieve a key from the keyservers. > > If it fails to find a key, it junks the mail (you don't want to keep it > around, it's baiting the LEAs!) and instead sends a notification to the > recipient that some anon e-mail was addressed to it, but it was junked; > and if they want to receive anon e-mail, they need to give a pgp key > to one of the key servers this remailer uses. This is what I like. It's a lot simpler than trying to keep a copy of the anonymous mail and deliver it later when the person asks for it. Just let him know that someone is trying to reach him anonymously, and let him enable that if he wants to be able to receive the next anonymous message that comes in for him. You can load his permission message down with all kinds of disclaimers that say he knows he's likely to receive obscene, threatening and illegal material, that he doesn't mind, that he knows the remailer is an automated system which doesn't look at the contents, etc. Not only does this give you a defense but it makes the person think about what he's getting into, so he will in fact be better prepared when something bad comes his way. Plus, having taken positive action to enable receiving anonymous mail, he will hopefully be more knowledgable about how to request that you stop, and it won't be such a big deal. He opens the pipe, and if he gets a face full of sewage, he closes up the pipe right away. You warned him. > If it finds a key, it looks at the anon mail bit; if it's on, it encrypts > the e-mail with the recipient's key and sends it; otherwise it junks it. > > Obviously, the key servers would need to be modified to allow users to > specify whether they want anon e-mail when then store their keys, and > to change this setting any time. Key servers wouldn't be the only place to store this information. I think the remailer could keep its own list, especially if it were defaulting to "off". This way recipients wouldn't have to generate and submit PGP keys, which is more work than just sending a reply to a remailer giving the OK to receive anonymous mail. > Right now, there's a very large number of addresses in the key servers. > Instantly making them into a list of addresses that accept anon mail > will make it hard (hopefully infeasible) for the LEAs to investigate > everyone willing to accept anon e-mail as a suspect in sending it. More cautious or politically vulnerable remailers might default in the other direction. It would be a matter of the individual situation. Hal

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Hello
by winsock＠rigel.cyberpass.net 17 Dec '03

17 Dec '03

Hi, anyone know if the Cyphernomicon is still available? --Chipjunkie --Tim May Just say "No" to "Big Brother Inside" We got computers, we're tapping phone lines, I know that that ain't allowed. ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay(a)got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, Higher Power: 2^1398269 | black markets, collapse of governments. "National borders aren't even speed bumps on the information superhighway."

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Re: remailer spam throttle
by dlv＠bwalk.dm.com 17 Dec '03

17 Dec '03

> > That's a good idea, but it'll take up a lot of disk space at the > > machine running the remailer. Right now, remailers that provide > > latency don't keep an e-mail for more than about 12 hours. Once > > you start keeping them around for a few days (a reasonable grace > > period for a first-time user), it's a lot more disk space. > > How 'bout this: > > There is (as we all know) a newsgroup for anonymous messages, Simply > encrypt the message with one half of a public key pair, and send the other > to the individual with a message saying that there is a message waiting > for you on alt.anonymous.messages with a subject of ^CHojnafy&Ys9. This is > the key to decrypt the first level. If you do not have access to usenet, > you can get the message from www.dejanews.com &etc. I don't like this for only one reason: you'll be wasting disk space at thousands of usenet sites. I happen to think that alt.anonymous. messages is a really wasteful communications channel. If it were used for all the traffic now caried by the remailers, many syadmins would stop carrying it (a lot of useless traffic). I would have if I had carried it. :-) Also it's not fair to assume that everyone with access to e-mail can also get web or usenet. One example that's still fairly common in a user on a corporate computer behind a firewall. > The encryption by the endpoint remailer is not intended to > supply complete privacy, but rather to provide an additional level of > protection for those who don't encrypt to begin with. If the key is generated by the remailer, then a LEA might go on a fishing expedition trying to figure how the key was generated and whether they can generate the same key again. It's safer not to generate random keys. > This has the benefit of (1) not dumping the email into a persons > mail box, so they don't get "spam" they don't want. (2) getting possibly > illegal material off the remailer machine as quickly as possible (well, > off the remailer portion anyway, if the news spool is on the same machine, > that is a different legal battle) and (3) disassocating the sender and > receiver a little more. These are all good things; I just wish they could be accomplished in a less wasteful manner. To replicate a file at thousands of usenet servers which can only be decrypted by one person is, in my opinion, selfish net-abuse. --- Dr.Dimitri Vulis KOTM Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps

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Re: remailer spam throttle
by dlv＠bwalk.dm.com 17 Dec '03

17 Dec '03

paul(a)fatmans.demon.co.uk writes: > > > Well, they can compile the list of addresses off of USENET postings and > > > such and then compute the hashes of the compiled names and identify > > > those that are on the anon acceptance list. Not that it completely > > > invalidates the idea, but certainly it is a problem. > > If a time delay isn`t a problem a remailer could operate on the list > with a MAC, if someone wants to find out if a name is on the list > they submit a request to the remailer operator who daily executes a > batch job using a (memorised) key to verify the hashes against one > another. > > Of course this gives no protection against the scenario of a law > enforecement agency or shady TLA comprised of men in long black > trenchcoats demanding the operator reveal the key to the MAC. I > suppose there is always "I have forgotten the key, officer"..... ;-) Yes. The remailer should contain as little "interesting" information as possible at any given time, even if it's encrypted. > > X sends 1000 copies of child porn/seditious libel to 100 people believed no > > to be using remailers right now. The remailer keeps the 100 e-mails onits > > hard disk and e-mails each receipient a ping, inviting them to agree to the > > disclaimer terms and to retrieve their anonymous e-mail. The first recipie > > to retrieve the e-mail gets upset and contacts the feds. The feds figure, > > remailer still has the 99 other e-mails and the information on who's suppos > > to receive them in its queue; why not seize it and take a look. > > A possible solution to this is to set a time limit, say 24 hours on > how long a proposed recipient may take to respond to a request for > permission to send the mail. The remailer then sends the mail > simultaneously to all those who agreed, those who declined to accept > the mail or failed to repond are removed from the recipient list. *If* the remailer keeps the e-mail until the recipient agrees to the disclaimer and fetches it, then the timeout period should be longer than 24 hours. Not everyone checks their e-mail every 24 hours. E.g., sometimes I'm away and don't check it for 3 or 4 days. A friend of mine checks hers once or twice a week because she doesn't get much. Of course I'm advocating something more draconian - discard the e-mail at once if the recipent isn't known and e-mail them how they can get their mail next time. --- Dr.Dimitri Vulis KOTM Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps

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[ANNOUNCEMENT] Cyclic codes
by nobody＠REPLAY.COM 17 Dec '03

17 Dec '03

Timmy `C' Mayonnaise sexually molests little children, farm animals, and inanimate objects. o-:^>___? Timmy `C' Mayonnaise `~~c--^c'

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RE: Hard to Tax Scenario
by James O'Toole 17 Dec '03

17 Dec '03

I think that the mythical "Doctor Ann" operating in this supposedly hard to tax scenario, may have operating costs that are higher than non-anonymous doctors, and when these operating costs approach her taxation costs, this "hard to tax" scenario becomes uneconomic. Because the operating costs will be roughly linear as a function of Ann's gross, whereas the taxes are roughly linear as a function of Ann's net, Ann will discover that it is cheaper to operate non-anonymously once her volume of business is sufficient. This is one of the reasons that black-market (non-reporting) organizations generally aren't common at large scale. There are plenty of other reasons: higher cost of capital, difficulty of proving disputes, etc. Crypto (and other anonymizing technology) may lower Ann's operating costs, but for any large organization, the %-of-gross will dominate the %-of-net fee that the tax authority charges for operating on the white market. However, Ann has another alternative, which large organizations will also have. Ann can operate completely non-anonymously, but bleed profits out of her business through the use of anonymized business partners who exist solely to assist Ann in hiding her profits. Crypto might make this scheme more foolproof for Ann, by enabling her to anonymously own and operate a network of covert subsidiaries that she does business with openly, and which collect most of her profits, but which themselves are for some reason not vulnerable to the tax authority. Traditionally, multi-national businesses do this using transfer pricing and offshore subsidiaries, and their battle with the tax authority has several features: taxes based on GROSS for transactions crossing borders that inhibit tracking (customs duties, higher withholding taxes for more anonymous trading partners, etc.) legal requirements for consolidated reporting, with rewards paid to informers who expose conspiracies shifting the burden of proof to Ann in cases of suspected self-trading with transfer pricing. (this means that if Ann can't prove who her anonymized trading partner is, and it therefore could be a covert subsidiary of herself, then she automatically loses) The gross-basis taxation is the most likely cost-effective tool that tax authorities could use to combat crypto-based tax evasion, in my opinion. I'd like to see the cypherpunks-quality analysis of how crypto/ecash would help the anonymous Doctor Ann function in a society whose tax system was more like Europe's VAT system. ---------- Date: Mon, 16 Dec 1996 16:47:14 -0800 From: Hal Finney <hal(a)rain.org> To: cypherpunks(a)toad.com Subject: Hard to Tax Scenario Cc: hanson(a)hss.caltech.edu Sender: owner-cypherpunks(a)toad.com Precedence: bulk Robin Hanson, inventor of the Idea Futures prediction market, is a very creative and thoughtful writer who has posted to this list occasionally. He says he sent the message below to the CP list over the weekend, but I didn't see it. I am including it (in bits and pieces) in its entirety for the benefit of others who may also have missed it. Robin Hanson, <hanson(a)hss.caltech.edu>, writes: > Hi. The volume here is too high for me to subscribe regularly, but I > subscribed recently so I could ask the following question: > > How well thought out is the notion that widespread crypto could > allow a large fraction (>30%?) of the economy to avoid taxation? > > I've heard this speculation many times, and just saw it in print in, > in David Friedman's article in the summer '96 issue of Social > Philosophy and Policy. But I have trouble imagining how it could > work. For those who don't know, by the way, David Friedman is the son of Nobel prize winning economist Milton Friedman. Both father and son have libertarian leanings, and David in particular has tackled some of the hardest problems which would be faced by an anarchic society. > Imagine Ann is a doctor who wants to ply her trade without taxation. > Patients go a local high res medical net booth, which Ann runs from > long distance using several real time digital mixes. To do this, Ann > spends most of each day in her expensive home VR room. So we are imagining a future scenario in which medicine is commonly if not universally practiced via these remote means? Or do we have two classes of doctor, the anonymous virtual ones and the identified ones that you go and see in person? I ask because at least some of the difficulties Ann faces seem due to her virtual practice. > Patients pay Ann in untraceable cash, which she uses to pay for > groceries and other net services. Her cover story about why she > spends so much time in her home VR room, and how she pays for > groceries, is that she is a receptionist for some sham company. The need for a cover story raises the question of from whom Ann has to keep her secrets. In a society where (we will stipulate) 30% avoid taxation, the moral significance of not paying taxes will be different than it is today. We had some interesting posts in an earlier discussion on this list describing the situation in Italy, where apparently tax avoidance is raised to a higher degree than in the U.S. It sounded like it has the approximate moral status that speeding does here, a minor infraction which almost everyone does some if not all of the time. In some sub-cultures no doubt the tax avoidance rate would be even higher. In such a society Ann may not have to care that much about keeping her secrets, as long as she doesn't have too high a profile at tax time. > Ann has many collegues which she does business with regularly, > including equipment suppliers, a pharmacist, a nurse practitioner, > emergency substitutes, and various specialists. Ann has never met any > of these people in person, and they all show each other fake faces, > voices, and even rythms of walking and speaking. Ann's social life > outside VR is entirely divorced from her work life. Well, that last part is true for me already; I telecommute to a company 300 miles away and have no social life with my co-workers. For that matter my wife and I have practiced cocooning for several years, and I haven't had a close friend from work since the early 1980's. Being married makes this easier, of course. The other part of this scenario, where Ann interacts with her co-workers via fake faces, does seem disturbing. I could imagine, though, that this might be common in such a culture. Maybe everyone pretties themselves up when on the videophone. If there is widespread understanding that most faces are at least somewhat false, then perhaps going all the way to a completely faked up face would seem more acceptable. But to someone from my generation it will be hard to accept. > To convince patients to trust her, Ann gets bonded by a certification > service. To obtain this certification, Ann must be careful to not > refer to any people who know her "true name", such as her teachers at > the physical school she physically attended. And Ann must somehow > assure the certification service that she will not resell the > certification, allowing others to pretend that they are her. It is possible that we might see a more performance-based certification rather than a recommendation based one. My wife is a physical therapist, and she had to pass a licensure exam given by the state which qualifies her to practice. In an earlier message to me Robin pointed out the crucial role played by recommendations in hiring decisions. Certainly I would be much more likely to hire someone who listed his previous jobs and for whom I could get good recommendations by his earlier supervisors than an applicant who insisted that this information was confidential. Robin also suggested that there could be a selection effect, so that the doctors from good schools with good grades would use these advantages to maximize their income, and so the only anonymous ones would be the ones who didn't have these qualifications. This could lead to a situation where most anonymous service providers were assumed to be inferior to regular ones, so they would get less money even if they were actually just as good. (I apologize to Robin if I missed the point of his earlier discussion or am presenting it incorrectly.) Even with such disadvantages, a doctor like Ann might accept a lower fee at first while she builds up her reputation as an anonymous doctor with talent and ability. After a few years she could hope to have overcome the stigma which (we will suppose) anonymous doctors face and display some strong recommendations based on her successes. In the long run this could be a winning strategy due to the tax savings. (I haven't given the problem of reselling certificates enough thought to discuss it in any detail. There have been some discussions of "is a person" credentials which could apply, but that opens up a big can of worms.) > If Ann ever slips up, revealing her true name to a virtual associate, > failing to convince a physical associate of her sham employment, > or if anyone ever breaks through her realtime digital mixes, Ann > is open to expensive blackmail, she may have to start over with a > new virtual persona, and may have to go to jail for a long time. This is an interesting problem which I haven't seen discussed before in this form. In Vinge's original "True Names" people were afraid of harrassment and physical threats if their identity were discovered, but Robin's example of the danger of being exposed as a tax evader could be very bad as well. If there is this much tax avoidance, we might assume that tax rates are high, and penalties for tax evasion are high as well. On the other hand, if tax evasion is nearly universally practiced, perhaps there are strong cultural pressures against turning someone in. There is also the question of how good the technology is for anonymous communication. At best it would appear to require a widespread infra- structure, and if this is used largely for tax evasion it is hard to see how it could survive. So I think this would be a very significant issue to be faced by the prospective 'nym. > It seems to me that Ann is paying a high price for an ability to > avoid taxation, and at current tax rates it is hard for me to believe > that she wouldn't just rather pay the taxes. What am I missing? > > Robin D. Hanson hanson(a)hss.caltech.edu http://hss.caltech.edu/~hanson/ It is hard to judge how high the various prices are that she pays. The socialization aspect may not be important if she has friends outside work. The risks of being caught will depend on factors we don't know, like the technology and legal system. Rather than assuming that tax rates are the same, it might be more plausible to assume they have gone up in order to keep revenues stable. Another problem which Robin didn't mention is the issue of insurance payments. It is hard to see how Ann's patients can get reimbursed for their expenses if we assume that Ann is in effect a "black market" doctor. This problem may be somewhat specific to the medical scenario, but I suspect that many other professions are going to have trouble switching to a cash basis. Anyone whose customers are businesses, for example, will face the problem that the businesses' books will need to show that an expense is justified in order to deduct it. This will be a major problem for the "anonymous firm" we have discussed occasionally. One difficulty I find with this scenario is its science fictional nature. It is hard for me to consider details about the life of a doctor who works via VR. Also, if we are already in a situation where 30% of people are avoiding taxes there will certainly have been major changes in society, but I don't know what they will be. This makes it hard for me to focus on the issues specific to Ann's anonymity. However I do like Robin's choice of a concrete and vivid example like this. Hal

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Re: remailer spam throttle
by dlv＠bwalk.dm.com 17 Dec '03

17 Dec '03

Adam Back <aba(a)dcs.ex.ac.uk> writes: > Dimitri Vulis <dlv(a)bwalk.dm.com> writes: > > Adam Back <aba(a)dcs.ex.ac.uk> writes: > > > [encrypt the message and send the recipient the key, discard the > > > key, when they request the message they supply the key] > > > > That's a good idea, but it'll take up a lot of disk space at the > > machine running the remailer. Right now, remailers that provide > > latency don't keep an e-mail for more than about 12 hours. Once > > you start keeping them around for a few days (a reasonable grace > > period for a first-time user), it's a lot more disk space. > > "Disk is cheap." I just bought a 3.8Gb quantum for $300. That's 4 > times cheaper Gb/$ ratio than last disk I bought a year ago. I paid over $700 for a 2GB disk about 18 mos ago. Yes, disk prices are falling through floor - giving the lie to the scum that tries to control Usenet "spam" - but is it really worth it to have to maintain a huge spool space to support a remailer? If you really think you can afford a few GB of extra disk storage, start up a Usenet site of virtue. > 1Gb encrypted message pool? No problem. > > Don't have the resources for the 1Gb disk? Your ISP will be charging > you many times that for your leased line. > > If it's an issue charge postage to cover your storage and transmission > costs. > > However, I suppose if you're using an ISP shell account, and have no > leased line, you may have more space restrictions. It should be possible to run a remailer on an average $19.95/mo shell account. Most of them come with a disk quota of a couple of megabytes. I do think that keeping a lot of mail in the queue (more than is kept by the remailers that use latency now) would make such accounts unsuitable for remailers. > A better idea, (for both ISP shell account and leased line version) > would to send the recipient the encrypted data, you keep the key :-) > > (View it as a secret split where the parts happen to be different > size, you keep the small one). > > They send you the data and you decrypt, send it back and discard the > key. You could store 16 million keys on your 1Gb remailer spool > partition. That 16 million keys would represent 16 Gb of delivered > encrypted email. > > You could still cope with a fair number of messages in 1Mb remailer > key spool in your home file space on an ISP based shell account. > > I think this solves remailer resource objections. yes, this sort of solves the storage problem. Thinking how this might work... Alice's remailer gets an e-mail for Bob. Alice's remailer generates 2 pseudo-random numbers, K and L, and uses K to encrypt the message with a symmetric cryptoscheme. Alice's remailer sends the encrypted message and L to Bob with the following note: if you want to receive the key to decrypt this message, send back L and acknowledge the disclaimer. Alice's remailer retains the triple (K,L,Bob). Because it's small, it can be kept for a long time. If Bob sends back L, the remailer sends Bob K so he can read his message. I see a few problems with this. I'm sure it can be improved. 1. What if Bob is another remailer, unknown to Alice? 2. What if Bob doesn't have the program to decode his message? (It's fair to assume that everyone can fine PGP. It's not fair to assume that everyone can find e.g. triple DES.) 3. What if the LEA's decide that the collection of triples on Alice's computer is worth looking at, for instance, for the list of addresses. (OK, they could be encrypted probably.) 4. What if the LEA's decide to find out how K, L are generated? > You still have the problem of saturation of your network bandwidth. > You can probably encrypt (it's symmetric key, say IDEA) fast enough > for encryption overhead to be less of a problem than the saturation of > the bandwidth of your leased line. I think IDEA or triple DES would be fast enough for this. > Your other problem is user acceptance -- your average user may still > object to receiving Mb's of junk which while the contents don't offend > him (he can't read it), the sheer volume may annoy him. Given how some people react very negatively to what they consider "unsolicited e-mail", I think it might be a bad idea to send them large encrypted messages w/o confirming that they want them. But it's also a bad idea to keep an unknown's e-mail on the remailer. The only way out, IMO, is to *discard* an unknown's e-mail and to tell him what positive action he can take so future e-mails don't get discarded. And by the way: a remailer should probably keep a list of people who have been told about the need for a positive action, so they won't get duplicate notices more than every week or so. If X sends Y 10 e-mails and the remailer sends Y 10 identical notifications with the instructions how to enable receipt, Y might get justifiable upset. When Alice's remailer gets an e-mail for Bob, it should do something like: try to fetch Bob's public key from a well-run key server / \ success failure | | encrypt the e-mail discard the with bob's key and e-mail! pass it to Bob | was the form letter sent to Bob in the last 7 days? \ / no yes \ / exit send bob the form letter Wow, isn't that a perry flow chart. :-) ... > > Suppose a LEA wants to search the computer hosting the remailer. > > They come across a bunch of encrypted files. > > The operator has to convince the LEA that they don't have the means > > to decrypt the e-mails or even to figure out who they're from. > > Well you can't can you? It may be hard to prove a negative to a LEO who doesn't know what the hell you're talking about. You have a file in your spool that was encrypted with a key that your program generated, but now you no longer have the key? Well, tell us how the key was generated. ... > I agree with what you're saying that technological aptitude can > provide some metric of cluefullness. And that cluefullness usually > correlates with good net citizenly behaviour (eg understanding what a > remailer is, and not legally threatening, or setting the Feds on to > the human owner of a bot. > > However there exist quite a few counter examples: cluefull people who > do not use PGP, or consider it to be too much hassle (quite a lot of > them hang out on cypherpunks, and will actually object if you send > them encrypted email, even though spending most of their time on > cpunks arguing about the usefulness and essentiality of these tools > for privacy). Well - if generating and publishing a PGP key were a requirement to be able to receive anonymous e-mail, I'm sure they'd do it. Some people (like Dale) legitimately question certain uses of PGP, but I think in this case it's worth encouraging its use. > Also some journalists are pretty clueful (or useful to be able to send > information too, shall we say, journalists as a group having a bad > rep), and not many can handle PGP. Hmm - I'm sure John Markoff and even Declan can handle PGP. If, for example, Jon Schwartz can't handle PGP (and I don't know whether he can :-), then he doesn't deserve any anonymous tips. Free market in action. Later - thanks a lot for the extensive comments. --- Dr.Dimitri Vulis KOTM Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps

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RE: Hard to Tax Scenario
by Robert Hettinga 17 Dec '03

17 Dec '03

At 8:44 pm -0500 on 3/29/97, Hal Finney wrote: > I think Robin's example of an anonymous doctor is a bit extreme, > since doctors typically do hands-on work. Ain't quite so far-fetched as it looks. At the ACM 50 year thing a bit ago, they were doing telemedical diagnoses. The Army has a teleoperated meatball-surgery system for battlefields. Onion routed surgery, anyone? > Yes, I think there is general agreement that these methods will not work > well for large businesses. Another issue is the requirement to keep > fraudulent records, etc., which may involve a large number of people in > the conspiracy. Right, but, in a <ducking> geodesic </duck> market, large entities dissolve anyway because (another of my wildly unsubstantiated claims) large firms' internal transfer pricing efficiencies aren't any higher than those of the open market. > I gather that similar dodges are employeed today by wealthy lawyers and, > yes, doctors, to hide some of their income. They hire offshore companies > to perform some services, which are actually under their control via > shell corporations, trusts, etc., set up in banking-secrecy jurisdictions. > Presumably crypto could smooth the way somewhat and open these methods > up to more people, but I don't see it as a particularly essential ingredient. I think, soon enough, we're all going to be sole proprietors of some kind, transacting business on our own behalf on the net, and cash will always king in that kind of world. Frankly, corporations have no way to hide, or they would. Heck, when you think about it, corporations, as legal entities, anyway, can't survive in an environment where laws can't work, anyway. (By the way, I'm going to embarass Doug Barnes now by naming a law after him. He said a thing of beauty at FC97: "Any transaction protocol which has, as one of it's steps, '...and then you call the cops', isn't a real good idea on the internet." Shall we call it Barnes' Law, anyone? Sure, lots have said it before, but no one's said it better...) > These all assume a model where the transaction is open, but where the > ownership issues are hidden. However I think we have been talking about > simpler methods, where the fact of the initial income is what is hidden. Right. Or, if the income is actually earned and spent on the net. There, cash is the best payment method because it settles instantly without the recordkeeping overhead -- much less the indirect cost of law-enforcement :-). > Or she takes some work on the side > via an anonymous network, and the cash goes straight into her pocket. Oops. I shoulda read further, I guess. :-). > If receipt-skimming is facilitated by the untraceable nature of ecash, > then presumably sales tax can be under-reported as easily as income tax. Or capital gains, or any other book-entry tax. > I don't know how or whether crypto could help with the more elaborate > techniques you are really asking about, dummy trading partners and such. > If you're really paying taxes on your gross receipts, then presumably > the only way to save is to hide those receipts. You could do this by > taking some fraction of your work anonymously, even if most of your > income is reported. I think of this stuff at the boundry between cypherspace and meatspace as the equivalent of turbulence. And, as the joke goes, turbulence is a hard problem. :-). However, I do know that as it becomes more and more easy to buy and hold assets on the net, particularly financial assets (the largest category thereof) and, someday, maybe even actual meatspace-physical *stuff*, this problem, like that of punching through the turbulence at the sound barrier, or that any other "barrier" for that matter, will be not such a big deal. (Another paragraph of Proustian proportions, that...) Cheers, Bob Hettinga ----------------- Robert Hettinga (rah(a)shipwright.com) Philodox e$, 44 Farquhar Street, Boston, MA 02131 USA Lesley Stahl: "You mean *anyone* can set up a web site and compete with the New York Times?" Andrew Kantor: "Yes." Stahl: "Isn't that dangerous?" The e$ Home Page: http://www.shipwright.com/

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