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