How To Beat Taxes With Crypto
Making allowance for taxation is normal in most business transactions.
Taxes are important in every economy as they are used to build infrastructure and provide social services. At the same time, taxes significantly eat into our earnings with the current high rates of taxation on income. Financial transactions that result in the change of ownership of an asset typically attract taxes in the form of capital gains tax. One way that you can beat the taxman who is out to collect money from you is by using crypto currency.
Most governments collect tax by skimming the top of the financial chain. Resource production starts with you and means at the bottom of the chain, doing the real work. The second layer is the different corporations we work for and who organize resources necessary for production. The third layer is the banks which handle the financial transactions and keeps records of all monetary flows. At the top is the government which skims money from the bottom three in order to finance its operations.
By eliminating the use of banks, crypto currency is in effect removing the central player that assists the government in the collection of taxes. For the taxman to trail your financial transactions, the cooperation of banks is very important. When banks are eliminated, it becomes virtually impossible to trace your financial transactions and, therefore, difficult to tax you. By using crypto currency, you will in effect have beaten the taxman in his own game.
The essence of crypto currency is its digital nature. It is not printed like traditional currencies. Rather it is mined using computer software that uses complex algorithms. The other central feature of crypto currency is that it is based on peer-to-peer networks. It is generated with encryption that needs validation across the peer networks. This feature makes it hard to control, and regulate. This makes it almost impossible to trail financial transactions on the internet. Perhaps the only way the government could tax crypto currency is to disable the internet and demand payment of taxes from all the crypto currency platforms.
The capital gains tax is levied when there is a clear proof that ownership has changed hands. This is the legal basis on which the capital gains tax works. In the case of crypto currency, it is impossible to confirm whether there is a change of ownership. Crypto currencies are anonymous in nature. Security features in the currency ensure that the private information of the parties in a transaction remain confidential. This makes it difficult for the taxman to prove that ownership has changed hands. That means you cannot be taxed easily when using crypto currency.
From the above reasons, the verdict is very clear. If you are seeking to avoid paying taxes, crypto currency is the best way to do it.