Everyone works on incentives and when it comes to crypto earnings, because the it is earned largely outside of the tracked economy, the incentive is to keep it that way. However, taxes aren't going to disappear and they are only going to get more precise, but is there a benefit for a country not to tax crypto?
Well, this depends on the country and its economy, as it might be better to attract spending of crypto locally, than have that spending move to other locations or not be spent at all. The reason is that for especially the smaller country economies, the earnings from crypto are not being generated locally, meaning that they act like an export income for the country, without there needing to be all of the "export" activity required.
For example, I export my skills globally on Hive as content and earn some tokens in return. These tokens only have value if someone is willing to buy them, so I take them out to an exchange to sell, but the people who buy are spread globally. If I spend that income, it is essentially drawing value from other country's economies into where I spend my earnings, kind of like how tourism benefits the tourist destination, by extracting earnings from the countries from which it was earned. It is trade. But, if there is too much punishment for running the export business due to tax, people either won't run it, suppress expenditure or if possible, circumnavigate having to pay the tax.
However, being able to attract that wealth into the country and encourage it to be spent, will see local businesses benefit from increased patronage value and, it get taxed through the consumer taxes on goods and services. The difference is, there is more incentive to use it rather than hide it and as such, there would be a great deal more incentive to earn globally and spend locally.
This becomes even more important as we go forward into an economy where there is increasing need and drive to build alternate and supplementary income streams, as many of those options will be internet-based and therefore global. This gives an opportunity (especially for the smaller national economies) to increase their earnings per capita, as more people will be able to earn from external sources, rather than earn from generating income within the borders.
Global earnings at any significant level have been the domain of large business that can export and develop the supply chain, but with the advent and propagation of platform-based earnings such as Hive, that enables individual "entrepreneurs" access to a global paying audience, there could very well be far more local earners bring money into the country, without having to be an employee of a conglomerate, which largely doesn't pay a tax where they earn the income anyway.
While the earnings per capita of each "global earner" might be less than the companies, there is actually quite a difference in impact, because it is direct income distributed to individual consumers who are far more likely to spend locally than a corporation. The corporation employees people who do spend locally, but all profits (including that of reducing tax through accounting practices) will largely go offshore into investment vehicles that increase wealth of the few.
At a practical level, incentivizing and encouraging external earners could have a profound effect on the future of a country, as not only does it bring more income in, but it allows for those earners to have a better quality of life and through the distribution of wealth, the wealth gap that causes so many conflicts directly and indirectly, will start to close. This empowers the people to a far greater degree, but still keeps them connected to their "roots", rather than the current practice of seeing how much stress they can take, before they with or uproot themselves and travel for better conditions.
One potential outcome that could come through the development of a large and diverse crypto economy is the option for many people to move globally, while earning, maintaining and retaining much of their wealth. It means that people will "vote with their feet" at a country level and it is never in the best interest of a nation's economy to drive the largest earners to find new homes in other places.
This means that in order to retain a healthy population that participants in building a healthy economy, governments are going to have to attract, engage and provide for the population, otherwise they will travel on. Yes, they could take the other route to, where they force people to stay, force them to pay on their earnings and bleed them dry - but that will result in the people choosing not to earn, as the cost to do so becomes too high.
While this is just a potential short term approach, what is quite clear is that the tax ecosystem employed at the national levels around the world are inadequate at serving the people or the government. All they really do is enable the corporations to extract and funnel more wealth out from one location and into another where they are able to maximize profits. This will eventually lead to wholesale collapse of economies through highly centralized wealth points, leaving inadequate ability to serve locally, even though there is enough wealth to do so. Distribution matters.
So, regardless of what happens with crypto, there has to be tax disruption that redistributes wealth in some way, otherwise the inevitability of collapse is confirmed and everyone suffers, even those who right now, have it all.
Crypto is a catalyst for change that through the layers of finance and economy, will impact on every facet of society that is important to us as local communities all the way out to the global whole. In time, when we look back, we here now won't be seen as early adopters, we will be instigators and agents of a completely different way in which the entire human population manages itself by finding new ways to negotiate and collaborate together.
It is a scary proposition for those in power to enable those without to build and own for themselves, but to not do so, will be certain death, and very painful in the process. But, power wants to hold onto power, so it is up to us, as the incentive for a better life experience, is common to us all who live and breath as humans.
We are going to have to earn it.
Taraz
[ Gen1: Hive ]
