PFF's Jeff Eisenach: "Time to Walk the Walk on Telecom Policy"

---------

July 2,1997

Time to Walk the Walk on Telecom Policy

by Jeffrey A. Eisenach
The Progress & Freedom Foundation

Thanks to Ira Magaziner -- of all people -- the
Clinton Administration has finally learned to talk the
free market talk that brings joy to denizens of the
Internet. Now, as always with this Administration, the
question is whether it will also walk the walk.

Magaziner deserves real credit for crafting the
Administration's new "Framework for Global Electronic
Commerce." In language that could have come from the
Cato Institute (or my own Progress & Freedom
Foundation), it credits the amazing growth of the
Internet to the relative absence of intrusive
government regulation. And it concludes that the
Internet should remain "a market-driven arena, not one
that operates as a regulated industry."

The paper -- and the process that created it -- has
already had a salutary impact on Administration
policy. The White House has now backed away from its
previous support of the Communications Decency Act in
favor of "industry self-regulation, adoption of
competing rating systems and development of
easy-to-use technical solutions." And last month,
Treasury Undersecretary Larry Summers, reportedly at
Magaziner's urging, had very positive things to say
about the "no new taxes on the Internet" legislation
sponsored by Congressman Chris Cox and Senator Ron
Wyden.

The Administration's conversion to a free market view
of the Internet is, however, far from complete -- even
rhetorically. Most importantly, the Framework's
treatment of telecommunications regulation amounts to
an endorsement of the Federal Communications current
policies -- policies that are, if anything, more
regulatory than before passage of the supposedly
deregulatory Telecommunications Act of 1996.

Following the path laid out by Vice President Gore and
outgoing FCC Chairman Reed Hundt, the Framework
ignores the fact that technological innovation is
rapidly ending the "natural monopoly" characteristics
of the market for local telephone (and Internet)
access. What government should be doing in this
context is allowing marketplace incentives to work,
thereby encouraging new technologies and new
competitors to turn the potential for local access
competition into a reality.

What it is doing, under the FCC and with the apparent
blessing of the Framework, is continuing a price
regulatory regime that destroys marketplace incentives
for the development of new technologies and
competitors. The Framework, which begins by stating
that "government attempts to regulate are likely to be
outmoded by the time they are finally enacted," ends
up endorsing the idea of "implementing, by an
independent regulator, pro-competitive and flexible
regulation that keeps pace with technological
development." Nice fantasy -- but in contrast to the
reality of the FCC's implementation of the
Telecommunications Act, it comes off as nothing but a
bad joke.

Telecommunications is not the only problem area with
respect to policy. Most notable among the others:
Encryption, where the Administration stubbornly
adheres to its unworkable, privacy-invading notion of
"key escrow" for encryption software -- i.e., giving
the police the key to your house in advance in case
they decide later they want to conduct a search.

Still, problems aside, what we have from the Clinton
Administration is a real and laudable move -- partly
rhetorical and partly real -- in the direction of less
regulation of the Internet. For the most part, the
Administration is now talking the deregulatory talk.
Will it also walk the walk?

Here are three giant steps that would go along way to
proving the Administration means what it says.

First, will the Administration appoint a new FCC
(there are four vacancies, including the chairmanship)
that understands the idea of dynamic competition to
erode natural monopolies? The FCC's current "managed
competition" approach is inconsistent with the broader
principles of the Framework and hugely destructive to
the innovation and entrepreneurship the paper
emphasizes so strongly. A new Commission would no
doubt want to re-think the Commission's recent rulings
with respect to Interconnection and Universal Service,
both of which represent massively regulatory
approaches to problems the free market can largely
solve.

Secondly, will it specifically endorse the Cox-Wyden
legislation prohibiting discriminatory taxation of the
Internet? Saying nice things about the bill is one
thing; endorsing it and working for passage is
something else.

Third, will the Administration support the new
legislative agenda being developed and soon to be
introduced by Senator Conrad Burns and Congressman
Billy Tauzin (chairs of the Senate and House
telecommunications subcommittees)? Among other things,
this legislation is expected to declare "enhanced
services" (including broadband Internet access
services) an essentially regulation-free zone --
exactly the sort of thing the Framework says the
Administration should support.

Free marketers want to believe the Administration has
seen the light on regulating the Internet. Our message
now is simple: Take three giant steps -- and throw
away on the key on key escrow -- and show us you
really mean it.

###

At 4:25 PM -0700 7/17/97, Declan McCullagh wrote:
>---------
>
>July 2,1997
>
>Time to Walk the Walk on Telecom Policy
>
>by Jeffrey A. Eisenach
>The Progress & Freedom Foundation
>
>Thanks to Ira Magaziner -- of all people -- the
>Clinton Administration has finally learned to talk the
>free market talk that brings joy to denizens of the
>Internet. Now, as always with this Administration, the
>question is whether it will also walk the walk.

To use their own Yuppie expression, "will it 'walk the walk' down the gang
plank"?

The only thing the Administration can do is to do _nothing_. Gibberish
about the freedom of the Net while other departments speak of key escrow
and content control is a meaningless gesture.


>easy-to-use technical solutions." And last month,
>Treasury Undersecretary Larry Summers, reportedly at
>Magaziner's urging, had very positive things to say
>about the "no new taxes on the Internet" legislation
>sponsored by Congressman Chris Cox and Senator Ron
>Wyden.

Taxes are already essentially uncollectable, even in interstate
transactions, so the moves by Summers and Magaziner are truly token
gestures.

Their continuing support for GAK and content control are what has earned
them only our vicious enmity.


>Telecommunications is not the only problem area with
>respect to policy. Most notable among the others:
>Encryption, where the Administration stubbornly
>adheres to its unworkable, privacy-invading notion of
>"key escrow" for encryption software -- i.e., giving
>the police the key to your house in advance in case
>they decide later they want to conduct a search.

Oh, yeah, this minor issue of their demanding access to diaries, phone
calls, e-mail, and other computer-mediated communications without so much
as a search warrant.

They all deserve to be hung for treason, or dispatched the old-fashoned way
(a la Guy Fawkes).

--Tim May

There's something wrong when I'm a felon under an increasing number of laws.
Only one response to the key grabbers is warranted: "Death to Tyrants!"
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@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."

We need the administration to do one thing: lift export controls.

Then it and Congress should forget all about the Net.

-Declan


On Thu, 17 Jul 1997, Tim May wrote:

> At 4:25 PM -0700 7/17/97, Declan McCullagh wrote:
> >---------
> >
> >July 2,1997
> >
> >Time to Walk the Walk on Telecom Policy
> >
> >by Jeffrey A. Eisenach
> >The Progress & Freedom Foundation
> >
> >Thanks to Ira Magaziner -- of all people -- the
> >Clinton Administration has finally learned to talk the
> >free market talk that brings joy to denizens of the
> >Internet. Now, as always with this Administration, the
> >question is whether it will also walk the walk.
> 
> To use their own Yuppie expression, "will it 'walk the walk' down the gang
> plank"?
> 
> The only thing the Administration can do is to do _nothing_. Gibberish
> about the freedom of the Net while other departments speak of key escrow
> and content control is a meaningless gesture.
> 
> 
> >easy-to-use technical solutions." And last month,
> >Treasury Undersecretary Larry Summers, reportedly at
> >Magaziner's urging, had very positive things to say
> >about the "no new taxes on the Internet" legislation
> >sponsored by Congressman Chris Cox and Senator Ron
> >Wyden.
> 
> Taxes are already essentially uncollectable, even in interstate
> transactions, so the moves by Summers and Magaziner are truly token
> gestures.
> 
> Their continuing support for GAK and content control are what has earned
> them only our vicious enmity.
> 
> 
> >Telecommunications is not the only problem area with
> >respect to policy. Most notable among the others:
> >Encryption, where the Administration stubbornly
> >adheres to its unworkable, privacy-invading notion of
> >"key escrow" for encryption software -- i.e., giving
> >the police the key to your house in advance in case
> >they decide later they want to conduct a search.
> 
> Oh, yeah, this minor issue of their demanding access to diaries, phone
> calls, e-mail, and other computer-mediated communications without so much
> as a search warrant.
> 
> They all deserve to be hung for treason, or dispatched the old-fashoned way
> (a la Guy Fawkes).
> 
> --Tim May
> 
> There's something wrong when I'm a felon under an increasing number of laws.
> Only one response to the key grabbers is warranted: "Death to Tyrants!"
> ---------:---------:---------:---------:---------:---------:---------:----
> Timothy C. May              | Crypto Anarchy: encryption, digital money,
> tcmay@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."
> 
> 
> 
> 
>

At 6:43 PM -0700 7/17/97, Declan McCullagh wrote:
>We need the administration to do one thing: lift export controls.
>
>Then it and Congress should forget all about the Net.
>
>-Declan

I don't think it is going to do that. Unless it gets something _major_ in
return, as part of a deal.

And given the choice between liberty and a lifting of export restrictions,
I know which side I support. No doubt about it.

If export restrictions remain in place, the world will still have
arbitrarily strong crypto. After all, implementations of RSA and other
public key systems are widely available in Europe and Asia. Stronghold
comes from overseas, Israel is a major center, Switzerland has long been a
point of development (though perhaps with NSA involvement, it is rumored),
and so on.

And an export ban might actually _help_ us all, by incentivizing world-wide
development, by "breaking the monopoly" the U.S. has held. (I'd rather that
Big Brother stay the hell out of the whole issue, especially as export
controls are worthless anyway.)

In any case, we as American citizens (and others) cannot accept limitations
on our basic freedoms to hold our own keys, to speak in whatever languages
we wish, to whisper and write in private languages, to sign whichever keys
we wish (in whichever ways we wish), and to write and speak without
"labeling" requirements...we cannot accept limits on these basic rights
just so that Netscape and Microsoft can export their patent-entangled
products!

I wish Netscape, Microsoft, and others well, but not if it means Big
Brother gains new powers. I'd rather see them lose billions to the foreign
equivalents, even face eventual loss of all of their markets, than see my
freedoms compromised.

And it's reprehensible that civil liberties groups are even _talking_ to
these statist creeps. What part of "Congress shall make no law" is unclear
to them?

Has it ever been the case that one basic right is compromised so that some
company can get an export license? That the right to keep and bear arms is
restricted so that Colt can export M-16s to Iraq? That the right to publish
is limited so that the New York Times can get the lucrative overseas
publishing franchise for Americans stationed in Europe? And so on.

Our basic rights are not to be traded away for export licenses.

--Tim May

There's something wrong when I'm a felon under an increasing number of laws.
Only one response to the key grabbers is warranted: "Death to Tyrants!"
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@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."

On Thu, 17 Jul 1997, Tim May wrote:
> At 6:43 PM -0700 7/17/97, Declan McCullagh wrote:
> >We need the administration to do one thing: lift export controls.
> >Then it and Congress should forget all about the Net.
> >-Declan
> I don't think it is going to do that. Unless it gets something _major_ in
> return, as part of a deal.

	Like...Their lives & jobs? 

> And given the choice between liberty and a lifting of export restrictions,
> I know which side I support. No doubt about it.

Petro, Christopher C.
petro@smoke.suba.com <prefered for any non-list stuff>
snow@smoke.suba.com

At 7:36 PM -0700 7/17/97, Mac Norton wrote:
>On Thu, 17 Jul 1997, Tim May wrote:
>>
>> Taxes are already essentially uncollectable, even in interstate
>> transactions, so the moves by Summers and Magaziner are truly token
>> gestures.
>
>
>Uh, Tim, corporate and personal income taxes are still rather
>well collectible, and that my be the reason the federal gov't
>doesn't worry too much about taxing the Net. State, and even
>more so local, gov'ts do not have the same collectibility
>advantage.  And the locals are often revenue-starved and

I meant that taxes are essentially uncollectable for interstate
transactions like mail order purchases.

I buy several thousand dollars worth of stuff each year by mail order, and
only a few hundred bucks worth of it has been taxable.

My state, California thinks I should either send them a check for 8.25% of
all that I have purchased, or that the vendors in New Hampshire, Ohio, etc.
should send them such a check....we all ignore this notion, and there is
little to be done. It is this sort of "tax arbitrage" I was drawing a very
real parallel to.

Most "tax the Net" talk I hear about is about taxing Net commerce (as
opposed to, say, placing a per minute tariff on Net connections). Hence, my
point.

I wasn't referring to either corporate or personal income taxes, which have
little or nothing to do with the Net.

--Tim May


There's something wrong when I'm a felon under an increasing number of laws.
Only one response to the key grabbers is warranted: "Death to Tyrants!"
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@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."

-----BEGIN PGP SIGNED MESSAGE-----

In <v03102801aff48a1390fc@[207.167.93.63]>, on 07/17/97 
   at 07:54 PM, Tim May <tcmay@got.net> said:

>At 7:36 PM -0700 7/17/97, Mac Norton wrote:
>>On Thu, 17 Jul 1997, Tim May wrote:
>>>
>>> Taxes are already essentially uncollectable, even in interstate
>>> transactions, so the moves by Summers and Magaziner are truly token
>>> gestures.
>>
>>
>>Uh, Tim, corporate and personal income taxes are still rather
>>well collectible, and that my be the reason the federal gov't
>>doesn't worry too much about taxing the Net. State, and even
>>more so local, gov'ts do not have the same collectibility
>>advantage.  And the locals are often revenue-starved and

>I meant that taxes are essentially uncollectable for interstate
>transactions like mail order purchases.

>I buy several thousand dollars worth of stuff each year by mail order,
>and only a few hundred bucks worth of it has been taxable.

>My state, California thinks I should either send them a check for 8.25%
>of all that I have purchased, or that the vendors in New Hampshire, Ohio,
>etc. should send them such a check....we all ignore this notion, and
>there is little to be done. It is this sort of "tax arbitrage" I was
>drawing a very real parallel to.

>Most "tax the Net" talk I hear about is about taxing Net commerce (as
>opposed to, say, placing a per minute tariff on Net connections). Hence,
>my point.

>I wasn't referring to either corporate or personal income taxes, which
>have little or nothing to do with the Net.

Actually with some "creative" accounting one can make use of the net to
cirumvent large amount of corporate & personal income tax. :)

It is quite possible to set up virtual corporations who's complete
bussines is done over the wire. While some setions of industry can benifit
from this more than others I see in the future a large section of the
revenue stream migrating offshore to various taxhavens beyoned the reach
of the little piggies in DC. :)

- -- 
- ---------------------------------------------------------------
William H. Geiger III  http://www.amaranth.com/~whgiii
Geiger Consulting    Cooking With Warp 4.0

Author of E-Secure - PGP Front End for MR/2 Ice
PGP & MR/2 the only way for secure e-mail.
OS/2 PGP 2.6.3a at: http://www.amaranth.com/~whgiii/pgpmr2.html                        
- ---------------------------------------------------------------

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[regarding TC May's comment that it still wasn't practical to live off
of exclusively offshore investment income tax-free, and that advocates
of offshore banking did not even claim it was, but that it might be in
10 years.]

What exactly makes it impractical to live off of the investment income
from off-shore investments exclusively?  I'm kind of broke right now, but
I was assuming that the combination of a set of offshore accounts
and an offshore visa card used to pay for practically everything, as
well as perhaps smuggled in cash and gold/etc. which could be sold outside
of reported channels would be enough to allow you to pay untracededly
for almost everything.  Then, if you did not have a primary residence
in the United States, but rather spent life living in a college dorm
(which is unlikely to flag anything at the IRS, being part of a bill which
is routinely paid by third parties, often from outside of the US), on a
boat registered outside of the US, or visiting places around the country
and world, plus had some plausible way of hiding this extra income of
yours, you could get by reporting only an abusrdly low amount of income
from a part time job or something, and no one would be the wiser.

Then, as your income/assets grew, you could continue to dump money from
off-the-record sources into an offshore account, continue to use the
offshore account for real and untraced purchases, and continue to draw
your small salary to show that you are paying taxes and are just poor.
Then, graduate from university and live the rest of your life vacationing
around the world, or skip the first step if you're smart. (From what I
know of IRS auditing procedures, they'd be remarkably more apt to find
out if someone with a real income's income suddenly fell to $4k/year and
stayed there from $100k+/year with no explanation given than if mine went
from -$30k a year to -$26k/year, so starting when you're broke might be
a decent plan.)

Are there any major obvious holes in this plan?  Now all I need is to
do some useful, crypto-anarchist work and be
paid under the table, perhaps taking a month or two vacation to 
Antigua or someplace in the process.

---
Ryan Lackey
rdl@MIT.EDU
http://mit.edu/rdl/www/

At 1:33 AM -0700 7/18/97, Ryan Lackey wrote:
>[regarding TC May's comment that it still wasn't practical to live off
>of exclusively offshore investment income tax-free, and that advocates
>of offshore banking did not even claim it was, but that it might be in
>10 years.]

I'll answer a few of Ryan's questions, but not in much detail. First,
because this is not a list oriented toward offshore investments and tax
avoidance strategies (though crypto anarchy touches on these issues).
Second, because opinions are especially cheap in this area. Third, because
advice/guidance depends critically on many factors, especially the amount
of money one has.

>What exactly makes it impractical to live off of the investment income
>from off-shore investments exclusively?  I'm kind of broke right now, but
>I was assuming that the combination of a set of offshore accounts
>and an offshore visa card used to pay for practically everything, as
>well as perhaps smuggled in cash and gold/etc. which could be sold outside
>of reported channels would be enough to allow you to pay untracededly
>for almost everything.  Then, if you did not have a primary residence

Well, first off, there's a huge difference between living at a "kind of
broke now" level and living at higher levels....those who are "kind of
broke" often pay minimal taxes anyway, so having their minimal assets, if
any, in a bank near the youth hostel in Amsterdam is hardly a comparison to
having, say, much larger amounts in offshore banks.

Getting the assets out is often a sticking point. Recall the oft-discussed
requirement for reporting offshore assets. And various bank and brokerage
requirements for reporting transfers. Attempts to evade these limits are
often successful...but sometimes not.

(A college friend of mine is married to an Assistant DA for the Brooklyn,
N.Y. area...one of her cases some years back involved prosecuting a guy who
was taking cash out of the country, sewed into the lining of his coat.)

Contrary to what is sometimes claimed here, it is not a matter of just
"wiring" one's assets out to a foreign site, and then being homefree.

By the way, the United States taxes foreign income for all U.S. citizens
for up to 10 years after their departure from U.S. soil. Doesn't mean they
can get this tax, but they will try. And those who don't play ball face
"failure to file" charges, etc. As computerization increases, border checks
will increase.

There have been several proposals, none yet enacted (fortunately), to
impose an "exit tax" on assets. That is, if one tries to transfer money out
a tax would be imposed. This even before the assets are sold, or income
realized. Similarities with the exit taxes of other repressive regimes are
obvious.


>in the United States, but rather spent life living in a college dorm
>(which is unlikely to flag anything at the IRS, being part of a bill which
>is routinely paid by third parties, often from outside of the US), on a
>boat registered outside of the US, or visiting places around the country
>and world, plus had some plausible way of hiding this extra income of
>yours, you could get by reporting only an abusrdly low amount of income
>from a part time job or something, and no one would be the wiser.

Sure, there are many possible scenarios. The "perpetual tourist" one is an
example. Again, the issue, espeically for folks like me, is gettign the
assets outside the view of the IRS in the first place. FinCEN is pretty
quick to spot transfers.

(All of you should be well familiar with "FinCEN," the Financial Crimes
Enforcement Network, a secretive task force made up of members of NSA, FBI,
IRS, CIA, Treasury, Commerce, etc. I first started hearing about it in
1990, and "Wired" did a big expose of it in one of its early issues. Web
searches will turn up various articles.)

Note also that stocks and bonds, "securities," are essentially no longer
available as "bearer instruments." That is, they are generally tied to some
identity, either as an account entry at the issuer, or similar. Thus, the
"stock certificate" I so cleverly hide amongst my papers when I board the
flight to Austria is *not* the actual asset! The banks and transfer agents
still have the asset (which is just a book entry somewhere), and my
certificate in Foobar, Inc. is just a piece of paper: it's location in my
safe deposit box or in Austria remains "secret"--until I sell some of it.
Then, magically, the appropriate notifications are mailed to the IRS. This
is basic stuff, but it's often forgotten by people.

I'm not saying there aren't ways to get assets out of the U.S. while still
allowing folks to travel and live in the U.S. But they carry risks, and are
getting harder to pull off. (If crypto anarchy, geodesic economies, digital
money, digital bearer instruments, etc. come to pass, things may be easier.
But we are quite a ways away on this.)


>Then, as your income/assets grew, you could continue to dump money from
>off-the-record sources into an offshore account, continue to use the
>offshore account for real and untraced purchases, and continue to draw
>your small salary to show that you are paying taxes and are just poor.
>Then, graduate from university and live the rest of your life vacationing
>around the world, or skip the first step if you're smart. (From what I
>know of IRS auditing procedures, they'd be remarkably more apt to find
>out if someone with a real income's income suddenly fell to $4k/year and
>stayed there from $100k+/year with no explanation given than if mine went
>from -$30k a year to -$26k/year, so starting when you're broke might be
>a decent plan.)

Starting to hide assets when one is poor is obviously an approach. However,
most of us didn't think this way when we were poor. Then we got "not poor."
With the assets very visible--houses, stock, bank accounts, etc.

Bear in mind that administering one's offshore bank accounts still requires
some communication. Trips to Europe or the Carribbean are certainly
possible. Much more could be written on this, but I'll pass.

>
>Are there any major obvious holes in this plan?  Now all I need is to
>do some useful, crypto-anarchist work and be
>paid under the table, perhaps taking a month or two vacation to
>Antigua or someplace in the process.
>

Good plan. Maybe you'll be near Jim Bell.

There are lots of black market fortunes being made everyday...I'd be
disingenuous to say otherwise. But some risks.

In any case, beware the currency reporting and transport laws. Declarations
of currency, as noted above.

A last note. Making money is more important than avoiding taxes on a much
smaller amount of money. I _hate_ paying the taxes I have to pay, but
having money is more important than avoiding taxes.

I for one have chosen to remain in California, for all of its political
faults. (But California is correcting many of these faults, such as its
elimination of "affirmative action" in the UC system, and so on. Many call
this a "right wing backlash," but I call it a breath of fresh air.)

--Tim May

There's something wrong when I'm a felon under an increasing number of laws.
Only one response to the key grabbers is warranted: "Death to Tyrants!"
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@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."

At 8:19 PM -0700 7/17/97, William H. Geiger III wrote:

>Actually with some "creative" accounting one can make use of the net to
>cirumvent large amount of corporate & personal income tax. :)
>
>It is quite possible to set up virtual corporations who's complete
>bussines is done over the wire. While some setions of industry can benifit
>from this more than others I see in the future a large section of the
>revenue stream migrating offshore to various taxhavens beyoned the reach
>of the little piggies in DC. :)

Well, obviously I'm well acquainted with this particular theory....

However, pulling it off is the hard part. A few data points:

- my income derives solely at this point from investments. No better
example of a "geodesic economy" exists...my assets and sources of income
can be located anywhere on Earth, and can be sent there with a few phone
calls. And, yet, I continue to pay the IRS, the Franchise Tax Board, and
various regional satrapies truly obscene amounts of taxes.

(Why? Because sending my assets to Foobaria and then attempting to live
tax-free off the income/dividends/sales is not currently feasible. Note to
the advocates of this strategy: not even the advocates of using offshore
banks think this is workable as a tax avoidance scheme.)

- I rather suspect that all of the employees of C2Net, surely a
"Cypherpunks company" if ever there were one, mundanely receive their W-2s
and file diligently. (Actually, the odds are that some of them are already
delinquent on filing, but the point remains valid.)

- John Walker, the founder of Autodesk (Autocad), became a citizen of
Belize and now lives in Switzerland. As above, a "virtual entity." And yet
he tells me his taxes are higher than if he'd remained in the U.S. (he left
for complicated reasons, involving taxes, but not necessarily to reduce his
personal taxes).

So, I admire the theory. In fact, I wrote many essays on related points.
(Cf. "crypto anarchy") But it's not at all easy to pull it off.

Maybe in 10 years.

--Tim

There's something wrong when I'm a felon under an increasing number of laws.
Only one response to the key grabbers is warranted: "Death to Tyrants!"
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@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."

On Thu, 17 Jul 1997, Tim May wrote:
> - I rather suspect that all of the employees of C2Net, surely a
> "Cypherpunks company" if ever there were one, mundanely receive their W-2s
> and file diligently. (Actually, the odds are that some of them are already
> delinquent on filing, but the point remains valid.)

	Having done a little graphics work for them last year I can attest
to the fact that they sent me a 1099.

Petro, Christopher C.
snow@smoke.suba.com

On Thu, 17 Jul 1997, Tim May wrote:
> 
> Taxes are already essentially uncollectable, even in interstate
> transactions, so the moves by Summers and Magaziner are truly token
> gestures.


Uh, Tim, corporate and personal income taxes are still rather 
well collectible, and that my be the reason the federal gov't
doesn't worry too much about taxing the Net. State, and even
more so local, gov'ts do not have the same collectibility
advantage.  And the locals are often revenue-starved and 
constantly in search of new tax base, constantly.  Thus,
what's easy for the feds to say ("no new taxes" read my
lips?:)) is just a costless slam at the locals.  No real
impact on federal revenue, no sacrifice, no altruism, 
except at the expense of other potential, and hungry 
taxing authorities.  Magaziner didn't earn any points with
me by proclaiming a policy that doesn't cost his end of
the gov't much of anything.  

It's as if George III told the colonies not to tax tea.
MacN