In the Name of “Improving Tax Compliance”
A new piece of U.S. legislation proposes a complete invasion of financial privacy
Discreet is dedicated to the principles of self-reliance and privacy. We do not advocate breaking the law, but we are in favour of less government control and interference in personal finances, and we share a deep mistrust of the banking industry. Our healthy skepticism of these institutions is continually reinforced by a news cycle that regularly reports on the gross over-reach of banks and governments around the world.
According to USA Today, the United States Treasury “proposed requiring financial institutions to annually report the total amount of money that went in and out of bank, loan and investment accounts if those accounts hold a value of at least $600, or if the total is at least $600 in a year.” This proposal, if enacted, would allow for the IRS to be made aware of under-reported income and better target those who are illegally withholding or avoiding taxes.
The relatively low threshold of $600 was chosen to “make sure the threshold is low enough so these people cannot divide up their money into multiple accounts,” according to Chuck Marr, senior director of federal tax policy at the Center on Budget and Policy Priorities.
(It’s important to note that this proposal has not yet been enacted, and if it were, it would not go into effect until 2023 at the earliest.)
The ostensible problem being solved by this kind of legislation is to allow the tax-collecting bodies to get their hands on the estimated hundreds of billions in taxable income that goes untaxed every year due predominantly to the legal manipulations and financial chicanery of the wealthy.
Laws like these suggest a kind of governmental oversight that gives many people pause, especially those whose moral and ethical principles lead them into the world of cryptocurrency in the first place. The idea is that ‘if you have nothing to hide, you have nothing to fear’. It’s the same rationale governments around the world use to erode fundamental privacy rights through mass surveillance or enforce backdoors in encryption.
The relative merits or shortcomings of our tax systems are a matter for a different discussion. The salient question is, as our lives and finances become increasingly digital, how much access to our digital world should we permit to governing bodies?
Strong cryptography is a proven way to protect information, and as long as a person retains the legal right to privacy in their finances, cryptography may be the only way to protect that information. The Discreet project was founded with a laser focus on privacy and speed. We aim to build financial tools that empower self-reliance, allowing people financial autonomy and total privacy regarding where they choose to spend their money.
While we obviously decry terrorism and the illicit drug trade, we do not feel like the existence of these bad actors should mean that everyone’s right to privacy ought to be compromised. Drug dealers, terrorists, and organized crime will find ways to fund their nefarious enterprises with or without cryptocurrencies, as they always have, and we support the agencies that bring criminals to justice. But it’s impossible to have it both ways. There is no such thing as a backdoor to encryption that will allow some things but disallow others. It’s all or nothing, and math cannot be regulated.
We are as curious as you are to see how the global financial system grapples with digital currency in the coming months and years. In the meantime, we are building a platform for the exchange of value that puts that control firmly into the hands of its users.