Quote from: Jobe7 on April 21, 2013, 02:58:07 PM

OK, if you had btc of $15,000 USD value (lets use a random number, 200 btc), then brought a car with that amount. You now have a car, would you still have to pay tax on the btc that you no longer have?

On the car, yes, same as in the UK. But you don't pay tax on stuff (money/btc) you don't have.

So, in the US you'd have to declare your btc, pay tax on that as if it was $15,000? (how do you propose to pay that tax in btc exactly? Does the IRS have a Bitcoin wallet now that I'm unaware of?).

you're not thinking about it correctly. we pay tax all the time on things we don't 'have'. for example, if you earn USD $15,000, you pay tax on that income regardless whether you spend it or save it.

the principle is really very simple, but most people who haven't studied it get very easily confused and make bad assumption after bad assumption. the united states's principle is very straightforward: you owe tax on all income received, from whatever source derived.

that includes noncash compensation. when something isn't cash, the value for tax purposes is its fair market value at the time you received it. of course, fair market value can be disputed; it is up to the taxpayer to declare it and the IRS to challenge it. (if an intentional understatement, it can lead to civil or criminal penalties.)

so if you buy 150 BTC at $100 and immediately use it to buy a car, you owe no tax merely because you used bitcoins. (you might owe a sales tax in the US on the car, of course.) if you buy 150 BTC at $50, wait until it appreciates to $100, and use it to buy a car, you owe $7500 in income (specifically, probably capital gains) taxes on the appreciation of the bitcoins.

as to barter, people pay tax on it all the time. individuals who barter for $200 probably cheat the government out of income to that amount, but sophisticated individuals and businesses that engage in noncash transactions certainly do pay tax. i have done it myself, to the tune one year of a $4 million tax bill.

as to the title of the thread, it is because not everyone is an extremist anarchist; most people adopt ethical systems that recognise the value of law and government and then adopt the principle that it is appropriate for the costs of government to be split based roughly on income. nobody thinks the tax system in any large country is perfect, but almost everyone in those countries (except in this often ridiculous forum) thinks it is better than having no government at all.

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