Phasing out Cash

European authorities are keen to move from traditional coins and banknotes to electronic money for all transactions, including small amounts. This shift will allow tracking of all payments and help align budget deficits. "Moving from traditional money to electronic transfers opens a whole range of new opportunities for the industry. While there is a really important market to capture, existing business models are not fully relevant in the emerging scenario. The race to find the best approach to catch these opportunities has already started," comments Mr. Georges.


http://www.marketwatch.com/story/fr...ities-in-the-low-value-cash-market-2012-06-18

 

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NO! NO! NO!

If all money went electronic, it would be a big cash grab for the IRS. If I sell my neighbor a lawnmower, they would expect me to pay taxes on it. Cash is KING.

 

A short video on the BBC web site last week:

Life in a cashless society

Author David Wolman wrote a new book titled, "The End of Money: Counterfeiters, Preachers, Techies, Dreamers- And The Coming Cashless Society."

The video follows him around NYC making all sorts of typical cashless transactions.

 

Cash is only king in the current scenario.

"Sell" your lawnmower to your neighbor for something like an exchange of labor-- e.g. the neighbor cuts your lawn for a whole season in exchange for the equipment. No cash needed... or try to get paid in exchange for something else you need and that the taxman don't yet accept.

 

But, the IRS would have documentation that you had purchased a lawn mower. If you no longer own the mower, then some explanation would be required. Forcing electronic transactions for every purchase would effectively be the same as issuing titles for everything. You couldn't completely avoid taxes by bartering your car to your neighbor, would be the same with a mower. That is, if they wanted to go that far with it.

 

But, that's assuming you bought the mower in a standard traceable transaction to begin with. What's to say one didn't have it given to them, inherited in a family's possessions, didn't win it in a sweepstakes, buy it second hand, receive it free in a broken state and repaired themself, modified the mower from several other parts of other similarly broken and cast away mowers, and so many other difficult to account for ways of obtaining something...

Given the size of the population and the quantity of goods and materials out there, there simply isn't time for the taxman to track it all and every non-retail or wholesale transaction that transpires between people. It would be cost inefficient for the taxman to come knocking, tallying and checking up on everyone and the everything they own, and further what they maintain year-to-year in their possession. Bartering in such a manner can and does eclipse their taxing capability.

 

True, but computers have no problem tracking this much information. And, if we moved toward a cashless society, then every monetary transaction would be automatically tallied into the database. I see what you are saying, and I am not claiming that this would be the case. But, in theory, the government would be capable of maintaining a running tally of all non-immediately consumable goods owned by every citizen. Bartering can be a means for avoiding taxes, but by legal definition, bartering is taxable. Also, giving things to other people incurs gift taxes. The value of non-monetary transactions for each individual could be determined based on the deviation between their documented holdings and actual holdings.

 

Greetings:
The Department of Citizens' Transgressions has
assessed your debit card in the amount $75 for
excessive consumption of fast food french fries
last month.

Have a nice day,

Larry Lumpalot--fast food auditor

 

I do understand and see what you are saying, though those systems only work when people are playing by the rules and paying into those systems. If this is such a feared thing, people can and certainly some will resist reporting. When it comes down to very minor things, even if their volume is many, it becomes impossible for those behind taxing scheme to enforce them to the smallest transactions, let alone a nation of lawn care crazed Americans, many of whom seek the labor of others to keep the green plain in shape. If this tracking becomes perceived as sinister or oppressive, preventing simple transacting or pinching certain comforts, a people will push back. I don't think these systems will become as oppressively intrusive as many leap to point out upon uttering such stories about technology tracking and reporting on people, though the current generation growing up in a totally wired and digital environment who appear so willing to overlook, set aside or forget about privacy, could use some cautionary advice in how such contemporary behavior can be exploited and inconvenient at the same time.

 

I thought you don't like news articles?

 

It is hard to imagine our society without cash, but I think we are moving in that direction. PMs may prove to be a nice substitute in a cashless society. TC

 

The term "authorities" sounds somewhat misleading, I think. Yes, retailers, banks etc. would certainly like to reduce the use of cash - after all, handling cash is expensive. But for paying small amounts, cash certainly comes in handy ...

For years one of my cards has come with a cash chip which I can "charge up" and then use at terminals that accept the chip. However, I have to keep track, sort of, of how much money I have left on that chip, and I have to physically insert it into the machine. Newer RFID/NFC based payment options, be it with plastic cards or cell phones, are "contactless" but they are not that widespread yet. Plus (or rather minus), they are often limited to one country only, even here in the euro area.

In my opinion, cash sure has a future, but as a "niche product", not as a primary means of payment. Look at Sweden, for example, where cash is used for about 3 percent of payments (Euro area: 9 percent, USA: 7 percent). Of course further reducing the use of cash will mean more opportunities for governments to control our payments. But there are quite a few not only in SE who actively support and promote limiting its use; a while ago Björn Ulvaeus (Abba, Chess ...) suggested that we should not have paper money any more.

Christian

 

The mower's engine seized up.

The neighbor's dog urinated in the fuel tank.

My ex sugared the gas tank.

Just to name a few explanations.

 

NFN, but this is something that has been toyed with in Congress.

Thank God they've always found some other ridiculousness to toy with instead.

 

Bitcoins

 

This is what they think they're going to
"capture."
http://www.freakonomics.com/2011/11/01/the-black-market-is-the-second-largest-economy-in-the-world/

 

Excellent book!
http://www.amazon.com/gp/aw/d/037542489X/ref=mp_s_a_2?qid=1340113332&sr=8-2

 

In the tax world - once assessed burden of proof basically falls to the taxpayer to provide evidence/ proof the tax is not owed.

 

Again, that's just assuming they can get people to follow the rules. The system would have hard enough time creating a full assessment of everyone and everything to begin with.

 

I have to admit that I'm thinking along those lines. I don' trust gold prices though. On another note, i just got a call from the NRA to buy bullion. Something is seriously wrong with the mental process that this constructs.