(Jim McCoy)
There is no way you can get around taxation if you intend on using this system in real life. Your system is much like that of a drug dealer, he gets all this money, but has no where to spend it until it has been laundered.
So in other words the earnings of the international banks located "offshore" and lending $trillions in the "Eurodollar" (now world financial) markets have been taxed for the last 30 years? Their balance sheets don't reflect these taxes. The new technology will let everyone "expatriate" themselves either actually or virtually. If, today, I am traveling in the South of France and writing the Great American Novel, I have no French tax liability and am not violating work permit laws even though I am working and may be earning $millions. (If I am or have been an American within the previous 10 years I would have US tax liability of course.) On the nets I can do a host of jobs while wandering around the world. In most countries I would have no income tax liability. Taxing me (or net entities created by me) would be even more difficult in a practical sense.
They will get you at the banks or wherever you go to spend your money. The "War on Drugs" has really caused this kind of banking service to dry up,
Digital cash will be able to buy lots of goodies (entertainment, communication, non-physical services, and physical services once the VR interface improves sufficiently). Dumped into an account that is otherwise unconnected to you it can be accessed via smart cards, debit cards, and ATMs from anywhere in the world. It is still not that difficult to obtain a bank account somewhere in the world in a nome de guerre.
The appetite of the taxation-beast will not diminish, and everyone will just end up having higher taxes on the physical elements of daily life that can't be stuffed on the wire. Sounds like this is going to be a world of info-elite tax dodgers...the public will love you...
Actually the poor evade more taxes (as a portion of income) than the rich these days. The appetite of the beast has not stopped the forex markets from tripling in size since 1986 (quite a bit untaxed). Legally, services sold "internationally" are not subject to tax and there is no entity capable of levying such a tax. The nets exist in an "international" realm. As time goes on the percentage of gross world product that is non physical is bound to grow (the non-physical bits have been growing steadily for years). Once future Madonnas determine that they can double their take home pay by renouncing their American citizenship (either actually or virtually) and selling their voices and images via the nets things will change. If the coercive sector has to increase the taxes again and again on an ever smaller portion of gross world product, it will starve to death.
The unbundling of the physical and non-physical aspects are nice, but how many non-physical aspects of a service are there?
If your VR interface is good enough most services can be delivered non physically. Nonphysical services include: writing (anything), entertainment, law, much of medicine, all of management, telecoms, advertising and marketing, all of financial services. Once automation develops much of manufacturing will be non physical as you purchase "custom" goods made on the spot from downloaded patterns. Authority can be a delicate thing. On November 9th 1989 you would have been shot crossing the Berlin Wall without permission on November 11th 1989 you could cross at will. Many of your supposed restraints only apply to US citizens in any case. British citizens living "overseas" have no UK tax liability and this is true of the citizens of most countries. Everyone is "overseas" on the nets. Even though US expatriates have continuing liabilities, 60% of them are tax nonfilers according to an IRS study of tax compliance. Shattering geographical bounds shatters legal ones as well even in this day and age. Duncan Frissell