Taxes, TVs and the Law of the Land

Watching TV through an antennae has always been “free”.  In return for watching advertisements you could watch the programs.

Keep fragile objects away at tax time.
Keep fragile objects away at tax time.

A company called Aereo has extended that concept.  It established hundreds of  TV antennas that pick up free broadcast TV and post live feeds to the Internet.

The idea is that consumers with antennas do not normally pay for the programming; Aereo is simply extending the reach of people’s antennas through the Internet.  Not surprisingly, networks sued but surprisingly, lost their case.

More and more legal conventions and social norms will be challenged by the virtual world.  As it is April, one thinks of taxation.  Taxation is based on what was thought to be an unalterable premise – The Law of the Land.  Where you are physically determines what laws apply to you.  This includes taxation.

So what is the land where virtual transactions take place?  On your computer or phone?  At the vendors place of business? Where the server is located?  Where the money (also virtual) changes hands?  If you think about it, it is a very, grey area.  It has not been pushed too hard because:

  • In the end, the exchange of money must take place in a financial institution that is within some taxman’s jurisdiction.
  • The money is some national currency.
  • Governments will exercise their right of coercion regardless and throw you or the corporation or both in jail.

But what if money was no longer needed?  Like Aereo using free broadcasts and transmitting them through a new medium, could something similar happen to money?  The first,distant, early warning are the use of Bitcoins – virtual money that is not regulated by any governing body.  Will Bitcoins replace actual currency?  Not likely as it is one of the earlier experiments.  What is more important is that people are trying to come up with ways to replace national currencies.  More sophisticated means of non-traditional monetary exchanges will develop over time creating new marketplaces with no links to any physical location.  And when they do, what law of the land applies then?

I am not advocating to stop paying taxes because the ability to throw you in jail always wins.  So get your filing done.

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