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Estonian Economist Suggests Abandoning Cash
J-Georg writes "Raul Eamets, professor of macroeconomics at the University of Tartu, proposed today during his TEDx talk that Estonia should stop using cash at all when adopting the Euro as the national currency (Estonian original). He also pointed out that abandoning cash would not be only important for the Estonian economy as a whole but also is a real challenge for both IT and banking sectors and would also improve Estonia's image as an IT-tiger."
I'll take it
Shit's so cash.
Leaves might be a better choice. Given the country's forests every citizen would become quite wealthy overnight and it wouldn't require any additional infrastructure. I believe the next US Congress will be considering adopting leaves in the next session as the new US currency since leaves are worth more than the dollar.
a professional economist and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous debts accumulated in Australia, and our very low rate of inflation
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
Money won't be zero... just will be an undefined variable.
So I won't be able to give $20 to a friend without: 1) being tracked; and 2) giving a cut to some payment processor like PayPal? I'd rather use cash.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
No way. Economies can't work without thieves or corrupt politicians. Even if something emerge to fill the gap, like gold, drugs, diamonds, name it, the neighbor country with real cash would get the benefits. At the bottom, cash on your pocket grants some privacy... and security.
Rawr!
...Until the power goes out.
you have never heard of an estonian economist before.
This comes out at the same time as I have stopped using credit/debit cards. I've started paying for everything with cash ( minus my web purchases... ). The government's ability to track non-cash transactions has improved to the point where I would rather have my privacy and take my chances with the possibility of theft.
illegal goods, illegal help, kickbacks, etc. It sounds like this economics professor thinks the answer is, they can't, and therefore all this crime and shady stuff will go away.
Nice try. Economists tend not to live in the real world. You would've thought that Estonians would remember an infatuation authorities had with the ideas of this guy Karl Marx...
People are pointing out some problems with this (power outage or system outage makes payment difficult, difficulty of making small personal transactions compared to cash, possibility of government tracking things a little too much). What they've failed to mention is cash isn't the greatest thing either. You can lose cash, it gets damaged, it gets stolen, it needs to be produced and distributed, and just the necessity of counting it eats up a huge number of man hours at banks every day. Sometimes, being able to keep track of payments can be beneficial as well; maybe you'd become less inclined to swipe your card for something you don't need when you see at the end of the month how all the little things add up to a lot of wasted money. I know that using a debit card has done that for me. And so what if they try this for a few years and it does prove to cause more problems than it solves? Then they have a much better banking and electronic payment system in place and they can go ahead and start issuing physical currency again. I highly doubt giving it a shot would cause any irreversible woes.
...but isn't this the way things are heading, anyway? And have been for sone time.
How many transactions have you done online this year so far? Our even this month? How about all those card payments you make? Everything from your shopping to your lunch can be paid by card and the rise of NFC being built into every phone will only make this more popular. Its probably possible to live without ever having to take out any physical cash at all. If they come up with a way to let you easily transfer cash to another person quickly, electronically and from anywhere (using your phone, that you already use for other transactions, perhaps?), then you could almost certainly completely dump it if you wanted.
+1 IDisagreeSoHeMustBeATrollOrAnAstroturferOrAShill
What about vending and video games / pinball games.
Few vending machines are set up for credit cards and the operators have to pay the CC fees.
For video games / pinball games other then the golden tee live games I not see any one take a credit card.
What about tipping people like bellhops / skycaps and others who people tip who they don't by stuff from like you would with a bartender / restaurant server.
There's much to be said for streamlining financial transactions, but there are limits to what we should allow, for reasons others have stated. There is simply too much opportunity for mischief in an economy where there can be this sort of control.
I'm surprised no one mentioned it, perhaps the /. readership is too young and secular to remember the concerns of Fundies from the 60's, 70's, and 80's, but I will give the relevant quote from the Book of Revelations, chapter 13, verses 16 & 17:
"16 It also forced all people, great and small, rich and poor, free and slave, to receive a mark on their right hands or on their foreheads, 17 so that they could not buy or sell unless they had the mark, which is the name of the beast or the number of its name."
(The number is, of course, 666, or in a few ancient texts 660.)
Regardless of whether one believes ancient prophecies, I think those Fundies had one thing right: Don't trust ANYONE - not even the "Majority" - to have that sort of control over humanity.
Barter is a solution which leaves Big Brother out of the loop, as long
as what is involved doesn't require a transfer of title, as in the case of
cars or real estate. Even then there are workarounds, the details of which
I will leave as an exercise for the reader.
I would much prefer to think it would force the comeback of the barter system. Either that or local community currency.
Once you start despising the jerks, you become one.
Few people realize that we use debt as money in our monetary system. All those dollar bills and Euro notes? Those are actually IOUs that have to be repaid with interest to central banks. All those dollars in your bank account? They too are just debt markers that have to be repaid with interest. The problem is that in order to repay the interest, new money has to be created; but the only source of new money is new debt, with more interest, that requires more money with more interest ad infinitum.
The net result is that: 1) if all debts in society were repaid there would be no money and commerce would sieze up; 2) all debts can never be repaid because the principle + interest always exceeds the money supply; 3) the amount of debt is always increasing until there is a crash.
Everyone (except bankers) would be better off if we used debt-free money issued by your government, rather than debt issued from privately controlled central banks.
http://www.youtube.com/watch?v=vVkFb26u9g8
Oh, tipping... is that still legal in the States? No taxes paid?
Tipping is not a common practice in the EU.
The solution for those is easy, and what Dave & Buster's does; tokens. Swipe your credit card, get some tokens, and drop them in the machines.
It will work because Estonia is so small, that everybody will still use Euros on the street, which they can easily obtain from neighbouring countries.
Excuse me, but please get off my Pennisetum Clandestinum, eh!
As of yet there is no good universal transaction system for individuals. Credit/debit cards work fine for businesses that have infrastructure, but not for you and me. Services like Paypal are inconvenient in that you can to access a computer and they take a cut. Checks are rather a pain unless the amount is fairly large. Cash just works real well for small, personal, transactions.
Now that isn't massive, doesn't mean that can economy can't be based on electronic transactions, but in most countries that's already the case. In the US, the EU, etc the electronic databases on the backend are what really keep track of money and where things really happen. Cash is just a small part of things. That's fine, though it may not be the biggest, doesn't mean we should drop it.
I see no particular reason to do anything with cash. It needn't be encouraged, but nor should it be eliminated. People will use it when it is convenient or makes sense, and not when it does not.
I live a largely cashless life but that doesn't mean I don't find a use for it from time to time. Can be as simple as something like loaning a friend a dollar to go buy a soda from a vending machine. It is worth keeping around.
In many countries, wait staff are paid a decent working wage so they don't need to rely on tips to survive. The listed price is the price you pay. (In fact, tipping is banned in some industries, such as casinos.)
Science is all about firing a drunk pig out of a cannon just to see what happens.
Is it wrong that I read this and thought that it was April Fool's?
Out of all the countries in the world, Estonia should know the dangers of having such a critical entity such as currency based on digital systems seeing as when they go down they're left in the dark.
Seriously, I pay for most things in cash.. minus a few online payments.
People actually look at you as rather odd that your paying for stuff in cash, and then check the money you handed them to see if it's fake or not. Honestly, it's rather insulting.. and screw um. I don't spend more than what I have, nor do I charge shit.. or, spend money I don't have.
What is so wrong about that? Nothing at all.
Wasting mod points commenting on the obvious.
Life was hell, then I discovered Linux...
Seriously? It ain't that hard to see all around you. The gas station prices their gas something something-point nine. Say it's 2.50 a gallon rounded up, but it's really 2.49.9 - so for every ten gallons you buy, you keep a penny of that 2.50. Whoopee right?
Now you're the government. You tax everyone at 7 percent.A sale of 5.33 now becomes 5.7031 - except it isn't, because registers are set to round up. So it's actually a sale of 5.71. Multiply that by how many Billions of sales in a year? In a year that's probably an extra $15.00 a year from every man woman and child. It may not make the difference between you going broke, but it does add up to those who collect the money.
Professor Eamets seems to have not much of an understanding of economics. I was already skeptical about this and when I forwarded the link to one of my friends who is a prominent economics professor at the Harvard Business School, he immediately confirmed that someone suggesting to abandon cash has obviously no clue about the very principles of economics and that in his 36 years of doing research in macroeconomics he had never heard of Mr Eamets.
Isn't that the country run by the Marx brothers?
Crap, how would I pay for prostitutes?
On the other hand, I just wrote two checks to family (um, not for services previously mentioned in this post). It seems like there should be a way to wire/ACH funds between individuals.
Then again, there are certain places (besides prostitutes) I would not trust with the information necessary to debit my accounts.
When I travel to Estonia, every transaction that I make gets recorded electronically? I don't think so.
Eamets may or may not know something about economics, but he apparently knows nothing about privacy or liberty.
In Soviet Russia cash abandons YOU!
I'm so very very sorry. It's a compulsion. I'll let myself out now.
Please. Don't look at me like that...
I am getting so sick of technology. I swear that it quit liberating humans from a previous woe or burden soon after the invention of the wheel, and has served only to further imprison and monitor humans ever since. Microsoft Silverlight turns your computer into a video/audio surveillance device for god knows who. GPS has turned your car and cell phone into a mobile tracking device. Kinect has turned your XBOX 360 into a living room biometric monitoring device....Sometimes I think Ted Kaczynski had the right idea all along....BTW no cash means that you won't be able to spend any money unless it's monitored and/or taxed, if not both. At this rate one more step in any direction will end with RFID implants...MOO!
-Oz
You mom only takes payment in cash. $2 if she spits, $3 if she swallows.
> nothing less than deci-dollars is worth striking up in coin, drop pennies, nickels and quarters
Even a dime is (exactly) a deci-dollar, and a quarter is bigger.
I should know, I need to use one every time I post my Slashdot .sig :-)
need I say more?
Be seeing you...
Estonian men and women are now lighting their cigars with worthless €100 notes... after their value was digitilised and stored in a bank for future use...
Can I put a spell on those who can't spell?
Your wheels are loose and they're losing their grip, good you're there.
If they go cashless, people will just use dollars or euros from another country. IMHO, cash will find a way - it just takes one person to write an IOU, and it's effectively cash.
Before they join the EU, the EU generally requires countries to enact laws that are compatible with all the existing EU regulations. That would include Regulation 974/98, which requires member states to issue Euro-denominated banknotes and coins, and give them status as legal tender.
In Sweden it's also discussed. Article from a few months ago: http://www.bbc.co.uk/news/world-europe-10538032
Disadvantages of no-cash:
- All your transactions are tracked. Your money privacy goes down the toilet.
Advantages of no-cash:
- You cannot be robbed, at least not of you cash. Even if someone forces a transaction on you, you can track it.
- All taxes will be paid. Think about it. Really think about it. All the rich people would have to pay all their taxes. That would be a revolution. That would change the world. That's the reason this will NEVER happen.
Rome taught me patience and assiduous application to detail. Virtues which temper the boldness of great, general views.
The Dutch National Bank is chairing a club called (translated) "community consultation for payments" that consists of large retailers, banks, and such --and not so much mere consumers or even consumer clubs-- with the goal of "eradicating cash". The main replacement is to be bank card + PIN (like the british chip+pin, though as of yet still mostly using magstripe). Detail: The Dutch IRS requires that a backlog of all transactions be kept for seven years. Good bye, privacy.
Nevermind all the practical problems with stability of the system, no fallbacks, rigid single use case support, and so on, and so forth. This guy apparently touts the resulting "transparency" as a good thing. This does not bode well for my respect for economists and economics as a "science".
I wouldn't mind so much if electronic payments were actually, provably, at least as anonymous as cash transactions. Until then, this remains a direct attack on civil liberties and an attempt to reduce you to a meek and easily controllable "consumer". Not something I'd like to have in place of "citizen" in the passport law already requires me to have.
I live in central Europe, and the trend to here is moving towards always paying with your EC bank card. A EC card is basically debit and ATM card, and this is quite common for purchases over 20€. However, it takes longer at the supermarket than paying with cash, because they print out a receipt that you have to sign. Even typing in a PIN takes longer than if you pay in cash. The cashier chicks at my supermarket have built-in abacuses in their heads. And when they grab into the cash registers for change, I have noticed that do not even look at the coins . . . they know from feeling the size how much is right.
A lot of folks like to pay with cards at the supermarket, because it gives you time to bag your groceries. No, there are no teen-aged "bag boys" where I live, and supermarkets here try to rudely toss you out, as soon as your bill has been paid. It's always a hoot and a half when I visit the USA with my girlfriend: she always jumps to start bagging the groceries, while some teenage guy gives her a look like, "Are you trying to steal my job?" Aldi is the worst offender: after your purchases get scanned, they are pushed to a packing place that is smaller than an average dinner plate. If you don't pack fast enough, they push your stuff onto the floor. If their prices were not so cheap, no one shop there, unless they are masochists who get sexual pleasure from being abused by assholes.
So anyway, the last time I visited ThePolygamousRanchSister in scenic New Jersey, I asked her where an ATM was. She told me that she never used cash any more. And my observations were that everyone, down to fast food joints, just swiped, and that was quicker than using cash. As soon as swiping a card without a print out and signature or PIN number is possible here, cash will be out.
Aw, the poor cash counterfeiters . . . this will wreck their business model.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
That could be good, but then you will have to force banks to provide means of payement and means of receiving money that are free of charge. Right now, the fee they impose to people who have a terminal for electronic card use is downright racket.
The Wise adapts himself to the world. The Fool adapts the world to himself. Therefore, all progress depends on the Fool.
http://www.theonion.com/articles/us-economy-grinds-to-halt-as-nation-realizes-money,2912/
Better yet, you save money from your ongoing business profits and as soon as you have enough money, you buy a small cart.
That whole 'debt and lending is required for an economy to prosper' is just a meme the banks want you to harbour.
Wow, this is the first argument I've heard that's made me want to support this.
My Estonian cousin tells me she regrets that she will no longer be able to tell people in other countries how many EEKs (Estonian Kroons) something is worth.
Please do not read this sig. Thank you.
What about vending and video games / pinball games.
Few vending machines are set up for credit cards and the operators have to pay the CC fees.
For video games / pinball games other then the golden tee live games I not see any one take a credit card.
SMS:
http://mobilesociety.typepad.com/mobile_life/2009/01/paying-with-the-mobile-at-the-vending-machine-yes-really.html
Perhaps they could criminalize the possession and use of gold and silver while they're at it. That might encourage the use of the new system. Alright, alright, let's be honest here: they'll need to criminalize bullion and foreign currencies in order for this Orwellian shit to stand a chance... and even then, they'll get to watch as everything goes black market, including money!
Just another symptom of the America's broken banking system. In sane countries, you can get a debit card that linked to your savings account.
In the United States, we have Federal Reserve Board Regulation D, which allows only six electronic withdrawals from a savings account per month. Both Google and Wikipedia drew a blank as to the reason that this was enacted.
In the US you can get a debit card and add funds to it in almost any store.
With cash, which Estonians won't have if this goes through. How does one add money other than with cash or a check? For example, how would one individual pay another individual?
The card is cheap.
Are you calling $3 per month, $3 per deposit (source), and $1 per balance inquiry cheap? What about the cost of getting and maintaining phone service, whose number is required of all customers by federal law (source)?
You don't need a checking account to get a debit card. They work just as well on savings accounts.
Except they're limited to six purchases per month. Please see my other comment.
Paypal won't take a cut of anything that small if you pay right.
How is "right"? A personal account can't take payments funded from credit cards, but a premier account has a fee deducted even from ACH payments. Do you mean that every PayPal user should have two PayPal accounts, one premier to take credit card-funded payments (and refund everything else) and one personal to take everything else (and refund credit card-funded payments), and two separate checking accounts to back them up?
Heard of debit cards? They're very common over here in Europe and go directly against your bank account.
There are debit cards in the United States, but not everyone has a checking account. For example, children under age 18 can't set up an account in their own name, and not all of them have a parent willing to co-sign on a checking account. Banks also like to deny checking accounts to those who have made serious credit mistakes in the past, such as having fallen ill and incurred medical bills. Relying on debit cards also leaves out person-to-person payments, as the initial setup fee for a terminal and the annual fee to use it tend to be more than an individual who is not a business owner can afford.
Or an active security device that communicates over 3G or EDGE.
Not everybody has $70 per month for a voice and data plan. What kind of setup fee, monthly fee, and transaction fee do you envision for such a device?
Where I come from debit cards are useless without the PIN.
In the United States, this is true of an "ATM card", which carries only the ATM network logo (Cirrus or PLUS) and has no embossed number on the front. These can be used only for PIN transactions. The term "debit card" is more commonly used to refer to a debit card that carries both the ATM network logo and a MasterCard or Visa logo and an embossed number. These can be used for PIN transactions or for signature transactions. They became popular because when they were introduced, few merchants took ATM cards.
Everything from your shopping to your lunch can be paid by card
But not paying the neighbor kid to mow your lawn.
If they come up with a way to let you easily transfer cash to another person quickly, electronically and from anywhere (using your phone, that you already use for other transactions, perhaps?)
Not all telephones are smartphones. I don't see payment becoming a common app on land lines or $5/mo pay-as-you-go phones any time soon.
The Euro is a completely viable alternative to the dollar on a broad international scale. It's even used as the official currency in countries outside of the EU: see, for instance, Kosovo. !
Ok, either this is an obvious flamebait, or you are talking just from the ignorance. I will bite, nevertheless:
Kosovo (and Metohija) was never independent country, and it isn't one now. If you counter this claim either you are shredding every single piece of international law in existence, or you are talking out of your ass. No, IANAL, but taking living room from my apartment, which I own - is illegal, no matter how you sugar coat it. How would you like for southern Florida to proclaim its independence and call itself New Cuba?
Yeah, yeah, -1 flamebait, but this fscking troll-meme that Kosovo is a country has got to stop.
that still needs added hardware in the vending machine and maybe the operator needs to pay for the cell data link / SMS link.
Most games on site / small game rooms use coins not tokens or cards.
Aye. One might add that this is particular prevalent in the Nordic countries, which Estonia is trying hard to position itself as being a part of.
I can't speak for the rest, but I can tell you that in Iceland, tipping waitstaff is not just not expected, it'll get you some very strange looks if you try (and there's always tourists who do) - you could just as well tip the clerk at the supermarket, or the doctor at the hospital, or anyone else providing a service.
Seriously! Your convoluted logic is so full of holes you couldn't carry play-dough in it.
POS (point of sale) systems generally round down from .004 and round up on .005 of fractions at 1/100th unit of currency around here.
they don't "ROUND UP" 100%
every day http://en.wikipedia.org/wiki/Special:Random
We have Octopus card here in HK, something that's closest to electronic cash than probably every other things on earth. It is a smart card that could have no identity attached. A lot of money transaction like public transit, fast-food restaurant, supermarket, 7-11, etc. can run through it. Spend the money stored inside, recharge, and spend. All those little cents are slowly being abandoned by people here now.
Cash is anonymous.
Anonymity protects privacy.
Privacy is necessary for a functioning democracy.
We should map all our physical money on virtual money, then swap page directory. Available addr^H^H^H^H money for free!
slashwhat?
Am I the only one who was disappointed after reading the article, given the headline? I was hoping they were abandoning fiat money and returning to the Gold standard. Turns out there are just jumping on the inflation train.
~ now you know
Switch your currency to Flooz. Oh wait. . .
The practice of tipping only persists because it allows people to avoid paying taxes. It really is a bad way to run a business. How does a restaurant manager deal with a waiter that spends all of his energy on the customer facing parts of his job, but does a poor job of everything else (shows up late, is uncooperative with other staff, belligerent in the kitchen, etc)? Sure it is possible to deal with it because it happens every day, but it would be much easier if the manager actually controlled the employee's compensation.
If physical money disappeared, the practice of tipping would disappear right behind it. So, the logic is actually the other way around -- we don't need cash to tip, tipping exists because cash is hard to track.
On the contrary - restaurant owners love this system. Wait staff that perform poorly get axed, or get others to do those parts of their jobs for them. That's why they're wait staff, and not bus boys. If you want to work, you get it done.
In return, the owners get to pay them $2/hr. They're effectively paying less than 10-15% of what real, trained, customer-interaction employees would cost. That in itself is enough to make them deal with the other problems.
Is it just my observation, or are there way too many stupid people in the world?
In return, the owners get to pay them $2/hr. They're effectively paying less than 10-15% of what real, trained, customer-interaction employees would cost. That in itself is enough to make them deal with the other problems.
With tipping - family pays $60 + $9 tip for dinner, waiter gets $9 plus maybe fifty cents in his pay check since he probably had eight tables in the two hours the family was there. Government takes 15 cents in taxes, leaving $9.35 in take home wages.
Without tipping - family pays $69 for dinner, waiter gets $9.50 in his pay check. Government takes $2.85 in taxes, leaving $6.65 in take home wages.
Notice in the second scenario that the restaurant raised the salary of the waiter to $38.00 an hour without costing either the restaurant or the customer any more money. They're not paying waiters less in the tipping scenario, they're simply allowing the waiter to work directly for the customer. The only real monetary difference is the amount of tax evasion that is possible.
Once tipping is gone and the manager has an 80K salary to tinker with, he can demand improvements in return for raises. Also, a single diner reading a book is much more likely to be treated as a real customer instead of a lump of meat that is occupying a table that could be used for a couple on a first date (where the dude is very likely to over tip to impress the chick). Even more importantly, the restaurant gets to make the decision of how to treat customers instead of leaving it up to the waiter. I've seen plenty of restaurants understaffed, but reluctant to call in help because waiters make a killing when the place is understaffed, even if most of the customers complain and leave smaller tips. It's not a healthy system when the boss has to choose between worse customer service due to understaffing and worse customer service due to ticked off waiters that just had their table count cut.
Resaurant owners only love the current system because they know the employees will under-declare tips making it cheaper to pay them (at the expense of everyone else that pays taxes). A $9 tip is $9 dollars in the waiter's pocket, assuming tax fraud. A $9 pay check is $6 take home pay.
With the rate tip jars are multiplying in the US, I'm sure it won't be too long before that's expected too.
I'm not sure if you're pulling our legs, or if you really wonder about this.
If overnight, there are 6,000 billion dollars more, demand for dollars would diminish in relation to the increased supply. You know the supply-demand relationship, right?
Say, our candystore owner wants to buy something with his hard-earned dollar. However, with more money in the system, he would find prices going up as there is now less shortage of dollars, so in order to stay afloat, he'd need to up the price on his candies sooner or later, in order to pay for rent, decent food (not candies) and everything else he needs.
For money, this is true even more than for other goods, since money has no inherent value, but is just a social contract. It does follow the speed of information though, which is tremendous in this day and age.
Say those 6,000 billion dollars are used to buy up foreign stocks and companies. This will lower trust in dollars worldwide, and send the dollar-value down. Because people in other countries aren't as stupid as you think. Already, countries are starting to block money from outside, from buying up too much.
If USA "produces" 6,000,000,000 billion dollars overnight, they could potentially buy up the whole world (in theory).
So it is nothing less than legalized theft of other countries' assets, nothing more or less than that.
Ironically, it will create even stronger bubbles than the ones we are in now though. More because money is being devalued, than anything of real value.
Those people with money in the bank will lose, unless they manage to time the market. But if money is being devalued, it might not be possible to time the market, only lose it or ride the wave.
http://www.debunkingskeptics.com/
Get rid of cash? I can see no faster way to get the populace to return to gold or silver as a means of exchange. The government can propagate an idea, but that doesn't mean the populace is going to accept it. Just like rubles v dollars in the USSR.
The idea of the government or banks sticking their nose into each and every transaction and getting their bit by regulation is unsettling to me also.
Part of the point of Aldi's is the sparse bagging environment, as a component fo their cheap-via-no-frills strategy.
I listen to both RIAA and non-RIAA stuff if I like the music, tangential business/politics nonwithstanding.
Is it possible to have cash only economy?
Govt must constitute a panel to rewrite US Constitution and Quran
... You may recover some lost face by immediately purchasing or borrowing a copy of The Ultimate Hitchhiker's Guide.
It doesn't count as much, though, unless you get it in the correct format.
I won't join Slashcott. OTOH, If Beta goes live, I just won't be back until it's fixed. Sorry Dice.
Is this a very friendly neighbour? Strictly cash for services? (I'm sorry, but your post did rather lay you open to it.)
assuming tax fraud
Seems you and I have completely different worlds in which we'd like to live. I'd prefer to live in a world where the laws are sensible and everybody follows them, rather than a world where everyone breaks the law so we can get on alright.
On a side note, when I go to restaurants, I usually write in a tip on the credit card receipt. Does this mean that it's tracked and the waiter will have to pay tax on it, where if I left him cash he could put it straight into his pocket?
Is 1563649 a prime number?
assuming tax fraud
Seems you and I have completely different worlds in which we'd like to live. I'd prefer to live in a world where the laws are sensible and everybody follows them, rather than a world where everyone breaks the law so we can get on alright.
On a side note, when I go to restaurants, I usually write in a tip on the credit card receipt. Does this mean that it's tracked and the waiter will have to pay tax on it, where if I left him cash he could put it straight into his pocket?
When a restaurant is audited, if the total of the employee's claimed tips is less than the confirmed tips on the credit card receipts, the restaurant gets in trouble and has to pay their half of FICA for the difference. This practice exists becuase it actually happens quite a bit. It is estimated that $12 billion in tip income is unreported each year (about 60% of all tips). Employers have to pay extra when they file if the total tips claimed by all of their staff is less than 8% on Form 8027, but most audits of credit card receipts show an average of between 14% and 15%. Tax fraud is a pretty safe assumption.
Alright, thanks for telling how that works. I guess I'll be leaving cash from now on.
Is 1563649 a prime number?
So... you've gone from living in a world where the laws are sensible and everybody follows them, to doing your part to "stick it to the man".
The point still stands that tipping isn't good for the manager-employee relationship. I have a very low threshold for corruption and the whole system of tipping is one huge invitation to sidestep ethics. A good example is when a bartender gives a customer a free drink and the customer tips him an extra few bucks in return. The net effect is the same as if the bartender took the money directly out of the register.
While I'd like to live in a world with sensible rules, I have to live in this one for the time being. I have no idea how to change the rules, so I just do my best to get along with the rules we have.
Is 1563649 a prime number?