[ajross]

Maybe we should heavily regulate cash transactions, limit the sizes of cash deposits, implement strict know-your-customer rules for any entities dealing with cash, and enforce reporting rules for transactions between any accounts involving significant cash-derived balances instead?

That argument doesn't work. In fact yes, the government understands that printed money is untrackable and we have extensive tools to deal with that, up to and including the formal sanction of entities that try to evade these controls.

[jimz]

Haha my goodness. Yes, if you're the state, all that is theoretically true, but the catch is of course the problem of legibility. The state is well aware of that, as you noted, but so many transactions themselves are untrackable, some because of explicit state policies (undocumented immigrants line up to purchase money orders to pay taxes a notable example of a collective and voluntary effort to overcome state obstacles that are put in place, but also the many many unbanked individuals in the country, especially those not on the payroll for various reasons). That argument absolutely works if you simply realize that a) the state is never going to be able to actually capture 100% of cash transactions and b) the state's primary goal is not recordkeeping per se but to collect its perceived share, so the greater punishment it dishes out and the more complex laws get in regards to consumer finance, the more likely that those on the cusp simply opt out of the formal system if they're in a position to do so and disappear from all that heavy enforcement measures, much of which the average consumer do not understand fully anyway.

This viewpoint issue is not limited to financial legibility of course. We do know that the underground economy, because data is only reported by authorities, is inflated or deflated for political purposes, further muddling any potential estimations. Oh, and plenty of what the IRS wish to do is just that - wishful, and only when it's convenient for the other party. You can try to regulate cash transactions domestically in a more heavy handed manner, but you're mostly going to affect those least able to afford it to begin with, and the costs involved may not be worth the effort. Oh, and US currency is commonly used abroad, including in place of native currencies in some countries. When it comes to cash, there are only estimates as to how much the government can reasonably regulate the transacting of, and the government's policies have undermined efforts to do so even when they could. Not everyone is in the cohort that posts on HN.