… that ‘tax pros’ are worried that tax evasion will be greatly increased by new regulations in the USA
Tax pros now fear that tax evasion could go viral if the health-reform bill’s new 1099 requirement takes effect next year. They say more small businesses will likely opt to do all-cash transactions under the table to avoid the 1099 reporting requirement, and all of its onerous provisions, which are worse than small businesses may realize.
“Tax evasion could go viral”… what a pleasing concept. Well all I can say to these unnamed ‘tax pros’ laboring away tirelessly to make people ‘compliant’ is “from your lips to God’s ear”.
Few things would help the growth of the culture needed for a fight back of liberty to succeed than something that not only induced contempt for the state but actively motivates self-interested resistance to the supra-constitutional tax gathering arm of the US government… and perhaps the single best form of resistance to an over-mighty state is keeping as much money as possible out of its hands.
Encouraging tax evasion: far from being an ‘ugly side effect’ it is the unforeseen silver lining that may tip millions of apolitical business folk into unwitting de facto alliance with liberty’s anti-statist friends.
I think in the POTUS we see a man who only views the population in the abstract, and in this he is playing with fire, keeping 3 things in mind. One, the recent crash of the Arizona traffic camera system by mass non violent non compliance. The entire state simply ignored any summons and the system was rapidly over whelmed. Two, there is a provision in the health care law that would give the Federal govt access to bank accounts by electronic means, probably NOT going to be a popular move. Three, the same govt has flooded the planet with currency. Altogether that rather suggests that a de facto creation of an enormous off the books economy.
That’s every leftist right there.
This is, in fact, a serious issue, with an increasing proportion of the electorate not being subject to adequately cognizable tax impacts – transparent taxation.
This is going to necessitate a VAT form of taxation, hopefully as a full substitute. But, I said that about taxation of business organizations back in 1954, and was drummed out of the “tax corps” by 1957 (for which I have been forever grateful).
Wrong again???
This 1099 was ALWAYS a pre-cursor to a VAT.
Not as a replacement to the Income Tax, but in additional to the income tax.
.
My main regret of the US system is that they tax citizens on their worldwide income. Unlike Eu states residency does not matter.
I live in AU, earn in AU, and have to pay taxes in the US on my AU income as if I earned it in the US.
So, there is no tax exile in the US tax system.
Great comment.
EvilDave:
There is the option of expatriation and immigration; but that is not for everyone, it is difficult, and expensive to buy your way out. Perhaps not so ironically, the expenses are reminiscent of the fees that “legal immigrants” and refugees from the Soviet Union had to pay.
Moving on to the concept of widespread tax evasion; there are areas in this country right now where businesses are turning in their licenses and tax papers and operating under the table. Obviously, it is mostly skills based service businesses, because it is hard to buy stock at wholesale rates if you don’t have a tax #; but it is happening. And I recently ran across a mechanic who closed his shop, and rigged up a van as a mobile shop and who works for cash only.
Other areas where the unemployment rate is maintained at a high level by deliberate government action have reverted to goods-and-labor barter for much of the economy. And Reven-ooo-ers are not well thought of.
5 years ago, who would have thought that areas of the United States would have reverted to a barter economy?
If I remember my Roman History, the Empire was not destroyed by military defeat. Cities in Gaul and Italy opened their gates to the “barbarians”, noting that the barbarians had kings, courts. codes of laws, and were less oppressive than the Roman equivalents; both socially and fiscally. When a government is regarded as more the enemy than forces outside the government is not a good omen.
Subotai Bahadur
Wanna bet? Happiest day of my life was the day I handed what was left of my US passport to a flunky of the Ambassador in San Jose, Costa Rica, and said “Take your tax and shove it, I ain’t payin’ it no more” to the tune of David Allan Coe.
I then amused myself exchanging pithy letters with the IRS ever since and I was rather saddened when after several years of threats, several of which I have framed in my house, they haven’t written back recently.
I worked in a skilled trades for decades, but now just pour beer in a working class saloon. Everybody is off the grid. Entire three lift garages, all cash customers. You can have your whole house built for cash. Everyone sees the local, state government as the enemy. Bars buy their booze off books.
I used to dislike people getting fake disability and then working for cash, but it’s too common now, and since the racket is no longer reformable( Reagan, Bush/Hasteret/Lott been there, done that ) the next option is for patriots to become part of the problem. Bring the racket down by judo.
When I was a kid, I used to buy shares of United States Steel stocks. I liked getting the yearly corporate report. I had a paper route and would go to the savings bank and the ladies would take my savings book and put it in the machine and type in the deposit I gave them. I used to buy savings bonds. I couldn’t wait to enlist.
Now I see the state as my enemy. Thieves and liars by other names. War is politics, and these politicians are killing people with taxes, destroying families, dreams.
I’ve been in the US for 15-odd years on a Green Card.
My in-laws have changed their opinion of me, from being a renegade and almost-traitor for not pursuing a path to citizenship, they now congratulate me on my smarts, because come the day, my wife, kids and I can walk out of the country and wave the IRS goodbye if we decide to.
My In-laws are lifelong yellow dog democrats.
I haven’t the heart to tell them that the reason why I didn’t apply (until about 2003) was because I was too lazy to go thru’ the paperwork.
And yeah, going off-grid is starting to look very appealing.
“the next option is for patriots to become part of the problem”
A very interesting observation, Paul. Sort of a version of the Cloward-Piven Strategy that Glenn Beck has been going on about lately, but with a libertarian rather than socialist orientation. Claire Wolfe (the libertarian author and blogger) has more or less come around to that strategy recently, too, albeit a bit grudgingly. She defines such people as “cockapoos” in her taxonomy of Freedom Outlaws. I think it has increasing merit.
(Incidentally, Claire Wolfe is the author of the wonderful “Freedom Outlaw’s Handbook”. A fun read and highly recommended.)
I’d love to know where your cash-based, off-the-grid society is located, but it’s probably not a good idea to post that information on such a public site (it might draw the wrong sort of attention). Hopefully more such oases will begin springing up as our economy continues to deteriorate. Congratulations on finding it, and good luck to you and all of your neighbors there.
Gee, with enough mass tax evasion the U.S. could be just like Italy!
This would not be a good thing.
For one thing, it would make an even larger portion of the population subject to legal punishment at the whim of the state. (Just because “everybody’s doing it” doesn’t mean they can’t arrest you.)
It leaves people vulnerable to gangster extortion. (You can’t call the police to defend property you don’t even admit owning.)
It shuts down a big proportion of the signalling that markets require. (How can a vendor have a good reputation when he has to keep his business secret? How can injured purchasers denounce a bad vendor when he has no public identity?)
Capitalism and markets depend on an extended web of trust. In an “off-the-books” economy, the only people one can trust are personal acquaintances and relatives – maybe. The absence of that extended web of trust is one of the major problems in the development of Middle Eastern countries and elsewhere in the Third World.
What else? It leads to government services being provided “off-the-books”, with officials taking money under the table for services to the underground. This can be just a more flexible form of the formal process, but it’s an open invitation to looting.
Is this the early dawn of alongside night?
As one who dreams of anarchist utopia I’m beginning to welcome this sort of thing. I have no faith in constitutionally limited minarchy as the path to liberty – just look at what the US has become and the Swiss can’t flush a toilet on Sundays. I also have no faith in the impossible concept of democracy. Agorism is the only way I can see of achieving liberty.
The reason I welcome increases in statism is because it seems to be the only way to wake people up. The ‘libertarian blogosphere’ in the UK was entirely the result of years of socialist big statism. If we all lived in the 20s noone would care about freedom from government coercion because there’d be so little of it. But that would be like ignoring just a little bit of cancer.
Bring on the counter economy
Ebay is of course the grandest off-grid market on earth. And has no problem sending very clear reliability signals for buyers.
It’s clear it won’t always be that way. Now that Ebay controls the payment system, it’s possible for our masters in Washington to track the movement of the money.
But they aren’t doing it yet.
As people have pointed out above – “lopehole capitalism” (i.e. trading based on dodging regulation and evadeing taxes) does not a prosperious nation make.
What is likely to result is not Italy (where the left are, oddly enough, in some ways weaker than might be thought – perhaps because many non leftist Italians understand the danger of “Gramsci tactics” and have learned to fight them), but BRAZIL.
Indeed most of Latin America (as described by de Soto) – endless “social justice” (with much mob violence) and yet (in reality no contradiction at all) an ever widerning gulf between rich and poor – and every major institution in society under the control of the ideological left (blaming the poverty on “capitalism”).
Businessmen (big or small) living by corruption – by bribes and dodges, and working in alliance (perhaps by choice – perhaps by grim necessity) with the very statists who have created the endless fiat money expansion (the credit bubble financial system – so Latin American already) and the endless regulations and schemes.
Remember the left in the United States (including the establishment “moderate” left such as Newsweek) are open in their praise of Brazil – it is one of their models.
Already the state oil company of Brazil gets subsdized by the American taxpayer (thanks Comrade Barack) to drill for oil which the Brazilian regime gets the profits of – yes to do the very think that Barack Obama has made de facto illegal to do in the waters of the United States.
I say “state oil company” – but there is at least one major private share holder.
Mr George Soros – Mr Crony Capitalist himself.
Where ever there is the stink of corruption there are people like Soros – and such “businessmen” are no allies of pro liberty people.
Take the example of the expansion of FDA regulations (one of Cas Susteen’s “nudges”?).
This does not only mean that only drug companies that are friendly with the regime (for example support Obamacare) can really expect to develop new medical drugs, it ALSO means that there is a excuse for government drug development.
“The private sector is not developing the new medical advances we need – so the govenrment HAS TO step in with its own development”.
I am not making this up – Comrade Barack has already said it.
And, no doubt, lots of pet businessmen will be lineing up to agree.
Rich Rostrom & Paul Marks
That sort of corrupt, statist system is indeed what not only Obama, but the Political Class [thanks to the pollster Rasmussen for his working definition of such last summer] regardless of party are aiming for. The tendrils of State control are everywhere spreading. For instance, the nationalization of our health care system includes in its thousands of unread before passage pages, the requirement that all businesses report all sales and purchases over $600 to the IRS via an individual form 1099 as of 2012. Aside from the fact that there is doubt that even with modern IT systems, it could be done; what does that have to do with Health Care? I think more likely it is intended specifically to make everyone liable for a criminal prosecution at will. Or the included provision within the nationalization that buyers and sellers of gold have to both report the transaction as INCOME on their taxes starting in 2012? Anybody thinking of another April 1933? Or the change in the student loan system so that the government and not banks decide who gets loans for higher education?
We found with GM, Chrysler, and the crony capitalism bailing out banks, brokerage houses, and unions who paid off the Democrats; that the rule of law is now sufficiently flexible that it can be folded back on itself like a Klein Bottle. The Constitution itself is beginning to look like a rehearsal at Circ de Soleil. Our laughingly named Justice Department has declared it as policy that it will not investigate alleged violations of civil rights of non-minorities.
If the law not only fails to protect you, and indeed is being used as a bludgeon against you; an individual or small business that can’t afford to bribe the organs of the State has to resort to an underground economy to survive.
We are getting there already. It will be interesting, in the Chinese sense, what decrees will come down in the wake of the coming economic collapse and/or war.
There are means of resistance, but with our electoral system being closer to Cuba’s than to the traditional New England town hall; that is a slender reed to lean on indeed.
In the meantime, individuals and mom-and-pop businesses do what they need to survive.
Subotai Bahadur
Last night I posted a brief response to Paul’s comment, but it’s still in smitebot purgatory. In durance vile here must I wake and weep, And all my frowsy couch in sorrow steep.
Bear in mind that, while avoiding paying taxes is a solution of sorts for the individual, it’s not a general solution because it doesn’t stop government from spending. They simply defer tax collection (effectively) by running up debt or printing money. Lower spending is the only true tax relief.
(Link)
A number of “balanced budget amendments” have been introduced in Congress this year (so far, all in the House of Representatives). In my opinion, all of them have flaws (and I’ve read them all). Unfortunately, the one purportedly introduced by Cornyn and Hatch doesn’t yet appear on Congress’ website, and they didn’t see fit to include in their press release either the text or a link to it, so I can’t form an opinion on it. The summary they provided says that their proposed amendment:
• Mandates that total budgetary outlays for any fiscal year not exceed total revenues.
• Caps federal spending at 20 percent of GDP.
• Requires the President to submit a balanced budget to Congress every fiscal year.
• Requires two-thirds vote in both the House and Senate on any measure that raises taxes.
• Provisions can be waived if there is a formal declaration of war, if the U.S. is engaged in a military conflict constituting a threat to national security, or if two-thirds of both the House and Senate approve.
I don’t like the “military conflict” exception, but other than that it looks promising. I look forward to seeing the complete text.
The problem with actuarial limits is they simply cook the books, redefining terms as necessary. Look at what they’ve done with CPI and unemployment over the years.
Exactly. No kind of politicking can solve the problem. There have to be a solid majority of elected representatives who genuinely want to do it, which means a solid majority of voters asking for it (and truly understanding what it means).
That’s why progressive taxation is so dangerous. By putting the burden of taxation on a minority, it ensures that the majority has a vested interest in more government spending. It’s not realistic to expect the majority to vote against its individual best interest. It would be nice, but it’s not realistic.
The problem with actuarial limits is they simply cook the books, redefining terms as necessary.
Agreed. But having a spending limit which is tied to GDP (and not merely requiring a “balanced” budget, which is a bad joke) makes it much harder to game the system. Adjustments to the GDP calculation methodology would have a very small impact, so it would take a long time before they could have any material effect on the spending limit, and by then most of the benefit would have been achieved. Of course, the Amendment should contain some protective language, such as that GDP is to be calculated “employing methodologies consistent with those applied at the time of ratification of this article”, although I’ll concede that even this wouldn’t be a permanent solution. But there is nothing “permanent” in human affairs; all we can do is the best we can do, and let posterity take care of itself.
The original Constitution served us well for about 150 years, before the progressives and revisionists managed to completely subvert it. A properly crafted Balanced Budget Amendment would be a step in the right direction and would help restore the balance. It’s better than nothing.
Poetry Laird – you FIEND!
High culture is evil – all modern British people are taught this (read the article on “Waterstones” book chain in the latest issue of the Spectator magazine – and you will understand what I mean).
A new Constitution……
The advantage of the existing one is that there is two centuries of experience to see which words can be plucked out of context to be used as an excuse for statism.
There is no need for a Constitutional Convention – just the following admendment:
The words “general welfare” and “regulate interstate commerce” are no longer to be held to have any legal force what so ever in giving powers to the government of these United States.
I repeat the left rip these words from their context (for example “the common defence and general welfare” is the PURPOSE of the powers granted to Congress by Article One, Section Eight, there is no catch all “general welfare spending power”), but if the words were formally struck down they could not be used.
So no need to rewrite the entire Constitution (although if you do – I suggest the New Jersey Plan), just strike down the legal force of “general welfare” and “regulate interstate commerce”.
If any other words in the text could be used by the left – they would have used them by now.
Paul, it seems to me that the only sensible response to an unprovoked attack by the Smitebot is to counterattack with literature. It is my plan to keep doing so, at least until I run out of ammunition. (The last time I used Melville.)
I don’t disagree with you that the “general welfare” and “interstate commerce” clauses have been perverted beyond all recognition. (Anyone who claims that the “general welfare” clause* provides any basis whatsoever for expansive government is woefully ignorant as to the elementary principles of statutory construction, to say nothing of history.) Nonetheless, there is a legitimate purpose to both of those clauses. So while I would favor some sort of amendment restricting judicial interpretation to their original intended purposes, I can’t agree with simply nullifying both of them. The unintended consequences would be severe.
* Actually, there are two “general welfare” clauses in the Constitution, one in the Preamble as well as the one you cited in Article 1, Section 8. My comments apply to both of them.
I know Laird – and the fact that the words at the start of of Article One, Section Eight repeat the preamble to the Constitution makes it even clearly that the words are a PREAMBLE.
By the way – my comment would also cover both times the words are used.