Category Archives: Taxes

The Carrier Deal

Donald Trump is an enigma. On the one hand he is not even President yet and he’s already using his legendary (according to him) negotiating skills to make good on his promise of keeping jobs in America. On the other hand this feat was accomplished through a combination of crony-capitalist carrots and sticks whose effectiveness was largely a consequence of Carrier’s parent company (United Technologies) being a cog in the military-industrial fascist apparatus. Dependency fosters control and United Technologies is highly dependent on the federal government for much of its business, therefore this was somewhat of a low-hanging fruit “win” for Trump.

The reaction to this deal has predictably fallen along party lines although there is a bit of cognitive dissonance on both sides as they try to come to terms with balancing fairness with pragmatism. People appreciate that Trump saved those jobs but are troubled by how he did it. Is it fair to bestow tax “giveaways” on one company but not others? Is it fair to reward only those that threaten to leave? Is it fair to invoke a punitive 35% tariff on goods imported from US overseas firms? The answer depends on the framework in which the question is asked. Within the framework of natural rights and individual liberty none of these are legitimate. The actions of any entity that initiates violence (taxation, tariffs) to achieve its ends are illegitimate. But we don’t live in that world. We live in a world literally run by the very warlords we are told would arise absent the state. Every state (i.e. country) is a plantation; some are far worse than others, but a gilded cage is still a cage. So given our condition of servitude to the state is it fair if the master decides to treat one slave more favorably than the others? Should we tell the master “You have no right to lift our brother out of the mud, please, cast him back down here with us!” Thus we have both sides of the political spectrum opposing this but for opposite reasons. The left opposes it because they enjoy being in the mud and believe this is the only way we can all be equal, therefore it is “wrong” for anyone to get out of the mud. The right opposes it for purity reasons. They believe ALL should escape the mud but that it is an either-or proposition; either all escape or none escape. Libertarians will argue for the moral solution but (grudgingly) accept the pragmatic one as a stepping-stone. Better for some to escape than none. Since wholesale emancipation seems to be off the table, then let’s create so many loopholes and deals that all can escape.

So do I wish I could get the kind of tax incentives Carrier got? Sure. It is absolutely unfair that they get them and other businesses like mine do not. However I’ll still applaud their small victory if it means it moves the needle even a bit toward the direction of universal tax relief.

Color of Law

If you, like me, have been periodically receiving recorded messages on your voicemail from a heavily accented hypnotized Haldol user purporting to be from the IRS you will be relived to hear those calls were actually fraudulent. Yes, I know it is hard to believe. Indian authorities recently raided and arrested hundreds involved in this scam. If you’re curious to hear first-hand how the scam plays out for those willing to take the bait, have a listen to podcaster Tom Woods as he has a little bit of fun with them. It basically ends with the victim being instructed to purchase Target Green Dot cards (of all things) to stave off an imminent IRS raid. We may laugh at the notion that anyone could be so gullible as to fall for this scam but sadly at least 1 in 100 people did indeed fall for it. After the raid it was reported that these scammers raked in from one-hundred to one-hundred fifty thousand dollars every day.

Although we can agree their actions were contemptible, there is actually little separating what they were doing and what the IRS itself does everyday. Granted the IRS does not threaten people over the phone. No, the IRS is much more polite; they use the mail instead. I know. I’ve received many such letters over the years. And in every single case it was due to an error on the IRS’s part. In other words, guilty until proven innocent. Fortunately my issues were all resolved but not without unwarranted time and expense. But more to the point, the IRS is no different than these scammers even when the amounts owed are correct. Why are such amounts “owed”? Because someone somewhere scribbled ink on a piece of paper and bellowed the incantation “lllllaaaaawwwwwwww” over said paper in order to sanctify its legitimacy. The ostensible use of the idea of “law” in order to extract money from a victim is no more legitimate than the actions of such con-men. The fact that a “law” must be made to extract payment proves the transaction is not voluntary – were it so then no law would be needed. We don’t pass laws that stipulate you must purchase food everyday or else.

The same phenomenon exists with money. Counterfeiters are excoriated as contemptuous thieves who extract goods from society without producing anything of value. Their nefarious duplication of currency parasitically extracts value from all other currency holders. True enough. But if a “law” says the government, excuse me, Federal Reserve, may do the exact same thing, well, that is perfectly fine. This is the economic equivalent of a state granted license to kill and no one bats an eye.

So the next time we are cheering for the apprehension of a villainous criminal lets take a moment to shift focus from the mote in their eye and toward the beam in the eye of the state who is more likely than not engaging in the same practice but under the color of law. Remember, don’t steal, the government hates competition.

Pot, meet Kettle

Who here would voluntarily pay more income tax? Anyone? Now be careful and think hard here, after all taxes help support so many aspects of society (roads, schools, welfare, defense, science, economic expansion, etc.) that benefit everyone wouldn’t it be selfish to not do all you could do? Sure the government says you can deduct your mortgage interest, property taxes, and other expenses, but should you? Wouldn’t it be more patriotic to forgo those deductions so that you can more fully participate in the community of this great nation?

If this sounds both familiar and ridiculous at the same time there is a reason for that. The whole message of taking part in the common good of taxation is directly from the statist’s propaganda playbook. The ploy is to guilt you into compliance: if you are opposed to taxation you must also be against all those things taxes fund, right? So while we are instinctively “for” the things taxes fund, we each individually endeavor to keep our share of that obligation to a minimum. A tragedy of the commons in which we extract from the tax pot as much as we can (concentrated benefits of special interests) while limiting what we put in that pot. This tragedy of the commons is nowhere more apparent than in the hypocrisy of ideologues like Clinton who claim the “wealthy” aren’t paying their “fair share” all the while she and her ilk are none to happy to take advantage for themselves every wrinkle in the tax code that allows them to limit their tax liability. Pot, meet kettle.

People who complain about the tax code don’t have any actual experience with it beyond filing their 1040. I do (unfortunately) as a business owner and I can guarantee you there is no secret “check this box to get out of paying taxes this year” box on any of the forms. If the current rumors are true that Trump has not paid taxes for the last 20 years it’s not because he’s some sort of clever businessman or has really great tax accountants. There is one simple reason. He lost a whole lot of money! It is after all called an “income tax.” You must have income in order to tax it. If you lose money in one year and make money in the next you are allowed to offset the profit with the prior loss. If that seems unfair to you then I suspect you’d find nothing wrong with gambling following rules of “heads I win, tails you lose.”

That Trump has apparently carried this loss forward 20 years makes his hesitancy to release his returns all the more understandable. He is tremendously embarrassed by the fact that he hasn’t made any money in over 20 years. In other words, imagine if you had invested $100,000 in the stock market in 1995 but it quickly declined in value to $20,000. Now 20 years later it was again $100,000. Have you made any money?

If it somehow seems unfair to you that people not making any money don’t have to pay “invest in the system” then perhaps it is time to abolish the income tax and shift toward a voluntary user-pays system. Those that consume more will pay more and those that consume less will pay less. You know, like every other good on the open market.

Crocodile Tears

We often hear that that manufacturing is dying in the US because of unfair overseas competition. US manufacturers are either going out of business or shifting operations overseas. However global competition plays a role across all industries, not just manufacturing. Something else is at play. US tax policy singles out manufacturing (actually nearly any business dealing in tangible goods) with unfair rules designed to extract more tax relative to a service-oriented business with the same income albeit while claiming the same tax rate. As the owner of a small US manufacturing firm, I have sadly gained firsthand knowledge of the severe disadvantage one must contend with if they have the audacity to try and make or sell goods in the United States.

The signs of this are not immediately apparent since the nominal tax rate for all corporations (non-pass through) is 35%. The trick though is in the sleight of hand where the focus is on the tax rate while it is the definition of profit that is critical. The common definition of profit is any money remaining after subtracting all expenses from revenue. And we all know what an expenses is, right? Anything you spend in furtherance of the goal of obtaining said revenue. Well unfortunately it’s not that simple, at least as far as the IRS is concerned. In business there are both overhead expenses and capital expenses. Capital expenses are not immediately deducted against revenue but rather depreciated over many years. So if you buy a $100k piece of equipment you don’t deduct the $100k, you deduct maybe $10k that year and for the next 9 years. There may be legitimate business reasons to view the numbers that way for accounting purposes however beyond a certain minimal size a business may not use the cash method (which does not employ depreciation) for tax computation but instead must employ the accrual method which invariably yields a higher figure by shifting more future income into the present. This puts such businesses (primarily manufacturing which is a equipment intensive industry) at a severe disadvantage insofar as the part spent but not deducted accrues tax. But it gets worse. Manufacturing maintains inventory and the inventory is treated as a capital expenses as well therefore none of it can be deducted until sold. And even when sold it is not taxed at lower capital gain rates but at higher regular income rates. The IRS knows the game of “heads I win, tails you lose” quite well.

Ironically it is a rapidly growing business that is most susceptible to such tax harm as most if not all the profits are invested back into the company in order to grow the inventory to keep up with increasing sales. So if you make a $1 million but use it to buy $1 million in inventory you owe $350k in taxes even though you don’t have $350k on hand. Oops. So you either have to borrow it, incurring even greater costs, deliberately slow your rate of growth, or just go out of business. But wait, it gets even worse. If you do so well that your sales exceeds $1 million the IRS redefines expense once again (Section 263a) and says a certain percentage of your payroll, rent, utilities, insurance, etc that is indirectly associated with producing the inventory must also now be capitalized into the value of the inventory. This shifts even more money from the expense column to the profit column. So based on pure available cash flow you may have made $350k but based on IRS capitalization requirements they say you made $1million. So the entire $350k you made is sent to the IRS on your phantom $1 million income and you end the year with nothing.

Only manufacturing is subject to these absurd redefinitions of expense and profit. Service industries have no inventory and nearly no equipment so their profit more or less equals their cash flow. Farming gets a million loopholes to avoid these issues. The rules governing profit/income are far more germane to ones tax bill then the tax rate itself. If we want manufacturing to flourish in this country again perhaps we should stop punishing those who try to engage in it while crying crocodile tears about how US manufacturers are fleeing this country.

Rape culture, no. Theft culture, yes.

There are a number of word-couplet slogans that aim to pithily define some societal ill that is widely ignored but which demands immediate rectification (white (or male) privilege, social justice, rape culture). The proof of said societal ill? The mere Jehovah-like utterance of said phrases brings them into existence before a credulous audience who only need hear the words to accept the implied truth. Their refutation, on the other hand, requires pages of discourse and facts and who has time for that? Mindless emotion trumps facts and reasoned discourse every time.

Sound bite slogans engage in semantic slight of hand, mixing words and their meaning into a soup of inscrutability. As the great sage Inigo Montoya would say, “You keep using that word. I do not think it means what you think it means.”  Perhaps the worst offender among these is “rape culture.” This term is particularly sinister as it establishes its own legitimacy in tautological fashion by claiming that proof of rape culture is found in the very denial of its existence.  Witches must exist because anyone denying their existence is only doing so to cover up their allegiance to said witches.

Users of this term apparently are unaware of what “culture” actually means. The dictionary definition is “the customs, arts, social institutions, and achievements of a particular nation, people, or other social group.” Hmmmm… so it seems if we had a “rape culture” that would mean we would find positive depictions of rape in our literature, movies and television. Our political leaders would extol the virtues of rape whenever possible. We would erect monuments to the greatest and most prolific rapists. Our schools would teach boys and girls the virtues of rape. Nope, I don’t see any of that, do you?

Yes, rape is a horrible crime and the perpetrators should be severely punished, but to suggest that 3% of the population who commits 90% of the rapes (on college campuses) suggests an endemic problem in the very fabric of a society is ludicrous. It ironically mimics the very thing proponents of this term decry – victim blaming – by shifting the blame from the perpetrator to society. “Society” should teach men not to rape and thus to the extent rape exists it is tacit proof of the failure of society to teach that. See, the perpetrators are the victims here as well; it’s not their fault, they never got the “don’t rape” memo from society. Honestly, is there anyone alive who thinks rape is “ok”? Even thieves and murders know their crimes are wrong – and yet they do it anyway. Does this then signify we have a “murder culture” or “theft culture”?

Actually, on that last question I would answer in the affirmative. We do have a “theft culture.” How so? Imagine the following: in order to eliminate the scourge of rape from society the government created an incentive system to stop potential rapists. Whenever someone thought about raping they could instead go to the government Department of Gender Relations and receive a payment to not rape. To make this system work all potential rape victims would be required to pay an annual fee into this system. If they did not pay up, then the government would publish a list of their names and anyone could rape them without consequence. Naturally nobody wants to be on that list so everyone pays – just the threat of what might happen for not paying is enough to ensure all continue to pay “voluntarily.”

Does that seem shocking and crazy? Well it should, but unfortunately this exact system exists today in order to prevent a different crime: theft. Government agents who would otherwise violently rob people in order to extract the proper “tribute” payment to the state’s coffers have convinced everyone it is better if we all just pay them “voluntarily.” If we don’t then they can rob us without consequence. So if we all pay our taxes in a “civilized” fashion then there will never be a need to resort to base barbarism. And it’s all “voluntary”, so that makes it legitimate.

The really scary part is that this culture is not unique to America; it is global. People will universally agree that taxes are bad, but quickly pivot to extol their virtues. The parallel to an actual rape culture would be if society would extol the virtues of all the children born as the result of rape and told women they should just accept being raped because yes it is bad, but look at all the good it brings about. One parallel that does exist today between rape victims and tax victims is the odious practice of “victim blaming” – rape victims “deserved” it because of how they dressed and tax dodgers “deserved” jail because they refused to be robbed; both have the right to exist in the world without being victimized on account of the lens through which others view them.

That is the way of the state, instead of standing as a bulwark against rights violations it institutionalizes those very violations and whitewashes them into a sanitized bureaucratic system that like a virus then infects all cultures, transforming them into the “war is peace” and “theft is good” upside down culture of the state.

Tax It Your Way

The recent announcement that Burger King will merge with a Canadian food chain (Tim Hortons) and shift its corporate headquarters from the US to Canada has predictably tripped the frothing at the mouth reflex of tax-hungry statists. Why? Because such a merger and move (known in tax lingo as “inversion”) means that Burger King no longer need pay the 35% US corporate tax rate (one of the highest in the world and despite popular media propaganda that focuses on a sliver of corporations avoiding it, it is in fact paid by 99.5% of US corporations) on income earned outside the US (they will still pay 35% on their US income). They instead will pay the much lower Canadian rate of 15%.

“Unpatriotic” is the word President Obama has used in the past to describe such tax inversions (which are completely legal) and his retinue are now all too eager to join that chorus – uncritically parroting the approved talking points put out by the administration. This sentiment of “economic patriotism” demands that one’s love of country directly correlate with one’s willingness to hand over whatever the state demands.

Obama has also said tax minimization may be legal but it’s “wrong.” Really? This is a rather warped interpretation of right and wrong. Traditionally “wrong” is reserved for those actions that violate one’s natural rights (theft, murder, rape). If Mr. Obama’s use of this term is technically correct then it betrays a scary proposition: individual ownership can not exist because all is owned by the collective, otherwise how else could it be wrong to keep one’s property, unless it was never yours to begin with.

This sentiment is shared by both the left and the right insofar as both are statist at their core. While they may differ in degree, they stand in solidarity on substance: the role of the individual in society is to serve the interests of the state. A vehement disagreement over whether 35% or 25% is a “fair” tax rate is much sound and fury signifying no disagreement. Shall the master allow his slaves one hour or four hours of rest? Clearly those in favor of one hour are godly and moral men while those supporting four are raving lunatics. But truly insane is the man who says slavery itself is immoral. Pay no heed to him, what he proposes would never “work” in the real world. So you see dear citizen, the profits earned by Burger King (or any company or person) are not really theirs. It belongs to us all, to the state, to the Homeland. How dare you attempt, even legally, to reduce by one red cent your contributive fair share to the communal pot?

The usual sort of justifications for unbounded taxation is that because a company receives benefits from the state (courts, policing, military, roads, research, education, etc.) this therefore establishes an obligate contractual relationship necessitating payment (of a unilaterally determined magnitude) for such benefits. If that is indeed true, then mobster-extorted protection money is equally legitimate.

Ignored in this false choice analysis is the possibility that these supposed benefits of the state would exist in the absence of the state. Naturally they would exist except in the minds of those bereft of an entrepreneurial spirit. The only difference is that privately produced “public” goods would be of higher quality and lower cost. If you’re unconvinced of this fact, just insert the word “public” in front of any good and consider which you would prefer in relation to the privately provided alternative (e.g. toilet, school, transit, food, clothing, car, healthcare, etc.) The difference in costs and quality between tax supported goods and market provided goods is the true dead weight tax cost and represents a net loss to society no different than if the government paid a million men to dig holes and fill them in.

It seems the tax-hungry-economic-patriot can’t decide what they want. If you protest the system they claim you’re unpatriotic and hate America and should leave. But when you take their advice and do leave you are then targeted with the vilest of epithets. But that sort of inconsistency should be expected; the ethics of the statist is consistently inconsistent insofar as they owe their allegiance to the mantra “the ends justify the means.”

The Pedagogical-Socialists Fear Competition

It can be particularly challenging to carve out a pseudo-market based approach to K12 education when the framework must rest squarely upon an overtly socialist system. In Georgia we are bearing witness to such an attempt with the passage of the “Georgia Private School Tax Credit” (HB 1133) in 2008. This bill set up a system whereby private individuals and corporations can make limited charitable donations to a “Student Scholarship Organization” (a type of charitable entity authorized through the bill). These organizations in turn grant scholarships to K12 students (typically needs based) so that they can attend a private school of their choice. Private entities donating money to help needy children get a quality education, what could be wrong with that? Well a whole lot according to groups like the Southern Education Foundation. This group and others feel that this program is diverting funds from public schools to private schools. The SEF is currently assisting in a lawsuit aimed at having the entire law declared unconstitutional.

Their assertion is true, untrue, and entirely irrelevant. To explain requires a bit of background. I will attempt to not bore you to tears so I will move quickly and gloss over some details. Essentially a taxpayer with a $1000 tax bill to Georgia can choose to send that $1,000 to an SSO of their choice instead of to the state of Georgia as long as they have permission from the state. Each year the state allows people to do this until an aggregate cap ($58 million for 2014) is reached. The benefit to the taxpayer is that while it does not change their Georgia tax liability it may lower their Federal liability in some situations. Although the state does indeed receive $58 million less than they otherwise would have absent this program, there is nothing in the law that says the education budget must be debited an equal amount. The legislature is the ultimate arbiter of funding. So decreased tax revenue could put pressure on them to decrease funding, in which case their charge is true. Or, to avoid such political backlash, they may not cut funding at all, in which case the charge is untrue. The only thing one can say for certain is that decreased tax revenue means that programs on the margin will receive less funding or that taxes will be raised to make up the shortfall.

Of course to suggest that reduced funding is a bad thing is completely wrongheaded. This is precisely what it SHOULD be doing. In essence this program is a backdoor to incremental privatization of the socialistic state run school system. To the extent that this program incentivizes parents to pull their children from public schools and move them into private schools it then follows that those public schools should require proportionally less funding. If the public school has 100 students and costs $100 to run, then if 50 students leave it follows that that public school does not still need $100 to run. Even if we assumed all $58 million got carved from the 2014 education budget that would be only a 0.5% reduction.

The goal is that the SSO’s act as a private version of a state education budgeting agency. In other words, given that many different SSO’s have sprung into existence all competing with each other for donations, it follows that those that are the most efficient at maximizing the student to dollar ratio (more students educated for fewer dollars) will excel. Why? Do you prefer to give to an efficient or inefficient charity? So the public school proponents should welcome this change. It will mean that if 50 students leave they will take with them only $25 leaving $75 for the remaining 50 public school students. How can they get by with only $25? Because they’ll get $50 worth of value due to competition driven market efficiency.

Of course in a truly market based system it would not be necessary to have all sorts of complicated tax credits and state chartered charities. Until the pedagogical-socialists let go of their superstitious fear of freedom that compels them to believe the only possible way to educate children is through gun-enforced collectivist redistribution, we will be stuck with the timid attempts of the state to emulate market based solutions to problems created by the state.

One Banana, Two Banana …

As the political pundits and state apologists breathed a sigh of relief over last week’s deal in Congress to end the government “shutdown” a subtle wrinkle in this deal went largely unnoticed. But this wrinkle, like the proverbial butterfly whose flapping wings results in a hurricane, sets the stage for the transformation of the American Empire into a banana republic and with it the ultimate collapse of that empire. How could this go unnoticed? As with all new government initiatives it is cloaked in the innocence of being “temporary.” As the astute observer of history Milton Friedman once observed, “there is nothing so permanent as a temporary government program.”

The deal that was rushed through Congress last week is, like Obamacare, now withering under the light of public scrutiny of those very details our overlords wished to keep hidden. Although laced with several “special deals” in order to buy the votes of particular congressmen, this deal carries with it something far more sinister than the usual run of the mill horse trading. It carries with it the “temporary suspension” of the debt limit until February 7, 2014. What does that mean in practical terms? Quite simply that the US Treasury may issue an unlimited amount of debt between now and February 7. They could issue treasury bonds for tens of trillions of dollars if they wished and it would all be nice and legal. Now is it likely they will do that? Not really. That is not the source of the hidden danger. The real danger lies in the fact that this “temporary” suspension of the debt limit will never end. This is because through procedural gamesmanship this component of the deal was added in such a way that it will take a two-thirds (!) majority of both the house and senate to reverse it. Considering both sides of the aisle are too craven to face the hard choice of reducing spending or increasing taxes you can lay down good money on the fact that they will never vote against something that would require them to ultimately face that quandary of a decision.

So although there will still technically be a debt-limit on the books, it will for all intents and purposes not exist since all who are bound by it have agreed to simply ignore it. Once this new reality becomes the status quo there will be absolutely NOTHING holding back Congress from spending as much as they desire. As they further inflate the currency through more and more debt creation, prices will rise year after year. This will further devalue the purchasing power of the dollar. Eventually, one day soon the United States’ largest creditors (foreign governments) will decide the US dollar is simply not an asset worth holding (would you continue to own a stock whose price dropped every year?) and will cease buying US Treasury debt and will also begin selling the debt they do own (further plunging the value of the dollar). Once that happens it will be declared a “crisis” by those in power who will once again clamor for a “temporary” suspension of even the most tenuous of rules that support the façade of separation between Fed and State. Currently it is illegal for the Federal Reserve to directly purchase US Treasury bonds (although they can do so indirectly through “the market”). However if no one is willing to buy our debt that leaves just one customer standing: the customer that has the legal monopolistic right to create counterfeit money out of thin air – the Federal Reserve. Once the Federal Reserve is “temporarily” permitted to begin buying US Treasury debt, that will be the last nail in the coffin of the American Empire. History has taught us clearly time and time again that once a government starts printing its own currency with no restraints of any kind, hyperinflation is not very far behind.

Perhaps this might seem like hyperbole to some, however if we combine the lessons of history along with our current government’s unwillingness to cut spending and face the economic failures of their socialist inroads into our economy (i.e. subsidization of ANY economic activity) there is simply no other plausible outcome. So get ready, the roller coaster is poised to plunge straight into the ground. And it all begins not with a “bang” but a mere unnoticed whimper.

Changing the Rules of the Game

September 1 will mark the end of an era, at least in Georgia anyway. This is the date that Amazon.com must begin collecting sales tax in Georgia. Some day you will wax nostalgic and regale your grandchildren with stories of how there was once a place where people could escape the clutches of intrusive government: the Internet. This was a place where anarchism reigned and yet everything worked without any rules or leaders. But slowly government began to stamp out the embers of this freedom bit by bit. First it was taxes, then it was privacy, and next it will likely be access. Internet license, please. As Nature abhors a vacuum, so too does government abhor freedom. Big Brother the busybody knows no boundaries. Big Brother demands his “piece of the action” in every transaction, no matter how small. Just as the mafia feels they have a right to a slice of any economic activity that occurs within their self-proclaimed “territory” so too does government operate upon an identical principal.

So how is it that this has come to pass in Georgia? Has Congress managed to stealthily pass the “Tax Fairness Act”? Fortunately no. This current state of affairs is the result of Georgia House Bill 386 passed on March 20, 2012. This bill follows the Orwellian mantra that if conventional definitions of words aren’t working for you, then simply write new definitions. This bill redefines a term called “nexus” in order to dragoon Amazon and similar entities into becoming uncompensated tax collectors for the state of Georgia. Nexus is a tax term which means “a connection” i.e. if a company has a physical presence (office, warehouse, employees, equipment, etc) then they are said to have a connection to the state sufficiently similar to a resident so as to make them liable for the same taxes a resident would be liable for. But this bill has now turned that definition on its head by broadening the term to the point where merely having a business relationship with an entity in Georgia will confer “nexus” upon the foreign entity. It is hard to see how those who voted for this bill did not recognize the perverse incentive buried within it, namely that companies outside of Georgia will choose to NOT establish any business dealings with companies inside Georgia lest they become entangled with the Georgia Department of Revenue.

As if loss of business opportunities and higher taxes wasn’t bad enough, it gets even worse. Nexus and residency have always had a common shared characteristic: physical presence. Not anymore. Now that nexus is based on the most ephemeral of connections to the state how long is it until the residency definition undergoes a similar metamorphosis? If the two are indeed linked in their common purpose of establishing tax liability, then a change in one will invariably result in a change in the other. Therefore Georgia may one day establish that residents of other states are also in fact Georgia “residents” for purposes of income tax. Once that precedent comes to pass then what is to stop others states from likewise inflicting such taxes upon Georgians? Perhaps some day you’ll get an income tax notice from Florida because you vacationed there once. “You enjoyed the generous state benefits of roads and municipal services while here, so certainly you should be paying your fair share” will be the justification. Each blow of the precedential ax upon the tree of freedom accumulates damage until finally one day that tree is felled.

Naturally this new sales tax collection is being heralded by the economically illiterate as a boon for the “brick and mortar” stores. The initiation of sales tax collection will have ZERO effect on expanding local sales in Georgia. Why? People aren’t ordering on line to avoid a few bucks in taxes. They are ordering online because it is convenient. The lack of sales tax is just a perk. Removing that perk is not going to change people’s behavior. It is however going to reduce what people can spend to the tune of $16 million. This will only harm the individual as well as local businesses they are already shopping at. Increased taxes reduce the individual’s capacity to spend – everywhere. This is supposed to help the economy?

 

On Voluntaryism, Stateless Societies and Contract Slavery

Recently I got involved an interesting philosophical discussion on Facebook (where else!) concerning taxation and the proposition that if you don’t pay your taxes men with guns will come and take you to jail or kill you (all true). One participant brought some focus to the conversation by distilling down the core argument to one of a) should we have government (b) how shall we pay for it (c) constitutions are like contracts. All good points, however embedded in each one is either a false choice or a fallacious assumption. So below I will reproduce his post and then my follow up as I address some of the main fallacies. 

here is the quoted content from the post I will be responding to:

This conversation, and every conversation about the scope of govt comes back to the same place. The first division is you are either an anarchist or you want some kind of law. The moment you say you want some kind of law, you are agreeing that at some point in the process of enforcing the law, a dude from the govt with a gun will come take you away. And I am okay with that – no point in pretending we have laws if they are not going to be enforced.I am willing to listen to discussion, but anarchy is probably not for me, or most of us. So then it’s like the old joke about the prostitute – we’ve already established what you are (pro-govt of some kind), now we’re just haggling over price. Where is the line in the sand as far as your philosophy of the proper scope of the law?I would suggest that the only useful argument by a libertarian about government is that it ought only exist to prevent one adult from using force or fraud to gain from another adult – whether that gain is via money or to forward an agenda. Situations involving children and the mentally impaired are naturally given to tighter governance.So to me, the idea that we’re arguing over whether or not you must / ought pay federal taxes so the govt can fund its activities is a little pointless. The only real argument for strict Constitutionalists or libertarians ought to be about the USE of the money, not the government’s right to take it. The law of tooth and claw was used to appropriate the land upon which I sit and afterward to create the govt that exists here – the RIGHT is almost irrelevant. Were I to be successful in dissolving this (formerly) useful govt, it is most likely a worse govt would take its place. There is no perfect freedom on this side of heaven, so the notion that no entity can curb my inclinations or bind my freedom is almost childish.We can get into a lot of philosophical discussions about man being created free and whatnot, but the fact is that there will be some govt, and we enter into “contracts” (the Constitution, say) with other free people to create these govts that will enforce our individual rights to property and to secure freedom from invasion, etc. With our ancestors having agreed to some form of these contracts, and most of us agreeing that they ought to exist in one form or another, we should be focused on the quality of the contracts, not the terms of enforcement.

Here is my response:

Your points I think have helped to focus the discussion, however the underlying assumptions simply reinforce the false dichotomous choice that is beaten into us from day one (by our educators, our literature and the state media) – namely that one has a choice of either being ruled by others (in the form of this thing we call government) OR absolute and total chaos with no laws or order whatsoever. Obviously with a choice like that who would pick the latter? And to an extent I think part of the failure for the proper alternative being made understood falls at the feat of us libertarians – we (or some of us) throw the word “anarchy” around and do not explain at all what is intended by the use of that phrase. I personally prefer “voluntaryism” – it’s enough of a neologism that it carries none of the associated emotional baggage of “anarchy”. We want the freedom of choice. Not the freedom to state our choice and have it vetoed by a “majority”, but to actually be allowed to execute our choice.


When we libertarians speak of “freedom from government” we do not intend a lawless, chaotic, anything goes sort of wild west world. Far from it. We want government. We want order. It’s just that we want to pick our own government to associate with. And we do not believe that simply because I happen to live next door to you and you want to associate with a government that establishes rules that promote Ideology A and I want to associate with one that promotes Ideology B, your choice should have any bearing on my choice. 

Think about it for a minute. I’m proposing something no more controversial than what we currently practice today – freedom of religion. If I’m Catholic and I live in a town full of Baptists it would seem ludicrous to anyone to suggest that “well since a majority of people who live here are Baptist, well, you have to be Baptist too, or at the least you have to do all the things the Baptists require” – and that if I didn’t comply I would be throw in jail. That’s insane – and rightly so, and everyone would agree that that would be insane. And so it is no different with government. This type of governance is not unknown. It is sometimes referred to as a “clan” system. In more “primitive” stateless societies families had a self-interest in protecting each other. They came to each other’s defense and helped each other in times of need. In time it became customary for non-family members to join a family or clan for such protection purposes (voluntarily paying or contributing something in return – i.e. truly voluntary “taxation”). However all members of the clan were responsible for the behavior of its members. If one member injured someone in another clan then all members must make restitution. They then obviously had a self-interest in preventing such behavior from those they knew to be the most troublesome. Eventually if a member behaved badly enough consistently enough they were thrown out of the clan and thus had no protection of any kind from any group. They were an “outlaw” – which meant that anyone could kill them, rob them whatever without any consequence whatsoever. That’s a pretty big incentive to not become an outlaw and behave as directed by the customs and laws of your clan. (For a brief discussion of this system in Ireland please see this interview with Gerard Casey by Tom Woods ). In order for all clans to get along they tended to adopt the same basic “common laws” against violence, theft, rape, etc. So in this way we can see how “law” can exist without an over arching state. Everybody is against rape and murder. But not everyone might be for space exploration, or green energy, etc. Essentially each clan is a government, the only difference being they did not have specific geographical boundaries. Members of multiple clans could all live in the same city and get along just fine. There is no reason such a system could not operate today on a larger scale, one where entities very similar to insurance carriers took the place of the role of government in dispute resolution, restitution, crime mitigation (less crime, less to pay out in losses). If such an entity does not provide what people want, they will go elsewhere. Without a barrier to entry imposed by outside regulations no one could ever “take over” such an industry, the market would always be providing those that could do it better, faster, cheaper, etc.

This has gotten a lot longer than I intended, but let me just touch on another point you made. The one of contracts is germane, however you again accept the “party line” that the fact that our ancestors freely entered into a contract (the Constitution) somehow morally binds us to that same contractual obligation in perpetuity. How can it? Are we bound by the contracts our parents sign? If your parents had a huge amount of debt and then died would you want to suddenly be saddled with that? What if I could vote myself out of the contract, but my siblings wanted to remain party to it, and thus I was then bound by their vote – why should I be bound by their choice? There really is no difference between that and the idea that we are all still adhering (or pretending to adhere) to a contractual document signed by people that have all been dead for nearly 200 years. I talk about this idea of contractual slavery more here